Caspian questions

Patrick Crow
Washington, D.C.
[email protected]

The oil boom in the Caspian Sea region is posing problems for U.S. policymakers.

Sen. Sam Brownback (R-Kan.) told a recent Senate foreign relations subcommittee hearing, "Our window of opportunity to influence events there is very narrow. The U.S. must assume a more consistent and pro-active policy immediately. If we do not act soon, we may find that we are too late to take advantage of a unique opportunity."

He said the Caspian basin contains proven oil and gas reserves that could rank third after the Middle East and Russia and exceed $4 trillion in value.

"Investment in this region could ultimately reduce U.S. dependence on oil imports from the volatile Persian Gulf and provide regional supplies as an alternative to Iranian sources."

Brownback said, "The U.S. must play an increasingly active role in conflict resolution in the region. The boundaries of the Soviet republics were intentionally drawn to prevent secession by the various national communities of the former Soviet Union and not with an eye towards possible independence. As a result, the countries in the South Caucasus and central Asia are fraught with ethnic tensions that pose serious dangers to the stability in the region."

State's position

Stuart Eizenstat, U.S. undersecretary of state for business and economic affairs, noted Turkey signed a deal in May to import gas from Turkmenistan through Iran, which U.S. officials later said does not appear to violate the Iran-Libya Sanctions Act.

Eizenstat said, "This announcement has been widely misinterpreted to mean that the U.S. has approved a pipeline across Iran. This is definitely not the case. We would prefer development of pipeline routes that do not involve Iranellipsespecifically a cross-Caspian pipeline."

He said the U.S. will begin energy talks with Azerbaijan and Turkmenistan this fall.

And Eizenstat urged Congress to repeal Section 907 of the Freedom Support Act, which restricts U.S. assistance to U.S. companies active in Azerbaijan because of conflicts between Azerbaijan and Armenia.

Amoco's view

Charles Pitman, chairman and president of Amoco Eurasia Petroleum Co., said the U.S. should drop its neutrality regarding the route for the main export pipeline from the Caspian.

Governments and oil companies are due to decide next year whether to build a line from Baku in Azerbaijan to the Georgian port of Supsa on the Black Sea, or from Baku across Georgia and Turkey to Ceyhan on the Mediterranean.

Pitman said the latter route is twice as long and twice as expensive but would help Turkey meet its energy needs and avoid more tanker traffic through the Bosporus Straits.

"We urge U.S. officials to work with their Turkish counterparts to find means to narrow the financial gap and make the Baku-Ceyhan route economically feasible."

In the dispute over ownership of the Caspian Sea, Pitman said Russia and Iran are urging common ownership beyond a 45-mile nautical limit.

But he said that would make the central Caspian Sea off-limits to U.S. companies because of Iranian ownership and involvement there.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.