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Caucasus: Oil Companies Make Ultimate Pipeline Route Decisions

By Davit Berdzenishvili

Tbilisi, 12 November 1998 (RFE/RL) -- Late last month (Oct. 29), during the celebrations in Ankara to mark the 75th anniversary of the founding of the Turkish Republic, the presidents of Turkey, Georgia, Azerbaijan, Kazakhstan and Uzbekistan and the U.S. Energy Secretary signed a political declaration of support for the Baku-Ceyhan route as the main export pipeline for Caspian oil. But that declaration may prove to be a Pyrrhic victory for the signatories, as the declaration is purely symbolic.

The crucial decision on the choice of a pipeline route lies with the oil companies. Since their merger the oil giants BP and Amoco -- which between them own a 34 percent stake in the consortium engaged in exploiting Azerbaijan's Azeri, Chirag and Gyuneshli oil fields -- have reassessed the politicians' wishes. Their verdict was that the Baku-Ceyhan route is expensive and not without risk. Nor is there any firm guarantee that in the next few years the volume of oil extracted in the Caspian Sea will reach the 100-120 million metric tons needed to make the Ceyhan route commercially viable.

Consequently, the Ceyhan route is only a future possibility. At present, the main focus is on the route from Baku to the Georgian Black Sea port of Supsa, which will have an annual throughput capacity of 12-15 million metric tons once repairs to it are completed. The pipeline from Baku to the Russian Black Sea port of Novorossiisk can also transport almost that amount. Work on the Azerbaijani section of the Baku-Supsa pipeline is finished, and repairs to the Georgian section should be completed next February. The export of Azerbaijan's Caspian crude to world markets through that pipeline should begin on April 1, 1999.

The routing of oil and gas pipelines via Georgia will mark the practical implementation of the concept of creating a "geopolitical belt around Russia." That concept was drawn up by Zbigniew Brzezinski in the early 1990s.

Beginning in 1993, some pro-Western organizations in Georgia began to promote the possibility and advantages of creating a geopolitical arc comprising the countries of the Caspian and Black Sea basins. Georgia and Azerbaijan were conceived of as a bridge, as the backbone of a Eurasian corridor that would link Eastern Europe with Central Asia and, on a global scale, Western Europe with the Pacific Basin. Creation of a Eurasian corridor that would separate an unstable Russia from the fundamentalist East was perceived as being in the interests of both the U.S. and Europe.

The Georgian authorities' initial reaction was that the proposal was naive and hopelessly romantic, and would place tiny Georgia in opposition to powerful Russia. But a number of factors -- Azerbaijan's firm commitment, the support of Euro-Atlantic structures and their growing interest in the region, the clear hostility towards Georgian leader Eduard Shevardnadze on the part of a weakened Russia -- soon impelled the Georgian leadership to adopt a pro-Western course. Today Georgia has a key role in the Eurasian corridor project.

The U.S. Congress is currently creating the legislative basis for making the revived "Silk Road" a reality. That project envisages the creation of a grandiose communications highway -- with oil and gas pipelines along the floor of the Caspian Sea by which Central Asian and Caspian oil and gas will be transported to world markets. At first glance, it appears that Georgia would benefit from the fact that the Baku-Supsa route is acknowledged to be the most realistic. That pipeline runs through a longer stretch of Georgian territory than does the alternative route to Ceyhan, and therefore Georgia would earn more in tariffs. But there is a more serious aspect to the pipeline issue: the choice of the Baku-Ceyhan route was intended to intensify the political and economic cooperation between the western-oriented states of the region -- Turkey, Georgia and Azerbaijan. That trio was intended to balance the growing military-political cooperation between Russia, Armenia and Iran. If Turkey is left out of the proposed Azerbaijan-Georgia-Turkey linkage, that could seriously weaken that linkage and strengthen anti-western forces within Turkey.

Ankara has already stated that it does not intend to turn the Bosporus and Turkish straits, which are under its jurisdiction, into an oil pipeline.

Russia, for its part, has the opportunity to increase exports via the Baku-Novorossiisk pipeline to the maximum, and thereby hinder the cooperation among Turkey, Georgia and Azerbaijan.

Iran -- for the moment -- remains out of the picture for purely political reasons, given that an Iranian pipeline route is the optimum one in every practical respect. But the U.S. is resolutely opposed -- a fallout of decades-old strains between Washington and Tehran.

At present, it is safe to conclude that the struggle over the export route for Caspian and Kazakh oil is not yet over.

(Davit Berdzenishvili is a Tbilisi-based contributor to RFE/RL. The feature was translated by Elizabeth Fuller.)