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Russia: Moscow May Switch Pipeline Policy

Russia is reportedly clearing the way for its companies to participate in the Baku-Ceyhan pipeline project. The move may be part of a gradual shift in Moscow's Caspian Sea policy. Our correspondent Michael Lelyveld reports.

Boston, 28 May 2001 (RFE/RL) -- Russia may be changing its policy on the Baku-Ceyhan pipeline, marking a potential step toward cooperation on the Caspian Sea.

On Thursday (24 May), the "Turkish Daily News" reported that Russian Deputy Foreign Minister Ivan Ivanov had declared his country's willingness to join in the pipeline project.

Speaking at a conference on Russian-Turkish relations in Moscow, Ivanov repeated Moscow's view that the U.S.-backed line will not be commercially viable. But at the same time, he reportedly said that Russian companies could participate in the project, which may start next year.

Ivanov is quoted as saying, "We say that the line is not economic. You can go on with the construction of the pipeline. Our firms are ready to take part in the construction. And we will not assert any political conditions for this."

The statement appears to be a change in degree if not direction for the Russian government, which has gradually eased its opposition to the oil route from the Caspian to the Mediterranean Sea.

A U.S. government official in Washington, who spoke on condition of anonymity, voiced cautious optimism in a phone interview with RFE/RL. The official noted that Russia's Caspian envoy, Viktor Kalyuzhny, has previously made qualified pledges that Moscow would not block the $2.7 billion project.

But Kalyuzhny said in March only that Russia would not oppose "any pipelines, including the Baku-Ceyhan project, if they are economically profitable." He added that "Russia will not try to keep anyone from entering the Baku-Ceyhan project."

The Ivanov statement appears to take the policy a step further by declaring Russia's readiness to participate. It also seems to drop the condition that the line must be considered profitable from Moscow's point of view.

The U.S. official said, "We are in favor of Russian firms investing in the pipeline as investors, as shippers, and if they do so in an open and transparent manner, as constructors, as well."

According to the "Turkish Daily News," Ankara has responded to the Ivanov comments by officially inviting Russian companies to take part in the construction tender.

U.S. officials have been trying to convince Russia since at least 1999 to join the Baku-Ceyhan project rather than fight it. Russia's Lukoil has shown interest in using the line for its Caspian exports, but it has faced resistance from officials who want the oil to flow only through Russian territory.

The new acceptance of the 1,730-kilometer route from Azerbaijan through Georgia to the Turkish port of Ceyhan may reflect several developments.

First, the project is advancing with formation of a sponsor group of companies, the completion of a basic engineering study and a vote scheduled in June for a detailed engineering study to be completed in a year.

Secondly, U.S. officials may be slowly winning their argument that Russia could find the route useful. Two of Russia's pipelines from the region run to its northern Black Sea port of Novorossiysk, which is frequently closed in the winter due to storms. Baku-Ceyhan could give the Russians a reliable southern option.

Thirdly, Russia may be faced with the reality that its tanker traffic from Novorossiysk will clog the Bosporus, now that its pipeline from Kazakhstan's Tengiz oil field is about to begin deliveries. The problem has been Turkey's strongest case for using the Mediterranean port of Ceyhan.

In his comments, Ivanov said that Russia is aware of "certain technical problems," although he stressed that Turkey cannot limit Bosporus traffic under international agreements for use of the straits. But Russia's exports would be halted if an accident occurred, giving it a reason to gain access to other routes.

The arguments are not new, but all may be gaining weight with the passage of time, now that oil is flowing and plans are becoming reality. There may be no point for Russia to stay out of a project that will take place without it.

The U.S. official said, "The bottom line is there's oil for everyone there, and multiple routes are needed."

Russia may also be motivated by the idea that it could find a role in the security arrangements for the pipeline if it takes part in the project. It is unclear how such a possibility would be received.

Moscow started softening its stand on Baku-Ceyhan last year after Kazakhstan voiced interest in using the pipeline for some exports. The latest statements follow a warming in Russian relations with Azerbaijan.

Russia has argued that the project will not be economic without oil from Kazakhstan. But BP oil company officials said this month that they now believe Azerbaijan will have enough oil to fill the pipeline on its own.