-Caveat Lector-
http://www.vny.com/cf/News/upidetail.cfm?QID=231548
Caspian pipeline skirts trouble spots
Tuesday, 27 November 2001 19:14 (ET)
Caspian pipeline skirts trouble spots
By HIL ANDERSON, UPI Chief Energy Correspondent
Dignitaries from around the world gathered at a
Russian tanker port on the Black Sea Tuesday to mark
the grand opening of a 900-mile pipeline that has
thrown open the door to the vast oilfields of the
volatile Caspian Sea region.
The pipeline was built in a little more than a year by
the Caspian Pipeline Consortium and has been
operational at a rate of about 600,000 barrels per day
for more than a month. It links the huge Tenzig field
of western Kazakhstan to the seaport of Novorossiysk.
While probably not the most direct route to the open
sea, the CPC route runs well north of Afghanistan and
skirts the troubled Russian republic of Chechnya.
This pipeline will strengthen international energy
security by adding more than a million barrels of oil
a day to global supply, and by creating new jobs and
billions of dollars in revenue, said U.S. Secretary
of Energy Spencer Abraham, one of a number of
high-ranking officials from the United States, Russia
and Kazakhstan who attended Tuesday's ceremony in
Novorossiysk.
Novorossiysk has been a major tanker terminal for
Russian crude exports for many years, however it was
not the only choice for the terminus of a crude
pipeline from the Caspian.
It turned out to be the safest and most expedient
investment for the consortium, which spent about $2.65
billion on the project.
During the 1990s, the United States was anxious to see
increased amounts of Caspian oil reaching the world
market in order to further dilute the clout of OPEC
and other major producers. The Caspian has as much as
34 billion barrels of proven reserves and much larger
potential reserves, about a quarter of what the Middle
East holds and larger than the reserves in the United
States and North Sea, according to the U.S. Energy
Information Administration.
The trick, however, was finding a politically secure
route for the oil to take from the landlocked sea to
open waters where it could be hauled to virtually
anywhere in the world.
The most obvious route for a pipeline would be through
the short route through Iran to the Persian Gulf, or
through Afghanistan to the Pakistani coast -- both of
which presented the chance that unfriendly governments
could shut down the pipeline in order to press a
political agenda with the west.
U.S. sanctions against Iran and its refusal to
recognize the Taliban in Afghanistan essentially made
Novorossiysk the only choice for the oil companies
that would invest huge amounts of money in the
Caspian.
The CPC is made up of companies from the Russia,
Kazakhstan and Europe as well as the U.S. companies
Mobil Caspian Pipeline and Chevron Caspian Pipeline
Consortium Co. The Russian Federation holds 24-percent
of the CPC while Kazakhstan and Oman also own stakes.
Executives Tuesday portrayed the CPC project as just
the first of many international projects in the region
that was thrown open by the collapse of the Soviet
Union.
This achievement comes at a time of increased
partnership between the U.S., Russia, and Kazakhstan,
said ChevronTexaco Chairman Dave O'Reilly. CPC is a
bellwether project for successful international
cooperation and demonstrates the confidence the
international business community has to invest in
Russia and Kazakhstan.
U.S. Commerce Secretary Don Evans said earlier this
autumn that the CPC pipeline tells the world that the
United States, Russia, and Central Asian states are
cooperating to build prosperity and stability in this
part of the world.
Caspian crude will have to transit the narrow Bosporus
to the Mediterranean Sea, making Europe its closest
market. A pipeline through Iran or Afghanistan might
make Caspian more economical for North American and
Asian markets, however any new oil on the market helps
keep world prices at reasonable levels.
Greater energy security through a more diverse supply
of oil for global markets -- these are key elements of
President Bush's National Energy Policy, Abraham said
in a plug for his boss. The CPC pipeline is a clear
example of that policy in action, in an international
setting.
Some analysts and critics of the U.S. campaign in
Afghanistan have theorized that the war against the
Taliban is actually aimed at installing a regime in
Kabul that will open the door for construction of
another Caspian pipeline, however Tuesday's ceremony
in Novorossiysk may be a signal that there is no rush.
There is no longer a shortage of oil export capacity
in Kazakhstan, Cambridge Energy Research Associates
said in a recent assessment of the feasibility of an
Afghan pipeline. The need for a major new oil
pipeline via Afghanistan or any other route will not
reemerge until around 2010.
The construction of the CPC pipeline to Novorossiysk
turned out to be the right choice for the United
States
