Bama,
Totally agree with news, mkt will catch up soon.IMHO
December 10, 1998
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Three Big Oil Companies Agree
To Study Dual Caspian Oil Pipelines
By STEVE LIESMAN
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The Clinton administration scored a small foreign-policy victory Wednesday when three international oil companies and the Kazak government signed an agreement to push a plan to build dual oil and gas pipelines in the Caspian Sea basin.
Chevron Corp., Mobil Corp., Royal Dutch/Shell Group and KazakOil, the state oil and gas company, agreed to study in the next year two pipelines that would run from Kazakstan to Turkey. The Clinton administration, in an attempt to bolster its ally Turkey and the independence of the newly formed states in the Caspian Sea region, has championed a route through Turkey as an alternative to other paths through Russia and Iran.
"It will serve to strengthen the autonomy, economic performance and political independence of the Caspian states," U.S. Energy Secretary Bill Richardson said at the signing ceremony.
The administration's support has come despite concerns from some international oil companies that the oil pipeline, estimated to cost between $2 billion and $4 billion, would be too expensive and is politically rather than economically motivated. Yet, the study is significant because it would be among the first to look at the economics of joining the oil and gas from the basin's two energy-producing regions: the Eastern Caspian and offshore Baku. Oil executives say that aggregating the production is the only way to make the route, which would end in the Turkish port of Ceyhan on the Mediterranean, commercially viable.
In addition, the study will look at the economics of a natural-gas pipeline that could join the moderate gas production from Kazakstan with the huge gas reserves in Turkmenistan for eventual sale in Turkey.
Officials have estimated the total cost of the study at around $20 million. However, the pipeline has a long way to go before it becomes the agreed-upon route for bringing the Caspian's oil and gas reserves to Western markets. Several other international oil companies at work in the basin, including British Petroleum PLC, Amoco Corp. and Exxon Corp., have yet to endorse the route formally.
The administration, pushing hard to coax companies to adopt the route, has denied applications by U.S. companies to swap Caspian oil for Iranian crude. Under such arrangements, oil would be sent to Iran and the companies would receive Iranian oil at export terminals for sale in foreign markets. But U.S. officials don't want any crude that could help justify the pipeline to Turkey to be diverted from the potential route.
Still, oil executives at a Caspian conference in Washington sponsored by Cambridge Energy Research Associates have begun to question whether the region's energy resources will be economical to produce if oil prices remain low. In addition, Saudi Arabia, home to the world's biggest, least-expensive reserves, has recently indicated a willingness to open its energy industry to foreign investment. That could curtail spending in the Caspian, where costs are higher.
DrRisk |
