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Central Asia Report: October 3, 2002

3 October 2002, Volume 2, Number 38

OILMEN IN ALMATY UPBEAT ABOUT REGION'S PROSPECTS... Opening the 10th annual international oil-and-gas conference KIOGE-2002 on 1 October in the former Kazakh capital Almaty, Prime Minister Imangaliy Tasmagambetov said that Kazakhstan, which produced 40 million tons of oil last year, eventually hoped to triple that figure, AFP reported. He admitted, however, that that was a best-case scenario. "By 2015, according to optimistic estimates, the total production of oil in the country will increase to between 120 million and 150 million tons of oil a year," Tasmagambetov said. Energy and Natural Resources Minister Vladimir Shkolnik added at a press conference that the country's oil industry had undergone a crisis following the Soviet collapse but now was "swiftly gaining momentum," Interfax-Kazakhstan reported on 1 October. Shkolnik noted that the mineral-and-raw-material sector presently accounted for 80 percent of the national economy.

Assessments at the conference of the future of Kazakhstan's hydrocarbon sector were upbeat. Tom Winterton, general director of TengizChevroil, which is developing the onshore Tengiz oil field, told AFP that the venture had the potential to produce 1 million barrels a day. Tengiz contains between 6 billion and 9 billion barrels of oil. Winterton added that TengizChevroil (in which ChevronTexaco has a 50 percent stake, ExxonMobil a 25 percent stake, and the Kazakh government a 20 percent stake) expected to invest a further $3 billion over the next few years to boost production.

There were other promises of continued investment from LUKoil Overseas, a subsidiary of the Russian company LUKoil, which manages the parent company's international projects. Azat Shamsuarov, vice president of LUKoil Overseas, told journalists in Almaty that his company's planned investments in oil and gas projects in Kazakhstan in 2003 could come to $250 million, Interfax-Kazakhstan reported on 1 October. The company owns shares in the development of the Karachaganak, Kumkol Severnii, and Tengiz fields.

Direct foreign investment in the country since it attained independence in 1991 amounts to about $13 billion. But according to the general manager of ExxonMobil Kazakhstan, James Taylor, investment in the country's hydrocarbon sector could reach $20 billion over the next five years, Interfax reported on 2 October.

It was also announced in Almaty that LUKoil and Kazakhstan's state oil-and-gas company, KazMunaiGaz, were drawing up an agreement jointly to exploit the Khvalynskoe structure in the northern Caspian Sea, Interfax said on 1 October. The head of KazMunaiGaz, Lyazzat Kiinov, made the announcement, adding that his company would be collaborating with Rosneft in the geological exploration of the Kurmangazy structure. In fact, Kiinov was jumping the gun a little. At the moment he was speaking, the bilateral agreement underpinning these ventures had not yet been ratified. It was signed by Russia and Kazakhstan in 1998 and followed up in May 2002 with a protocol establishing the geographic coordinates of a modified median line dividing the northern Caspian seabed between their countries. This protocol also provided for their equal participation in developing the Khvalynskoe field and Kurmangazy structure. The agreement, however, was only ratified by the Mazhilis (lower chamber of the Kazakh parliament) on 2 October, Interfax-Kazakhstan reported. The Mazhilis then sent it to the Senate (upper chamber) for consideration by that body.

...BUT RUSSIAN ENVOY AIMS BARBS AT BTC. Kazakhstan's export potential has been limited thus far by a lack of pipelines to transport energy from the landlocked region. The Caspian Pipeline Consortium (CPC) pipeline, stretching 1,580 kilometers from the Tengiz field to the Russian Black Sea port of Novorossiisk, currently pumps about 1 million tons of oil per month. ChevronTexaco CEO David O'Reilly told Interfax on 27 September that plans were afoot to increase the capacity of the CPC system threefold to 38 million tons a year.

Meanwhile, many Western and Kazakh oilmen's hopes for export expansion are pinned on the proposed Baku-Tbilisi-Ceyhan (BTC) pipeline, a $2.95 billion link from Azerbaijan to the Turkish port of Ceyhan. But Russia's Caspian envoy Viktor Kalyuzhnyi spoke out against the BTC pipeline in Almaty on 2 October. He stressed that new pipelines should be economically viable rather than built for political reasons, AP reported. "It is important that politics does not stand behind the choice of a new transport route, but that new routes are based on economic and ecological considerations," Kalyuzhnyi said. He made it clear in subsequent remarks that his criticism was aimed at the BTC pipeline. Washington has lobbied strongly for it because it would cut out Iran and, by obviating Russia, would reduce Moscow's control over Central Asian oil exports. Meanwhile, many analysts believe that a southern route through Iran would be both cheaper and logistically more feasible than the BTC line. Kalyuzhnyi averred that a route through Iran was promising and would be competitive, were it not for political considerations, Interfax-Kazakhstan reported. The Russian envoy also spoke positively about China, which, he said, was planning to import 50 million tons of oil next year and could be purchasing 200 million tons annually by 2020. As AFP noted on 2 October, China and Kazakhstan have mooted plans for a $3 billion, 2,800-kilometer pipeline carrying 20 million tons of oil per year from the Caspian to China's western Xinjiang province, but the project has stalled apparently due to financial impracticality.

AKSY TRIAL ABORTED FOLLOWING FIASCO. The first trial of officials charged in connection with the 17-18 March bloodshed in Aksy Raion, when police fired into crowds of antigovernment protesters, was supposed to open on 30 September in the district center Kerben. However, it was swiftly adjourned before it even got started, as furious spectators verbally and physically assaulted the defendants as they were led into the courtroom, RFE/RL reported.

The newspaper "Vechernii Bishkek" on 1 October listed the defendants' names and titles. The six defendants included four policemen: Daniyar Kuluev, the former chief of the district's department of the interior; his deputy, Abdimital Kalbayav; Kubanych Tokobaev, chief of police for Aksy Raion; and Alik Rakishev, former head of criminal investigations for Djalalabad Oblast. The other two defendants were Abdykalyk Kaldarov and Shermamat Osmonov, the district's former prosecutor-general and former head of administration, respectively. The men have been charged with abuse of power, RFE/RL's Bishkek bureau reported. All have pleaded innocent. (According to a statement on 3 June by Kyrgyz Prosecutor-General Chubak Abyshkaev, it was Kuluev who gave the order to police to fire at demonstrators.)

The hearing was formally a sitting of the military court of the Osh garrison, which had traveled to Kerben for the trial. It was presided over by the garrison's judge, Bakyt Arabaev, AKIpress said. Some 300 people, the majority of whom were reportedly relatives of those killed in the March clashes, filled the courthouse and spilled onto the street outside. As the defendants were escorted into the building, the crowd pressed in on them, pulling at their clothes and grabbing them by their shirtfronts. The sixth defendant, Osmonov, never even got into the courtroom. The crowd taunted and shouted at the accused men. Unable to bring the court to order, Judge Arabaev postponed the trial for an indefinite period. The defendants, who were at liberty, having promised in writing not to leave the area, returned home, "Vechernii Bishkek" reported.

Following this fiasco, the authorities circulated other, face-saving accounts of why the hearing was put off. Prosecutor-General Abyshkaev explained that it had been postponed to allow the defense time to the prepare its case, RFE/RL said on 30 September. AKIpress reported the same day that the judge halted the trial because some of the defendants did not show up. But on 1 October, Abyshkaev told Interfax that the venue would probably be moved to the capital Bishkek because of "certain actions taken by Kerben residents." Opposition parliamentarian Azimbek Beknazarov went so far as to claim that the original decision to hold the trial in Kerben was a form of provocation by the government, intended to madden the victims' relatives into flouting the law, the news agency reported.

On 2 October, hundreds of demonstrators in Bishkek gathered near the main government building to protest in favor of the four accused policemen and demand their acquittal, RFE/RL reported. Many of them were friends and relatives of the accused, according to Interfax. They demanded that authorities stop persecuting scapegoats and bring those truly guilty to justice. In connection with this, the former prosecutor-general, the governor of Djalalabad Oblast, the former presidential chief of staff, and the former interior minister were named by the crowd, Interfax said. The protesters also wanted a new venue for the trial away from Kerben. If their demands were not met by 10 October, they warned that large-scale rallies would be organized throughout Kyrgyzstan.

Meanwhile, several hundred more people demonstrated in the south of the country with similar demands. In Bazar-Kurgan in Djalalabad Oblast, supporters of the policemen picketed the governor's office, threatening that protests would continue unless the authorities' investigations and accusations were less "one-sided," AKIpress reported on 2 October. Simultaneously in the city of Osh, protesters said they would stage rallies for a month unless the accused policemen got a fair trial, as well as better protection from those supposed to be guarding them.

U.S-TURKMEN COMMERCIAL AGREEMENT HAILED AS PAVING WAY FOR TRANS-AFGHAN PIPELINE... On 27 September in the Turkmen capital Ashgabat, President Saparmurat Niyazov received Greg Barton, chairman of the board and CEO of Caterpillar Inc., and signed a long-term agreement with the U.S. firm. In accordance with the agreement, between 2002 and 2010 the company will supply Turkmenistan annually with up to 200 excavators, bulldozers, and other machines for highway and pipeline construction (see "RFE/RL Newsline," 30 September 2002). Barton told Turkmen television the same day that Caterpillar anticipated involvement in developing the country's transportation infrastructure, water resources, and hydrocarbon industry, as well as in constructing a trans-Afghan pipeline. According to a press release by the Turkmen Foreign Ministry, Barton said there was support for the pipeline project in the United States "together with a firm belief that it is timely and justified."

Niyazov, in turn, told his guest that the project was winning backers among international financial institutions, and added, "Your participation and the participation of other large U.S. companies in this project will be an additional guarantee of its success," Interfax reported. On 16 September, representatives of Turkmenistan, Afghanistan, and Pakistan convened in the Afghan capital Kabul and agreed to move ahead with the planned pipeline. It would stretch nearly 1,500 kilometers and connect Turkmenistan's Dowletabat-Donmez natural-gas fields with the industrial city of Multan in central Pakistan. The envoys signed the framework for a feasibility study to be financed by the Asian Development Bank (ADB), dpa reported. CNN added that they were due to meet again in October in Turkmenistan to discuss how to proceed with the project once that study is completed. However, serious questions remain about financing the $2.4 billion pipeline. The Itochu conglomerate of Japan has expressed interest in investing. But, although ADB representative Seethapathy Chander said in Kabul that financing arrangements would start in June 2003 and construction would begin soon afterward, most analysts consider that prognostication wildly optimistic.

...BUT ASHGABAT STILL FAITHFUL TO ITS PRESENT CUSTOMERS. Also on 27 September, Niyazov stressed that the focus on a trans-Afghan pipeline did not signify any change in the orientation of Turkmenistan's gas-export policy. "We have agreements with Ukraine, Iran, and Russia on gas supplies, and we will strictly keep to them," he said, as quoted by Interfax.

Four days later, Niyazov held talks with Yuriy Boyko, chairman of the board of Ukraine's national oil-and-gas company Naftohaz Ukrayiny. They agreed that in 2003 Ukraine would purchase 36 billion cubic meters of Turkmen gas at a price of $44 per 1,000 cubic meters (see "RFE/RL Newsline," 2 October 2002). This year, Ashgabat has been selling its gas to Kyiv for $42 per 1,000 cubic meters paid in equal shares with goods, services, investment, and currency. The agreement with Boyko stipulates that hard currency will be used for half of the payments and the other half will be invested in various Turkmen projects, RFE/RL said. Ukrainian companies have signed contracts for projects including the construction of a railroad bridge across the Amu Darya River, compressor stations, water-supply infrastructure, and drainage tunnels under Ashgabat, Interfax noted on 1 October.

Russian Energy Minister Igor Yusufov saw Niyazov in Ashgabat on 19 September and stated that Russia intended to buy 10 billion cubic meters of Turkmen gas in 2005 and 20 billion cubic meters by 2008. Niyazov also concluded a contract with the international energy corporation Itera in January for the purchase of 10 billion cubic meters of gas.