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[ThatHawaiiGuy]

Stars and Stripes Fly over Caspian Sea

[File under: CLUE.]

Over the last few years the United States has openly admitted that the Caspian Sea region is of strategic interest to it. This has been set out clearly in the US' energy doctrine. In contrast to Iraq, US companies have managed to take control of 16% of the Caspian's oil reserves and 11.4% of its gas reserves without firing a shot. If you add joint US-British companies to this list, then Washington and London control 27% of the Caspian's oil reserves ad 40% of its gas reserves.

Of course, the allies needed 10 years to achieve this in the Caspian, compared to a couple of months in Iraq, but the result is much the same. The US already feels itself to be in charge in the region. A recent Chinese attempt to negotiate greater participation in Kazakh oil and gas projects met fierce US opposition. Kazakhstan itself has little chance of having its own energy policy: 73% of the country's proven oil reserves are controlled by Western oil companies.

The interest from George Bush's administration in Caspian oil can be explained by the fact that neither Kazakhstan, Azerbaijan nor Turkmenistan are members of OPEC. This means that energy supplies from these countries will be less dependent on the cartel's pricing policy.

It is clear that the US has gained the upper hand over the world's energy masters. Many politicians now in Bush's administration were involved in strengthening the position of US business in the Caspian region. Condoleezza Rice, the president's national security advisor, was a director at Chevron. Incidentally, Rice now has a Chevron tanker named after her. Vice-President Dick Cheney was a founder, and remains a major shareholder, of Halliburton, which is a leading supplier of services to oil workers in the Caspian.

The future of the oil industry in the Caspian region looks very bright indeed. Proven hydrocarbon reserves in the region amount to 7.8 billion barrels. By 2010 the region will be producing 3.8 million barrels of oil a day, which is roughly 60% of the North Sea's current, but declining output. By the same year the Caspian will be producing more oil than Norway or Brazil and experts believe that its proven oil reserves will be 1.5-2 times higher than those of the Gulf of Mexico. Unsurprisingly, at a spring session of the Parliamentary Assembly of the Council of Europe, the Caspian Sea region was named a key centre of European energy security.

US and British companies have concentrated their main resources in Kazakhstan and Azerbaijan, which have about half of the region's hydrocarbon reserves. Iran, which owns the Caspian's southern shores, is the most awkward country in the region for the US: American oil companies have yet to find a way there. The Iranian parliament even removed aspects of the government's programme for 2003 that concerned attracting foreign investment into projects in the Caspian basin.

Iran is the main obstacle to US plans to develop international oil and gas projects in the Caspian. Turkmenistan is in many ways similar to Iran, but with one main difference: it is much less able to stand up to US pressure.

The balance of power in the Caspian with regard to the status and division of oil and gas reserves has not changed much recently. On the one hand, Iran and Turkmenistan are in favour of dividing the Caspian Sea equally between the five countries that share its coastline. On the other hand, Russia, Kazakhstan and Azerbaijan want to split the sea according to the length of coastline each country owns.

On May 15, Russia, Kazakhstan and Azerbaijan signed a trilateral contract on dividing the sea floor to allow natural resources to be exploited. They also appear to be drawing closer on other issues. However, Iran and Turkmenistan refuse to recognise this agreement. The seemingly endless arguments will no doubt arise again when the working group for drawing up a convention on the Caspian's legal status meets for its tenth session in Moscow in early July.

The positions of the different countries are clear. Russia, Kazakhstan and Azerbaijan have lined up together, which makes the business of gaining access to Caspian energy reserves much easier for international oil corporations. If this position remains unchanged, a significant part of the Caspian's riches will find themselves controlled by Russia's strategic partner:
Time will tell how wise this policy is. Meanwhile, the process of dividing the Caspian's energy resources is drawing to a close.

Alexei Frolov, Rosbalt News Agency. St. Petersburg
Translated by Robin Jones

http://www.rosbaltnews.com/2003/08/01/63269.html