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Central Asia: Kazakhstan, Turkmenistan Face Decisions On Oil Routes

Kazakhstan and Turkmenistan are both reported ready for steps to promote Western petroleum pipelines. But both countries face fears about Russian reactions and concerns about their economic security. Correspondent Michael Lelyveld reports.

Boston, 24 August 2000 (RFE/RL) -- The past week has brought good news for two Caspian pipeline projects that are backed by the United States, but many questions remain unresolved.

On Monday, the outlook brightened for the Baku-Ceyhan pipeline after Georgian President Eduard Shevardnadze reported a pledge by Kazakh President Nursultan Nazarbaev to provide 20 million tons of oil for the line annually. Kazakhstan is also said to be planning to increase its rail shipments of oil through Georgia by 10 million tons.

According to Shevardnadze, Nazarbaev made the commitments during a meeting at the informal CIS summit in Yalta last Friday. The report coincided with a new forecast by Kazakh Economy Minister Zhaksybek Kulekeev that the country would double its yearly output of oil and gas condensate to at least 60 million tons by 2005.

Kazakhstan has been predicting enormous growth in production since its recent announcement of a major discovery at its offshore Kashagan oil field. U.S. officials hope that Kazakhstan will be a source for the oil volumes that are needed to justify building the Baku-Ceyhan line.

Prospects also improved for the trans-Caspian gas pipeline, with reports that Turkmenistan President Saparmurat Niyazov may soon be ready to pursue the project with Royal Dutch/Shell after months of delay.

Last week, The Wall Street Journal quoted an unnamed Shell executive as saying it would be "days or at most weeks" before the company receives Niyazov's official approval for the project.

The trans-Caspian line from Turkmenistan to Turkey has been stalled by Niyazov's insistence on better financial terms. But now the president is said to fear the loss of Turkey's gas market to Russia, Iran and Azerbaijan as those countries push ahead with their own pipeline plans.

Progress may be possible for both of the U.S.-backed pipelines from the Caspian, particularly now that a growing number of oil companies have voiced interest in taking shares in the construction of Baku-Ceyhan. The two lines would create the energy corridor through the Caucasus that has been sought for so long by the United States, Turkey, Georgia, and Azerbaijan.

But the latest reports still leave a series of difficult questions.

In the case of Baku-Ceyhan, there has been no verification so far from Nazarbaev that he has committed substantial volumes of Kazakh oil to the line. The Kazakh leader made an identical pledge last November when agreements for the pipeline were signed at the OSCE security summit in Istanbul. Days later, he retracted the promise, saying it was only made under pressure.

Soon after, Nazarbaev instead increased his exports through Russian pipelines. This time, the talks with Shevardnadze at Yalta apparently took place in the absence of Russian President Vladimir Putin, who cut short his visit due to the crisis over the sinking of the submarine Kursk. The question is whether Nazarbaev will stick to his latest promise for Baku-Ceyhan if he comes under Russian influence again.

Niyazov is said to be similarly concerned that an endorsement of the trans-Caspian plan could cost him income from lost gas sales to Russia. In May, during a visit to Ashgabat, Putin and Niyazov discussed a huge increase in deliveries of Turkmen gas. But three months later, the two sides have still not agreed on a price.

Before the visit, the countries tried to negotiate a long-term increase of 30 billion cubic meters a year. They then announced that the increase would be 10 billion cubic meters a year for the near term. This week, Russia said it wanted only 8 billion cubic meters. But there is still no agreement on price. Russia is said to be offering substantially less than the rates it now pays for Turkmen gas.

Putin's visit did succeed in raising Niyazov's hopes, however. It also helped to delay the trans-Caspian project because of concerns that Russia would monopolize all of Turkmenistan's available gas supplies.

It remains to be seen whether the Russians are serious about gas purchases or only employing tactics against the competition. But at current rates of delivery, Turkmenistan's existing contract to supply 20 billion cubic meters of gas to Russia is likely to be fulfilled in October, leaving it with no exports after that unless a new deal is signed.

Both Turkmenistan and Kazakhstan now face decisions about pursuing alternatives to Russian export routes. But both countries are susceptible to Russian strategies. Both are also controlled by leaders whose commitments have proved elusive at best.

Their actions may be understandable for countries that seek security in the shadow of Russia. But their inaction in seeking new export routes seems likely to limit their chances for economic security.