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Russia: Kremlin Determined To Stay In Race For Caspian Oil

Moscow is pressing ahead with an oil pipeline around Chechnya, despite its success on the battlefield. In this analysis, RFE/RL correspondent Michael Lelyveld writes that the high cost of the project is a sign of Russia's determination to show that it can still control Caspian oil.

Boston, 11 February 2000 (RFE/RL) -- Russia may be spending almost as much to build a pipeline around Chechnya as to fight the war, suggesting that oil is playing a major part in the Kremlin's regional plans.

The state-owned pipeline company Transneft has estimated the cost of building the bypass around Chechnya at $160 million. On January 24, First Deputy Prime Minister Mikhail Kasyanov said that the war's cost in 1999 was about 5 billion rubles, or $174 million. Both figures are open to question, but they appear to indicate a comparable expense, at least in terms of cold cash.

Russia seems to be racing ahead with the bypass line, even though it has captured and secured central Grozny. On Monday, Deputy Fuel and Energy Minister Vladimir Stanev said that Transneft has laid 147 kilometers of pipe, or about half of the 312-kilometer detour around Chechnya.

The route through Dagestan is intended to replace Russia's broken link through Grozny and complete the Caspian oil passage from Baku to Novorossiysk. Stanev claimed that Transneft is working at the astonishing rate of 25 kilometers per week, allowing completion on schedule sometime next month.

If the rate is correct, it would represent an impressive commitment of manpower, materials and resources. It implies that Transneft has been laying over 3,500 meters of pipe per day. But other Russian statements may call the claim into doubt.

On February 1, Transneft Vice President Sergey Grigoryev said that 138 kilometers of line had been "assembled and installed." The figure implies that only nine kilometers of line were laid last week, not 25. Alternately, Stanev's figure may be for pipes laid on the ground but not welded in place.

In either case, the statements seem to show the eagerness of officials to demonstrate to their superiors and the world that they are pressing ahead with the project, which was ordered by Prime Minister Vladimir Putin before he became acting president.

The bypass plan appears to be aimed at convincing Chechnya rebels that Grozny will never again have strategic value, despite its previous importance as a route for a pipeline and a railway, as well as Chechnya's own oil. The message to the world is that Russia will control an export route from the Caspian, no matter what the future of conflicts in the Caucasus.

But the message to the Chechens may be contradicted, in part, by reports that the Russian oil company Rosneft has been granted temporary rights to Chechnya's oil and gas resources.

Most of the petroleum installations are located in and around the ruins of Grozny, but apparently, they are still important enough to attract commercial interest. How Rosneft plans to move the resources without a pipeline or a railway is still a mystery. An alternate interpretation is that both will be restored, and Grozny will retain strategic importance, after all.

Late last month, Putin aide Sergei Chizhov cast doubt on the value of the bypass project, in light of Moscow's progress in winning the war.

"Should $150 million be wasted? Personally, I do not rule out the possibility that the project may be buried," said Chizhov, as quoted by the Caspian Times.

Whether or not it proves useful, Transneft officials may be trying to show their own value by completing the Putin project as ordered and on time. The timetable suggests that Putin may see apolitical benefit in getting it done before the March 26 presidential vote.

For the time being, at least, there is no oil to put into the pipeline, raising doubts about the economic purpose and the haste. Azerbaijan has stopped shipping oil along the current pipeline and rail route to Novorossiysk because of the need to refine fuel oil for its shortage-stricken power plants.

Transneft's Grigoryev said the company may seek oil from Kazakhstan and Turkmenistan if Azerbaijan decides not to use the pipeline.

But volumes of Turkmen oil are still small, while Kazakhstan is already shipping oil through its northern connection with other Russian lines. Another new line from Kazakhstan to Novorossiysk is also under construction by the Caspian Pipeline Consortium.

The Kremlin's insistence on the bypass seems to be a sign that it will pay almost any price to stay in the race for Caspian oil, whether the pipeline is needed or not. The cost in human terms has been infinitely higher, but so far, Russia has not taken it into account.