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Russia: Official Seeks Kazakh Explanation On Pipeline

Russian Deputy Foreign Minister Viktor Kalyuzhny has reportedly demanded an explanation from Kazakhstan for its recent support of the Baku-Ceyhan pipeline. The implied threat may only help to make the case that a western export route is needed for Caspian oil. Our correspondent Michael Lelyveld reports.

Boston, 13 March 2001 (RFE/RL) -- Russia's Caspian envoy Viktor Kalyuzhny appears to have reversed course on the Baku-Ceyhan pipeline in less than two weeks, declaring that he opposes Kazakhstan's plan to use the line for its oil exports.

Speaking last week (6 March), Kalyuzhny said he disapproves of Kazakhstan's moves to support the U.S.-backed pipeline project from Azerbaijan to Turkey's Mediterranean coast, Russia's RIA Novosti reported. Kalyuzhny spoke after Astana signed a protocol five days earlier with Azerbaijan, Turkey, and Georgia for transporting its oil through the pipeline.

In words with ominous implications, Kalyuzhny said Kazakhstan should explain to Russia why it is considering taking part in the Baku-Ceyhan project. Instead, Astana should pursue a policy to create an "energy balance" with Russia and cooperate on oil transit, he said.

The statement followed an interview with Kalyuzhny published by Vremya Novostei on 23 February in which the deputy foreign minister downplayed any conflict with Baku-Ceyhan by saying it would not affect Russian interests. The comment was seen as a sign that Russia might be coming to accept the project, which has recently made progress amid reports that even Russian oil companies might want to use the line for exports.

Kalyuzhny's tougher tone against Kazakhstan may have resulted from a backlash against his earlier statement, or it may simply have been another instance of his unpredictable diplomacy. Kalyuzhny's performance has been under scrutiny since he was named as Caspian envoy after his dismissal as Russia's fuel and energy minister last May.

His handling of relations with Iran on the Caspian has also had mixed results. Although he had previously accused the Iranians of stalling negotiations on the Caspian division issue, Kalyuzhny received a public welcome during a meeting in Tehran last month.

But the remarks about Kazakhstan may have added significance because of the country's heavy dependence on Russia for its export routes. Russia has steadily raised Kazakhstan's quota for oil exports through its pipelines. Kalyuzhny's demand for an explanation seems to be intended as a reminder of Moscow's power and control.

Although reports differ on the importance of Kazakh oil to the Baku-Ceyhan project, it is generally seen as needed to make the project a commercial success.

Despite Kalyuzhny's warning, Kazakhstan President Nursultan Nazarbaev said 6 March on local television that his country would take "a purely pragmatic approach" to export routes, including both Baku-Ceyhan and a possible pipeline through Iran.

But prospects for Baku-Ceyhan have gotten a boost as a series of Western oil companies have voiced interest in joining a sponsor group. The recent naming of Italy's Agip to develop Kazakhstan's giant Kashagan oil field in the Caspian also seems to be a step forward for the westward pipeline.

Nazarbaev has suggested that "early oil" from Kashagan could flow through Baku-Ceyhan. Agip's parent company, ENI of Italy, also favors the pipeline, according to the FSU Monitor of Petroleum Argus, a London-based newsletter on the oil industry. Last week, the publication quoted an ENI official as denying interest in a pipeline through Iran, saying, "I expect Baku-Ceyhan conditions to be more favorable in both fiscal and political terms, if the project goes ahead."

Petroleum Argus also reported that Russia's Lukoil may want to use Baku-Ceyhan. The newsletter quoted unnamed sources at the company as suggesting that it could consider the line for exporting its share of oil from Azerbaijan's "deal of the century" Caspian offshore fields.

Such a sentiment from a Russian company would come as a blow to opponents of Baku-Ceyhan, even if Moscow succeeds in blocking its use of the line. Supporters have continually argued that the western route from the Caspian is needed. Kalyuzhny's attempt to intimidate Kazakhstan may only help to make the case.