[A-List] US imperialism: Central Asia
Michael.Keaney at mbs.fi
Mon Jul 22 02:24:39 MDT 2002
Oil snub to US in the pipeline
By Hooman Peimani
Asia Times, July 16, 2002
In his late June meeting with Kazakh Prime Minister Imangali Tasmagambetov in Astana, Iranian ambassador to Kazakhstan Morteza Safari announced his country's readiness to begin negotiations on a major oil pipeline project. It was a significant meeting in terms of global business and geopolitics.
The proposed project would provide a connection between oil-producing Kazakhstan and the Iranian Persian Gulf oil terminals (via Turkmenistan) through which Kazakh and also Turkmen oil could be exported to international markets. Iran and Kazakhstan have long been interested in the project, although it has remained on paper mainly because of American opposition. According to the Kazakh government, Total, a French oil company operating both in the Caspian region and in Iran, is planning to undertake a feasibility study on the proposed pipeline, in itself a positive sign of the project's feasibility.
Even though there is no certainty about its implementation in the near future, Kazakhstan's recent statement of interest and that of a major European oil company reflect an emerging realism both in the Caspian region and in Europe over the issue of exporting Caspian oil. The region's economic needs, its geographical realities and the European Union's growing political and economic rivalries with the United States seem to be whittling away at Kazakh and the European concerns over American objections to the involvement of Iran in Caspian oil exports. This trend, if it continues, will pave the way for the pipeline's construction.
Finding reliable export routes for Caspian oil and gas has been a major preoccupation for the three energy-exporting Caspian countries, Azerbaijan, Kazakhstan and Turkmenistan, since their independence in 1991. As landlocked countries, they have to rely on their neighbors with access to international waters for their exports. Geography dictates only four potential direct routes for oil pipelines leading to seaports from where Caspian oil could be exported by oil tankers. The Chinese one is practically out of the question as it is too long and too expensive to be a long-term route, while the Georgian one is only suitable for limited short-term exports as Georgia suffers from major security problems, including two independence movements, among other restrictive factors.
The Russian and the Iranian routes are both feasible and economically sensible, with the Iranian route being shorter and safer (as Iran, unlike Russia, suffers no Chechnya-style instability on the route). However, the American policy of excluding both countries from the Caspian oil industry has created severe obstacles to the use of these economically sensible routes, with Iran practically removed from consideration as an export route.
In recognition of Caspian countries' need to maintain friendly ties with Russia, the Russian route has been used since the mid-1990s. However, the Americans have since sought to promote an indirect, long, expensive and unreliable route via Georgia and its neighboring Turkey in the form of the Baku-Tiblisi-Ceyhan pipeline to bypass both Iran and Russia. With all its shortcomings, the majority of oil companies operating in the Caspian region have shown no interest in the proposed pipeline, which enjoys the support of its immediate beneficiaries (Azerbaijan, Georgia and Turkey) and the United States. Because of its high cost, the pipeline will be profitable only if Kazakhstan opts to export through it, but the Kazakhs have refused to commit themselves.
Kazakhstan has the largest proven oil reserves of the Caspian region. As a result, it could potentially become the most prosperous regional country if it secured reliable long-term oil export routes. Undoubtedly, Iran's geography and its internal stability make it the shortest, cheapest, safest and most reliable route for the Kazakhs who are currently heavily relying on Russia for their oil exports and who wish to increase them. No wonder the Kazakhs have expressed interest in a pipeline to Iran's Persian Gulf oil terminals. Turkmenistan, a friendly country sandwiched between Kazakhstan and Iran, is also interested, as it would provide that country with its own export route through a neighboring country with which ties have been expanding steadily since independence.
Iran, Russia and Turkey have been competing to establish themselves as the main export routes for their obvious economic and political benefits. Without any exception, all oil companies operating in Kazakhstan, including the American ones, are interested in using the Iranian route for its mentioned characteristics. Yet the American ban on cooperation with Iran for American companies and the threat of sanctions have resulted in a limited amount of oil exports via Iran through swap deals. Thus Iran receives Kazakh oil at its Caspian oil terminal for its northern refineries and deliver to designated buyers the equivalent amount of oil at its Persian Gulf terminals. Swap deals could expand several-fold, but a pipeline would still be more reliable, as well as a future necessity for Kazakhstan. That pipeline would be used in addition to the existing operational Russian pipelines connecting it to the Black Sea to ensure Russian friendship and for export to Eastern Europe.
Iran and Kazakhstan signed an agreement for the construction of the Kazakhstan-Persian Gulf pipeline in the 1990s, but it has not been implemented due to lack of investors. Nevertheless, Kazakh President Nursultan Nazerbayev has reiterated his country's view of Iran as a "promising" export route over the last few months, including in last April during US Secretary of State Colin Powell's visit to the country.
The Americans are still against the project, but a reliable export route is becoming increasingly vital for Kazakhstan as it needs to decrease its reliance on Russia for political and economic reasons and to create export capabilities for its growing oil exports. Despite American opposition, certain developments are contributing to a more suitable situation for the implementation of the pipeline project. The rising European Union (EU) is finding its interests in conflict with those of the United States on a growing number of issues and in many regions. In search of political influence and economic gains, the EU has become inclined to challenge American views on certain matters, including ties with Iran.
Consequently, the EU opted to expand political and economic ties with that country during its June foreign minister meeting in Luxembourg without regard to American opposition. Against this background, the decision of Total to conduct a feasibility study (if it happens, and if it receives full EU backing), will likely lead to the implementation of the pipeline project given the strong interest of Iran and Kazakhstan.
Dr Hooman Peimani works as an independent consultant with international organizations in Geneva and does research in international relations.
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