Oilsands Quest Inc (fka OBQI)

[lexi2004]

August 10, 2008
War In Georgia: The Oil Angle

News reports indicate that Russia may have tried to bomb the Baku-Tbilisi-Ceyhan pipeline, which runs through Georgia. If so, the bombs missed, and flow of oil through the pipeline was not interrupted. The BTC pipeline runs from the Caspian Sea to the Mediterranean coast of Turkey; note Russia to the north and Iran to the south:



The BTC pipeline runs through Georgia, well south of South Ossetia:



The pipeline, in which British Petroleum is the lead partner, can carry up to one million barrels of oil per day. It is of considerable strategic significance, as it is the only means by which countries in the region like Azerbaijan can get their oil into the international market without relying on Russia. The Daily Mail writes:

It is crucial to the world’s volatile energy market and the only oil and gas route that bypasses Russia’s stranglehold on energy exports from the region.
In 2002, when the pipeline was being planned, the BBC reported:

BTC is said to be an effective alternative to Russia's pipeline network. ... [O]il experts believe political considerations played a major role in the choice of the route.
American officials prefer a route that would weaken Russia's stranglehold on regional pipeline network and leave Iran on the sidelines. Local governments want less dependency on big regional powers, too.

"This pipeline is of strategic importance not only to Azerbaijan, but to the other new independent states as well", says Ilham Shaban, oil analyst in Baku. "This is a reliable way to the world markets. Take Turkmenistan with its huge resources of natural gas and no access to the world markets. As a result, The Turkmens have to sell their gas 2.5 times cheaper than the world price."

Turkmenistan could join a gas pipeline which is likely to be built alongside BTC to the Turkish town of Erzurum.


That natural gas pipeline has now been built immediately adjacent to the BTC oil pipeline and is called the South Caucasus Pipeline. It has a capacity of 16 billion cubic meters per year. Plans are now being laid to connect Turkmenistan's vast natural gas reserves to the SCP:

Turkmenistan and Azerbaijan are central to the EU’s plans to reduce its energy reliance on Russia which supplies a quarter of Europe’s needs. ... Both the Azeri and Turkmen leaders said they wanted to improve relations and diversify their export routes — a natural move, analysts said. The vast majority of Turkmenistan’s gas currently travels north to Europe through Russia’s network of pipes.
Because the BTC pipeline gives the USSR's former breakaway republics a way to deliver their petroleum to the world market without relying on Russia, Russia "steadfastly opposed" its construction, recognizing that "the new conduit stands to severely weaken Russia’s grip on regional energy exports."

For these reasons, it would be of enormous strategic benefit to Russia if it could reassert dominance over Georgia, or merely have an opportunity to demonstrate to Turkmenistan and Azerbaijain that any means of getting their petroleum products to market independent of Russia may be unreliable. These issues are a key subtext to Russia's conflict with Georgia and Georgia's desire to join NATO, and otherwise seek protection from the West.

One can only imagine the astonishment and glee with which Russia's leaders are observing Nancy Pelosi's nearly hysterical determination to prevent the United States from developing its own oil resources, and the fecklessness of Democratic Presidential nominee Barack Obama in the face of their aggression against an American ally.

Posted by John at 11:54 AM | |

http://www.powerlineblog.com/archives2/2008/08/021212.php