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Caucasus: U.S. Returns To Multiple Pipelines

Boston, 26 October 1998 (RFE/RL) -- U.S. officials have changed their goals in the campaign for Caspian Sea pipeline routes, hoping to declare a partial victory in the face of high odds.

As the deadline approaches for a decision on pipelines, the choice of a route to Turkey's port of Ceyhan seems unlikely, despite support from the presidents of Azerbaijan, Turkey and the U.S.

The high cost of the Baku-Ceyhan line continues to trouble the members of the Azerbaijan International Operating Company. While they may agree not to exclude the option for the future, the oil companies are reluctant to commit funds to it now.

At a meeting Thursday, oil industry executives and U.S. National Security Council officials agreed that Baku-Ceyhan will only be commercially viable if Caspian volumes increase.

A smaller pipeline for "early oil" to Georgia's port of Supsa is nearly complete. Russia's existing line to Novorossiisk is also operating. Both routes have been proposed for larger pipelines. But the current capacity of the two smaller lines could be enough to serve the Caspian for several years to come.

While Washington is still pushing hard for Baku-Ceyhan, it has gradually dropped its insistence that the Turkish route must be the consortium's exclusive choice. Officials said this week that they now see it as just one of the multiple pipelines that should carry the Caspian's oil. In other words, they will be satisfied as long as Baku-Ceyhan is included in the mix.

On the surface, the "multiple pipeline policy" is the same thing that officials have advocated all along. But the history of U.S. positions over the past two years shows how much the position has changed.

When the term was first used in 1996, National Security Council officials explained that multiple pipeline policy referred to support for three lines. But the Baku-Ceyhan line was the only one considered for Azerbaijan. The other two included a line from Kazakhstan's Tengiz oilfield to Novorossiisk. The third was the unrelated eastward gas line from Turkmenistan through Afghanistan to Pakistan.

Since then, the term "multiple pipelines" has become little more than a face-saving slogan, allowing adjustments in meanings as events change. In the past week, for example, U.S. officials argued that the United States would support any number of pipelines, as long as they include Baku-Ceyhan and avoid domination of the region by either Russia or Iran.

The distinction is important because it will allow Washington to modify its policy even further in the future without having to suffer the embarrassment of changing its name. A decision to choose Baku-Ceyhan exclusively is no longer a "make-or-break" issue for the vision of an east-west energy corridor. The use of the Georgian line to Supsa for the foreseeable future also allows U.S. officials to say that eastern oil is moving west. As long as oil is flowing to Supsa, it avoids the risk that the Caspian will be exclusively dependent on Russia and Novorossiisk, a core concern for the U.S. policy.

By supporting feasibility work on Baku-Ceyhan with the goal of building the line sometime in the future, officials can also argue that Turkish worries about Bosporus traffic will be dealt with for the greater volumes of oil.

Such a policy could even eventually make room for Caspian oil transit through Iran, as long as flows also continue toward the west and there is no hint of dependence or control.

The biggest advantage of such an interpretation is that it can avoid an admission of failure if the AIOC postpones a decision on Oct. 29, or if it decides to do nothing at all and use Georgia's and Russia's "early oil" lines for now.

While attention has focused on Baku-Ceyhan, Central Asian nations have been quietly diversifying their export routes. Earlier this month, Turkmenistan and Kazakhstan took steps toward opening energy transit through Iran. France's Total SA has agreed to undertake a feasibility study of an oil pipeline from the two republics to the Persian Gulf, announced earlier this year.

Petronas of Malaysia and Britain's Monument Oil and Gas are also planning to trade Turkmen oil with Iran through the Caspian. In addition, Turkmenistan has announced that it will sign an agreement for gas sales to Turkey during President Saparmurat Niyazov's visit to Ankara on Oct. 29 as part of ceremonies celebrating the 75th anniversary of the Turkish Republic.

Reports suggest that the gas deal could be part of a plan to build a pipeline across Iran, which is now under study by Royal/Dutch Shell. The gas could also be delivered over Russian lines or a trans-Caspian pipeline through Azerbaijan, which is being sought by the United States.

But the increasing number of plans to seek alternate export outlets has prompted little comment or resistance, in contrast to the objections raised by Washington six months ago. The difference is that multiple-pipeline policy now seems to recognize that the problem of Caspian access is far too complex to yield to any single U.S.-backed plan.

(Lelyveld is National Correspondent for the Journal of Commerce. This analysis was written for RFE/RL)