Replies to post #3851 on Foreign Correspondence

[Amaunet]

Pipelineistan's biggest game begins
By Pepe Escobar



May 26, 2005

History may judge it as one of the capital moves of the 21st century's New Great Game: May 25, the day high-quality Caspian light crude started flowing through the Caucasus toward the Mediterranean in Turkey. The Baku-Tbilisi-Ceyhan pipeline (BTC) - conceived by the US as the ultimate Western escape route from dependence on oil from the Persian Gulf - is finally in business.

This is what Pipelineistan is all about: a supreme law unto itself - untouchable by national sovereignty, serious environmental concerns (expressed both in the Caucasus and in Europe), labor legislation, protests against the World Bank, not to mention mountains 2,700 meters high and 1,500 small rivers. BTC took 10 years of hard work and at least US$4 billion - $3 billion of which is in bank loans. BTC is not merely a pipeline: it is a sovereign state.

This BTC state slices Azerbaijan in half from east to west, then slices Georgia in half almost from east to west, before taking a dip south, bypassing secessionist Ajaria and slicing Turkish Anatolia diagonally from the northeast toward the south. The founding stone is at British Petroleum's (BP's) gleaming terminal at Sangachal, half an hour along the Caspian south of Baku. The state is 44 meters wide, snaking 1,767 kilometers across three countries, two of those (Azerbaijan and Georgia) extremely volatile, and the other (Turkey) faces potential trouble from dispossessed Kurds.

The pipeline itself is only 126 centimeters wide, a dizzying steel serpent of no less than 150,000 segments made in Japan, finished in Malaysia and delivered by ship to the Georgian port of Batumi, capital of the separatist micro-republic of Adjaria - which is virtually uncontrolled by Tbilisi.

To understand the scope and ambition of BTC, one must visit Villa Petrolea, the Baku headquarters of BP. The BTC's major shareholders are BP (30.1%) and the Azerbaijani state oil company SOCAR (25%), followed by Unocal (US, 8.9%), Statoil (Norway, 8.71%), Turkish Petroleum (6.53%), ENI (Italy, 5%), TotalFinaElf (France, 5%), Itochu (Japan, 3.4%), ConocoPhillips (US, 2.5%), Inpex (Japan, 2.5%) and Delta Hess (a joint venture of Saudi Delta Oil with American Amerada, 2.36%).

BP has invested at least $15 billion in the country (exploration, exploitation, pipeline construction). According to Baku's street wisdom, the man who really rules Azerbaijan is David Woodward, BP's chairman, known as "the viceroy", a walking oil atlas with more than three decades working for the company from Scotland to Abu Dhabi and from Alaska to Siberia. Woodward and BP mercilessly spin that BTC is the cleanest and safest pipeline ever built. Georgian peasants and English non-governmental organizations beg to differ.

Dynasty, Caucasus-style
BTC would be impossible without the usual, strategically positioned US-supported dictator - in this case old, ruthless Caucasus hand Heydar Aliyev, who died in December 2003. A dynastic dictatorship is even better, since his son Ilham became the successor in fraudulent elections in October 2003. It also helped that Ilham, a former playboy, happened to be the head of the state oil company, SOCAR. Azerbaijan was never about "liberty and democracy" or color-coded revolutions in the style of Georgia, Ukraine and Kyrgyzstan. Just last Saturday in Baku, Azeri police beat up and arrested more than 100 opposition protesters demanding "Freedom!" and "Free elections!" This is a regime that according to Transparency International ranks 140th out of 146 in the global corruption index. From Washington's point of view, the Aliyev dynasty in Azerbaijan performs the same role as Islam Karimov in Uzbekistan: they are "our" dictators.

Azerbaijan, Georgia and Turkey were all desperate to finish BTC on time. Turkey owes a fortune to the International Monetary Fund. Georgia survives thanks largely to American handouts. Azerbaijan at least set up a state oil fund to use oil revenues to the benefit of future generations. But very few Azeris believe in the corporate myth that BTC will enrich them. Real life can be found less than a kilometer from downtown Baku: huge families crammed in Soviet-style communal apartments with scarce water and electricity. Azerbaijan could easily be pinned down as a land of rickety Ladas and Volgas crisscrossed by an armada of white BP 4x4s with satellite dishes on top - which allow the headquarters either in London or Baku to immediately locate all "troops" anywhere in the volatile Caucasus. The only other flourishing industry in the Caucasus, apart from oil, is kidnapping. Not to mention Kristina, the top belly-dancer at the Karavanserai, the favorite restaurant of the oil oligarchy, who is in a class by herself.

In Georgia the obstacles were more complex than in Azerbaijan. Thus the "Rose Revolution" of late 2003, getting rid of Edward Shevardnadze to the benefit of young, photogenic, American-educated and American-aligned Mikhail Saakashvili. The small matter of defending BTC from attacks of alleged al-Qaeda-related Chechens holed up in the Georgian mountains remains. But at least protection at the end of BTC in Ceyhan in Turkey is guaranteed: it's not a coincidence that the pipeline ends right next door to the massive American airbase at Incirlik.

Game not over
In terms of no-holds-barred power politics and oil geopolitics, BTC is the real deal - a key component in the US's overall strategy of wrestling the Caucasus and Central Asia away from Russia - and bypassing Iranian oil and gas routes. Kazakh President Nursultan Nazarbaev, for instance, has just announced that Kazakh crude will also flow through the BTC before 2010. He even proposed to add Aktau - the Kazakh Caspian oil Mecca - to a new acronym (ABTC?). It's interesting to remember that BP always denied that it needs Kazakh oil to fill its pipeline.

Everything related to BTC spells tremendous ambition. It will take a few months to fill the pipeline - and for the supertankers at Ceyhan to be loaded with Caspian crude, thus bypassing the highly congested Bosphorus. BTC is projected to reach 1 million barrels a day - roughly 1.2% of global production. Compare it with the 500,000 barrels of the Caspian Pipeline Consortium, which moves crude from Baku to the Russian port of Novorossiysk.

BTC makes little sense in economic terms. Oil experts know that the most cost-effective routes from the Caspian would be south through Iran or north through Russia. But BTC is a designer masterpiece of power politics - from the point of view of Washington and its corporate allies. US Vice President Dick Cheney, already in his previous incarnation as Halliburton chief, has always been a huge cheerleader for the "strategically significant" BTC. The verdict is open on whether this massive investment will be worth it. Instead of the dreams of a new Kuwait, the Caspian may hold only 32 billion barrels of oil - not much more than the reserves of Qatar, a small Gulf producer. The Caspian in fact may hold less than 10% of the total, known Middle East reserves.

Anyway, what really matters is positioning in the New Great Game. The Caucasus, the Caspian and Central Asia are up for grabs. European customers for Azeri (and Kazakh) oil and gas might rely on BTC for some of their supply. But the Russian counterpunch will come: President Vladimir Putin will not cease to seduce the European Union with loads of Russian, Caspian oil - plus strong protection - in return for loads of European Union investment. Ladies and gentlemen, place your bets.


http://www.atimes.com/atimes/Central_Asia/GE26Ag01.html

[otraque]

First Pipeline From Caspian Sea Opened By AIDA SULTANOVA, Associated Press Writer
41 minutes ago



SANGACHAL, Azerbaijan - The presidents of Azerbaijan, Georgia and Turkey pulled orange levers Wednesday to send the first flow of Caspian Sea crude into a $3.2 billion pipeline seen as key to reducing the West's reliance on Middle East oil.
By year's end, the 1,100-mile pipeline is to ship up to 1 million barrels a day to Turkey's Mediterranean port of Ceyhan.

President Bush, whose administration is seeking to diversify energy sources, said in a letter read at the ceremony by Energy Secretary Samuel Bodman that the pipeline "opens a new era in the Caspian Basin's development."

"The United States has consistently supported (the pipeline) because we believe in the project's ability to bolster energy security, strengthen participating countries' energy diversity, enhance regional cooperation and expand international investment opportunities," Bush's letter said.

The U.S.-backed pipeline realizes several crucial goals for Washington, including reducing dependence on Russian pipelines and avoiding Iran. While the pipeline crosses areas plagued by separatist conflicts, raising security concerns, the countries hope it will be a catalyst for calm and prosperity as well.

The Baku-Tbilisi-Ceyhan, or BTC, pipeline aims to boost access by the energy-hungry West to the rich Caspian fields, estimated to hold the world's third-largest reserves. Iran, Russia, Azerbaijan, Turkmenistan and Kazakhstan all claim shares of the undersea wealth.

Standing in front of a transparent section of pipe with Bodman and BP PLC Chief Executive John Brown, whose company leads the consortium that built the pipeline, the presidents pulled the levers that allowed the oil to flow through.

The pipeline "can be called the Silk Road of the 21st century," Turkish President Ahmet Necdet Sezer said during the ceremony at the Sangachal oil terminal, 25 miles south of Baku.

It "will take new supplies of oil to the world market and will help to demonstrate that security is best achieved by having multiple sources of supply and trade routes," said Brown.

But the plan to circumvent Russian pipelines has angered the Kremlin. Most Caspian oil exports go through Russian pipelines to the Black Sea port of Novorossiisk, where the oil is loaded onto tankers that squeeze through the busy Bosporus strait. Russian officials tried to persuade Azerbaijan not to sign on to the project.

Instead, Azerbaijan, Georgia and Turkey look to earn substantial revenue from the pipeline, through transit fees and royalties.

Azerbaijan is banking on the pipeline to swing international support behind Baku in its dispute with Armenia over the Nagorno-Karabakh enclave, which ethnic Armenian separatists took control of more than a decade ago. The conflict continues to simmer, undermining the region's security.

The underground pipeline passes within a few miles of Nagorno-Karabakh, and critics of the project have suggested it could be vulnerable to terrorist attacks at various points.

Azerbaijan also hopes the pipeline will raise its profile in the world, and it tightened security ahead of its inauguration. On Saturday, police broke up a banned demonstration by protesters demanding free elections and arrested demonstrators, with the government citing safety concerns ahead of the pipeline's opening.

Tensions between the government and the opposition in the tightly controlled former Soviet republic has increased since a 2003 election in which Ilham Aliev replaced his late father, Geidar Aliev, as president in a vote the opposition said was marred by fraud.

"This pipeline first of all will help solve economic and social problems, but the role of the pipeline in strengthening peace and security in the region also is not small," Aliev said at the ceremony.

The pipeline's route through Georgia does not pass near the two separatist areas in the north of that country, but does traverse comparatively wild areas in the nation where security is fragile. Some of its stretch in Turkey goes through conflict-prone Kurdish areas.

Georgian President Mikhail Saakashvili, who has sought to lessen Russia's influence on his small, impoverished country, suggested that the pipeline, by spurring investment, could undermine that influence.

"Because of our geographical position, we've been in the center of attention for various empires," he said in apparent reference to Russia. "However, today Georgia is changing into a place where the largest energy companies in the world are trying to make investments."

The drive for alternatives to Middle East oil intensified after the Sept. 11, 2001, terrorist attacks highlighted potential regional instability.

Once fully operational, the pipeline will represent a "significant" addition to Western oil supplies, said analyst Jason Kenney of ING Financial Markets, although because of the time needed to fill it, "you won't see exports until the later part of the year."

Other experts say the new oil will provide only short-term relief to a world that is consuming more crude every year. Oil prices, while down from their recent highs, are still around $50 a barrel.

Pipeline officials said it would take up to a month and a half to fill the Azerbaijani section. The Georgian part will be ready after that, and then the Turkish stretch, which Turkish authorities have said should be filled by Aug. 15.(

It will take approximately 10 million barrels of crude to fill the entire pipeline. Bodman said Tuesday that deliveries of oil to tankers at the terminal in Turkey are to begin in the fall.