A TRANS-BALKAN PIPELINE : A COMMENTARY
This is a commentary of an article titled " Looking at Balkans route
for
Caspian crude" written by Paul Michael Wihbey , a senior fellow
at the
Washington based think tank , the Institute for Advanced Strategic
and
Political Studies, which appeared on the Internet on June 23,
1999 (
source : http://www.clarinet.com/hot/wed/cy/Ubalkans-oil.RoKC_9uN.html
) . Wihbey
article raises two interesting points which require some comment and
analysis. These will be discussed below .
(1) The US Trade and Development Agency's feasibility study in Bulgaria
Wihbey stated that the US Trade and Development Agency (TDA) had
given
Bulgaria a $588,000 grant on June 2 , 1999 to conduct a feasibility
study
into a trans-Balkan pipeline to carry Caspian Sea crude oil . This
would be
shipped by tanker from the ports of Novorossisk and Suspa in Russia
and
Georgia to Bulgaria and would " then be pumped by overland pipeline
[ from
Bourgas in] in Bulgaria,
[ Former Yugoslav Republic of ] Macedonia and [ to Vlore in] Albania
to
waiting European consumers."
This decision would have surprised the Turkish government , since there
have been numerous delays in the construction of their own Baku- Ceyhan
pipeline. The construction of the Baku-Ceyhan pipeline has stalled
as costs
, according to Wihbey, have increased anything from $2.5bn to $4bn
which
makes it difficult for investors to maintain their level of financial
support.
On June 23 , Selina Williams , a Reuters correspondent reported
in her
article titled ' Turks up price cap to $2.7bln Baku-Ceyhan line' that
Turkey had raised the cost from $2.4bn to $2.7bn where Natik
Aliyev, the
President of Azerbaijan's state oil company SOCAR, could not understand
"
why the price has gone up and what it is connected to." Furthermore
the
Turks " had also set back the starting construction date to 2005 from
2003." It seems that the proposed Baku-Ceyhan line is raising
doubts in
the minds of investors who are also querying the "commercial viability"
of
the project.
It is interesting the US and Turkish governments' are eager to see
Baku-Ceyhan project succeed and even energy experts considered
this route
" as the outstanding choice to transport the newly discovered oil treasures
of the Caspian Sea to Western consumers." Even sustaining " low world
oil
prices, stagnant demand ...[ and] lower -than-anticipated Caspian
production" , there are Americans who have expressed different views
regarding the future of this pipeline.
Richard Morningstar, the US adviser on Caspian energy issues, " dismissed
the new obstacles to the line" whereas Jan Kalicki , a US Commerce
Dept
Counsellor, stated that " the U.S government would not play a major
role in
financing the line , leaving the private sector to stump up the money."
I come to the central questions of this paper . Why is TDA interested
in a
trans-Balkan pipeline? what is the role of the United States in the
Caucasus and Balkans?
There are some factors which might have influenced the TDA to
arrive at
such a decision. These are :- (1) the on-going Nagorno Karabagh
issue ;
(2) the unresolved Kurdish issue in South East Anatolia. Onnic Marashian
shows that one of the proposed routes for the Baku-Ceyhan line will
pass
through S.E Anatolia ;
(3) it might be cheaper to ship Caspian crude from Russian and Georgian
ports to Bulgaria rather than the proposed 1730 kilometre Baku-Ceyhan
route
; (4) the proposed Baku-Ceyhan pipeline will run through a sensitive
seismological region; and finally oil tankers will avoid travelling
through
the Bosphorus, thus reducing the environmental risks to the fragile
ecosystem.
Points 4 and 5 require some elucidation. In the former case ,
Michael
Clayton states that " The Caucasus is a region of heavy and on-going
seismic activity and soil movement .... The utilization of the existing
Baku-Suspa pipeline as the first leg of the emerging plan for a multi-pi
peline energy transportation system for Caspian oil and gas would reduce
substantially the risk of seismic activity affecting the pipeline network,
since southern Georgia-the route of numerous plans for additional
pipelines-is particularly dangerous and geomorphologically complex....
"
Furthermore " southern Georgia continue[s] to play a central role in
the
thinking of both energy companies and governments actively engaged
in
developing Caspian oil and gas."
With the latter , Clayton states " Environmentally the Bosporus is
the
biological corridor for all marine wildlife traveling in and out of
the
Black Sea. The [19] mile channel which bisects Istanbul ( population
12
million) requires large vessels to make at least twelve course changes
,
including [4] turns of greater than 45 degrees."
It would appear the shipping of Caspian crude from Novorossisk and
Suspa to
Bulgaria is a safer route in seismological terms compared to the overland
Baku-Ceyhan line. Turkey, after all, is located in a major earthquake
zone. If the major oil stakeholders decided that a trans-Balkan pipeline
is
a commercially viable option compared to the Baku- Ceyhan line; then
any
increase in oil tanker traffic will raise the potential for tanker
collisions to occur resulting in major oil slicks . Such an environmental
disaster will lead to coastal pollution, the destruction of marine,
plant
and animal life and even threaten the health and livelihood of people
living in cities and towns along the shores of the Black Sea.
Another important factor requiring an explanation is United States foreign
policy in the Caucasus and the Balkans. In the former region , Rusudan
Goriladze, believes that the US has four geopolitical objectives .
These
are : - (1) attaining regional security which includes a resolution
to the
various ethnic conflicts; (2) promoting democratic state institutions
and
political practices; (3) the successful construction of a pipeline
route to
transport Caspian Sea's oil riches to western markets, thus reducing
the
Wests dependence on the Middle East; and finally the US views
Transcaucasia acting as an effective barrier in containing the spread
of
Islamic fundamentalism.
The last two factors highlight America's opposition to the construction
of
an oil pipeline from Baku crossing Iran to terminate in the Persian
Gulf.
Writing in 1997 , Graham Fuller, a senior political scientist at the
Rand
Corporation and William E. Odom , Director of National Security Studies
of
the Washington-based Hudson Institute, recognised that American- Iranian
relations were strained and both of them believed that America's
long term
interests would be better served in establishing and improving its
ties
with Tehran. Odom mentions the US negative attitude of Iran will assist
Tehran to maintain its close ties with Moscow and Beijing. Alternatively,
Senator Sam Brownback, a member of the US Foreign Relations Committee,
recognised the high cost of the Baku-Ceyhan project but supported its
construction as a means of preventing Azerbaijan, Armenia, Kazakhstan,
Tajikistan and Turkmenistan becoming 'economic hostages' of Iran.
The United States has politically and militarily been active in the
Balkan
in the 1990's. It viewed the break up of the Yugoslav Federation in
the
early 1990's, as a threat to its wider political, economic and security
interests in Europe. In 1993 , US troops were dispatched to reinforce
the
UN peace-keeping mission in FYROM . The US soldiers were sent
"
essentially to show their presence and [to] help keep the peace..."
Furthermore, the US action was designed to contain the Bosnian conflict
and
stabilise the borders of FYROM and the wider Balkan Peninsula.
On February 24 and 26 1999, US Secretary of State, Madeline Albright
and US
President Bill Clinton delivered speeches in Washington DC and San
Francisco outlining US foreign policy in the Balkans. Both of them
mentioned that the Bosnian and Kosovo crises had the potential of spreading
to Albania, FYROM, Greece and Turkey. Albright stated the Dayton Accords
signed in November 1995 remained ' the lynchpin of hope for stability
in
the Balkans." Regarding Bosnia , she explained that over the
past 3 years
the refugees and displaced people had returned home, elections had
been
conducted , the symbols and substance of Bosnian nationhood was taking
place, and that the US and its SFOR partners were beginning to reduce
its
international military presence. Clinton told his audience that the
violence in Kosovo had to cease and that " President Milosevic [of
Yugoslavia] should understand that this is a time for restraint, not
repression. And if he does not , NATO is prepared to act."
A few months later, the NATO alliance led by the United States , bombed
Yugoslav military targets in Serbia and Kosovo forcing the evacuation
of
the Yugoslav army from Kosovo. This province is currently under NATO
jurisdiction.
The U. S views the former communist states of the Caucasus and Balkans
as
an important part of its own long-term security and prosperity. It
wants to
see these states become stable democracies , economically prosperous,
to
foster and develop independent media, to strengthen the free market
, to be
fully integrated into the world economy and to resolve ethnic tensions
within their borders in a peaceful manner.
2) Proposed Oil exploration in the Black Sea
The second point raised by Wihbey is that on June 21, the Turkish
Government's state-owned oil company, entered into a joint venture
agreement with Atlantic Richfield ( Arco) for oil and gas drilling
in
Turkey's Black Sea waters.
This announcement raises some interesting issues and what will follow
is
based on speculation.
These are :- (1) to find alternative sources of energy should the
Baku-Ceyhan pipeline deal not materialise; (2) to find sufficient
quantities of oil and gas to make this a commercially viable project;
(3)
this would allow Ankara to exercise direct control over its own natural
resources; and finally it may allow for the construction of a pipeline
somewhere in Northern Turkey terminating in a port in South Western
Turkey.
Another factor which might have influenced the Turkish Government is
the
over-estimation of oil reserves in the Caspian Sea. Marashian states
that
200 billion barrels of oil are based on " pure speculation." Groups
such as
the " Geneva -based Petro consultants, London-based-International Institute
for Security Studies and the Houston-based James A. Baker Institute
for
Public Policy take a more sober view." At the moment established oil
reserves run between 15-29 billion barrels where 7 million of these
are in
Azerbaijan, mainly located offshore.
Another 14 billion barrels might be recovered should international
companies intensify their drilling plans. Kazakhstan and Turkmenistan
have
proven oil reserves of 20 and 1.7 billion barrels, with the former
having
potentially another 25 billion available in the future. Turkmenistan
might
be able to recover a further 4 billion "onshore and offshore, if [it]
settles its ownership dispute with Azerbaijan."
In conclusion , some of the issues raised in this paper is based on
conjecture and
their future outcome is still unknown. The most obvious factor is the
increasing role and presence of the US in the Caucasus and the Balkan
affairs during the 1990's.