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Russia: Questions Persist Concerning Completed Bypass Oil Pipeline

Russia announced this week that its bypass oil pipeline around Chechnya is complete, but questions about its purpose may be only beginning. Our correspondent Michael Lelyveld reports:

Boston, 29 March 2000 (RFE/RL) -- Russia has defied its critics and the doubts of industry experts by completing a pipeline around Chechnya as promised and on time. But it may be harder than ever to determine what purpose the pipeline will serve.

On Monday, a vice president of the Russian pipeline company Transneft told the Reuters news agency that the oil bypass has been completed and will go into service next month. The project was ordered by then-Prime Minister Vladimir Putin last September and was predicted to take no more than six months.

Since that time, the destruction of Chechnya has also been accomplished. Satellite photos of Grozny, published Sunday by The New York Times, have made clear how complete the devastation has been.

The two huge undertakings -- the construction and the destruction -- may be signs of Putin's future policies as he assumes the mantle of president. Russia's two simultaneous operations -- the bombing and the building -- may have few historical parallels. Russia has spent vast sums on both, although it may be years before the full costs are known.

The 312-kilometer bypass line was estimated to cost $160 million earlier this year. The figure was more than the $100 million that Transneft first predicted but far less than the $250 million that some Russian officials thought would be spent.

Plans for financing the project have taken almost as many twists and turns as the pipeline itself. Transneft first tried to sell shares to Azerbaijan and other Caspian countries, but they showed no interest. Transneft's announcement of a loan from the European Bank for Reconstruction and Development proved false. Another plan calling for 75 percent ownership by Russian oil companies also fell flat.

But it has long been apparent that price was no object in building the pipeline. Putin made it a priority, and Transneft had no choice but to make sure that it was done. Pipeline tariffs from Russian oil producers are now said to be paying for the line.

But the real purpose of the project may be harder to pin down. Like an earlier bypass plan that was abandoned in 1997, the detour on the line from Baku to Novorossiysk was supposed to keep Chechnya from ever blocking Russian oil transit or stealing supplies again.

By moving the line north and demanding that it be built in time for the presidential election, Putin may have been showing a lack of confidence that Chechnya could be secured and pacified in the time he had promised to wind up the war. Once Moscow appeared to be winning, some Russian advisers spoke openly about halting the pipeline construction and returning to the route through Grozny, which was occupied.

But construction continued at the furious pace of 25 kilometers per week, or even more. In the meantime, Russia's transport of oil from Baku by rail around Chechnya stopped in January, when Azerbaijan ran short of supplies for its own power plants.

This week, Transneft's vice president, Sergei Grigoriev, said the line would carry local oil from Daghestan and 40,000 barrels of oil per day from Turkmenistan and Kazakhstan, instead of relying on Azerbaijani oil. The oil from the Caspian countries would be barged to the port of Makhachkala, where a 17-kilometer link to the Baku-Novorossiysk line is being built.

Several conclusions can be drawn from the plan. First, Russia seems to have given up hope that the project will fulfill the aim that was intended, namely to assure uninterrupted oil flows from Baku. Now, Transneft does not expect to get Azeri oil. The new plan is for relatively minor amounts from Turkmenistan and Kazakhstan. So far, there seems to be no confirmation that contracts exist even for those small volumes on the circuitous route to the Black Sea.

The pipeline now seems to be in search of a purpose. The original reason for the Novorossiysk route was to demonstrate the viability of the option for a main export pipeline through Russia instead of one through Georgia or Iran. But the loss of Azerbaijani oil hardly suggests viability.

The lack of Azerbaijani demand for the Russian route must have become apparent to Transneft officials some months ago. But instead of halting their project, they were compelled to press ahead.

Stopping construction for the second time since the bypass plan was dropped in 1997 would not only have disappointed Putin. It would have undercut confidence in all bypass plans, including those for an oil line around Ukraine and a similar detour around the Baltic nations. Bypass lines are a form of pressure on transit countries. They must not be seen as bluffs. With the impressive speed of its project, Transneft has at least proved that Russian threats can be carried out.

The loop around Chechnya also completes the destruction of its strategic value. It will never again be important to Russia as a Caspian route, even if oil begins to flow again from Baku. Chechnya's own oil, which is to be developed by Russian companies, may now be transported only by truck or rail.

In the long term, the bypass around Chechnya may prove pointless and counterproductive. But Putin may only have been thinking as far as March 26. Now that he has a new presidency and a new pipeline, the purpose of both may emerge.