Watching Government More oil diplomacy

President Clinton said last week the U.S. government wants to see more than one pipeline option to export oil from three Caspian Sea fields to the West.

An international oil company group has earmarked nearly $8 billion to develop the fields and will decide soon whether oil should be shipped through Russia or the former Soviet republic of Georgia. Companies in the group are to meet this week to decide how to export early oil produced from the Azerbaijani fields in 1997.

The U.S. has reason to be concerned. Most of the companies involved are American, and the lines will need U.S. financing. The Clinton administration wants an export pipeline built that does not cross Russia because most lines dont have that option.

Although the administration did not say so, it does not want the oil shipped through Iran, Azerbaijans neighbor to the south and the target of a U.S. trade embargo.

Route choices

The route through Russia could use an existing line to Novorossiysk on the Black Sea. The Georgian route would require a new line through that country to the Black Sea or perhaps a line to connect with a pipeline through Turkey to the Mediterranean port of Ceyhan.

A White House spokesman said Clinton spoke with Azerbaijani President Haydar Aliyev by telephone last week and expressed his support for commercially viable, early constructed, multiple pipelines from the Caspian Sea region that would benefit the companies that were investing in oil development as well as all the countries of the region.

The Azerbaijani pipeline decision also could affect Kazakhstans oil exports because that country wants an export pipeline from Tengiz field across Russia to a terminal on the Black Sea.

Kazakhstan also has an Iranian option. It and its partner, Chevron, could use tankers to move oil down the Caspian Sea to Iran, where it would be swapped for oil exported via the Persian Gulf.

Getting Azerbaijani and Kazakhstani oil out of the Black Sea is another problem. Turkey complains that the Bosphorous Strait is too congested and wants to limit dangerous cargoes like crude oil. So it is pushing for the Azerbaijani export pipeline that would use an existing line with a terminal at Ceyhan.

However, Russia plans to sign a pact next month for a pipeline across Bulgaria and Greece, bypassing the Bosphorous and its old rivals, the Turks.

Sanctions against Nigeria

In another act of oil diplomacy last week, the Clinton administration extended sanctions against Nigeria.

Five U.S. oil companies operating in Nigeria had urged the administration to lift the embargo. But then the military junta disclosed it will delay restoration of civilian rule another 3 years.

The Clinton administration responded, The transition timetable is too lengthy and does not appear to provide for significant civilian participation in any transitional government or in national decision making. Copyright 1995 Oil & Gas Journal. All Rights Reserved.