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Russia/Azerbaijan: Caspian Sea May Be The Next Great Oilfield

  • Robert Lyle

Washington, 19 February 1997 (RFE/RL) - A former U.S. defense secretary who now heads an oil and gas field equipment company says the Caspian sea could be the most important new source of oil for the world since the North Sea.

Richard Cheney, president and chief executive officer of a Dallas, Texas-based company actively involved in Western efforts to explore and develop Caspian sea energy resources, says the Caspian "may be the first world-class oil province to open since the North Sea."

However, he told a meeting of the U.S.-Azerbaijan Chamber of Commerce in Washington Tuesday, that realization of the area's potential depends on politics as well as commercial considerations. The struggle to get the oil to market involves a number of countries with competing interests, including Russia, Turkey, Iran and the United States.

Cheney says Russia "looms large over the entire region" and tries to assert continuing influence over Azerbaijan.

"Some would say Russia wants to keep Azerbaijan weak by hindering oil exports, with a fall-back position that if Azeri oil does flow, that it goes through Russian territory," he says.

He notes that Russia is "moving slowly" in allowing Azeri oil through its pipelines, but says that is understandable to some extent when Russia does not have capacity for its own oil exports. That will only change, said Cheney, "when it suits the Russian interest."

Economically, Cheney says Russia also wants to gain maximum benefit from resources from former Soviet states, especially demanding that it get credit for any economic or energy development which took place during Soviet days.

"Russia wants to maintain political leverage in the near abroad countries and it remains to be seen how far (Russia) will go in terms of economic pressure and political maneuvers to achieve its goals," he says.

Turkey, like Russia, wants to gain as much leverage over the Caspian sea resources as possible, looking particularly to gain from export pipeline routes, Cheney said. In addition, of course, Turkey is concerned over oil tanker traffic in the Bosporus Strait.

Complicating Turkish concerns, says Cheney, are the issues of the Kurdish insurgency, the Armenian-Azerbaijani conflict and its "deep suspicion with respect to Russia and Greece." Ankara also wants to maintain its "political significance" to the west, he says.

Cheney says Iran is a different story, although like Russia and Turkey it also wants to share in the economic benefits of developing Caspian resources. He says Iran has already made a swap arrangement with Kazakhstan for oil supplies in the northern part of Iran and knows that its proximity makes it the most direct export route for oil if pipelines could be constructed across its territory. That is why it supports the Russian and Turkmenistan position on a 45 mile national limit in the Caspian, said Cheney.

The United States, the fourth major player in the region, supports the political and economic independence of the former Soviet republics, but is constrained by its policy of containing both Iran and Iraq. Cheney said that policy actually gives Russia "more leverage over the states of Central Asia by blocking their exports to the south," thus contradicting the policy to encourage the independence and sovereignty of the ex-U.S.S.R. republics.

Cheney says U.S. law prohibiting aid to Azerbaijan is "seriously misguided," based only on domestic American political issues.

Azerbaijan itself has the most at stake, he says. "Azerbaijan's very independence and viability and survival are on the line," Cheney says. He says while it also wants to profit from its geopolitical influence and leverage, it mostly wants to get on with building its own nation, economy and political stability.

Cheney's company, Haliburn Energy Services, makes machinery and equipment for oil and gas exploration and production. It has a subsidiary company which builds pipelines and similar oil facilities.