RIA Novosti, Russia
June 6 2005
Baku-Tbilisi-Ceyhan Pipeline: Oil or Politics?
16:15
MOSCOW (RIA Novosti economic commentator Vasily Zubkov) – The
ceremony of commissioning the Azerbaijani section of the new
Baku-Tbilisi-Ceyhan (BTC) pipeline again drew the attention of
analysts to the project.
Moscow did not support the idea of the pipeline but did not interfere
with it either, though it had said that it would not provide oil to
it. Sergei Grigoryev, vice-president of Transneft, had said that each
state had an inalienable right to build what it needs. I would add,
even if the project were unprofitable. Baku cannot supply as much oil
as the new, highly expensive pipe from the Caspian to the
Mediterranean can pump. Nobody is talking any more about the
allegedly giant underwater oilfields on Azerbaijan’s shelf. The truth
is that the bulk of oil is concentrated on the eastern, Kazakh, coast
of the sea.
The competition of oil companies for transportation routes, which is
always tough, has never been so politically loaded as in the case of
the BTC, described as the main geopolitical project of the U.S. in
the former Soviet states. The late president of Azerbaijan Geidar
Aliyev had said that the pipeline would pump oil in one direction and
politics in the other. Oil has not started flowing west yet, but
Georgia, a member of the project, has been shaken by a pro-American
revolution.
Americans spent through the nose to create the first stage of the
Great Oil Road, laying pipes by a route bypassing Russia, which, as
it grew stronger economically, is making public its view of
developments in the former Soviet states, in particular on its
southern borders, increasingly often. But will this pipe lower the
transit potential of Russia?
The new supermodern ports on the Baltic Sea, the upgrading of the
Baltic Pipeline System to 60 million tons this year, and the nascent
construction of pipelines in Russia’s European north and the Far East
will guarantee Russia a long geopolitical transit life in Eurasia.
The rerouting of Azerbaijani oil from Novorossiisk to the new pipe
was hardly noticed, because it accounted for a mere 1% of Russia’s
oil exports. Baku says openly that it would like Russian oil
companies to become its clients; it needs them to ensure the BTC’s
estimated capacity of 50 million tons a year. Besides, the capacity
of the Russian pipe monopolist, Transneft, has been larger than the
oil output for a second year running, according to its president
Semyon Vainshtok. The production of oil is lagging behind the
construction and modernization of pipelines and ports, though this
year Transneft plans to increase export deliveries by 16% to 255
million tons.
There will be a surplus of pipe capacities in the future, and so
Russia does not plan to change export routes. A spokesman of LUKoil,
which works energetically on the Caspian shelf, told RIA that the
current rates and the absence of “lines” for Transneft’s pipe suit
his company. Rosneft and other oil majors do not plan to change
export routes either.
Russia plans to complete the construction of an alternative route to
the BTC, from Burgas in Bulgaria to Alexandroupolis in Greece,
bypassing the Turkish straits. It will be more profitable than the
BTC: its length is slightly more than 300km (1,767km in the case of
the BTC), its throughput capacity is 35-50 million tons (50 million)
and it will cost about $700 million (some $4 billion). With the
completion of this pipe, tankers with Russian oil will no longer have
to spend weeks in the Turkish straits.
Baku thinks that the Kazakh oil can “save” the BTC, to a degree.
President of Kazakhstan Nursultan Nazarbayev was the highest foreign
guest at the commissioning ceremony and expressed interest in the
pipe, but his republic will not hurry to sign a contract. This
proceeds from the recent statement by Lyazzat Kiinov, deputy minister
of energy. He said that his country had an operating project
Aktau-Baku and hence the new pipe would be filled exclusively by
Azerbaijani oil. Kazakhstan will ponder participation in the BTC
project only when the new pipeline to the Mediterranean is completed.
What effect would it have on the Transcaucasus? Though there is not
enough oil for the pipe so far, the aggregate capital of companies in
the BTC consortium is $1 trillion, which makes the pipe an instrument
of powerful political influence in the region. This is the opinion of
Eduard Agadzhanov, of the Armat Center of Democratic Development and
Civil Society (Armenia). In view of the unsettled Armenia-Azerbaijan
conflict over Nagorny Karabakh, the powerful U.S. assistance to Baku
is radically changing the geopolitical situation in the region.