TEXTO 3: Hydrocarbons and a New Strategic Region:
The Caspian Sea and Central Asia
FONTE: https://fmso.leavenworth.army.mil/fmsopubs/issues/hydrocarbons/hydrocarbons.htm
Obs: Este é o original do qual foi feita a tradução que é o TEXTO 2.
Hydrocarbons and a New Strategic Region: The Caspian Sea and Central Asia
by Mr. Lester W. Grau, Foreign Military Studies Office, Fort Leavenworth,
KS.
This article appeared in Military Review May-June 2001
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The United States currently imports 51 percent of its crude oil—19.5
million barrels daily. The Energy Information Administration estimates
that by 2020, the United States will import 64 percent of its crude—25.8
million barrels per day.1 The United States buys much of its oil from Ven-
ezuela and the Persian Gulf; Europe buys from the Persian Gulf and the
North Sea. For years Europe has bought natural gas from the Soviet Union
and Russia, but Eurasian oil has made limited inroads into the European
market. This may change. The Caspian Sea appears to be sitting on yet
another sea—a sea of hydrocarbons. Western oilmen flocking to the area
have signed multibillion-dollar deals. US firms are well-represented in
the negotiations, and where US business goes, US national interests
follow.
Well-dressed urbanites pass stores with signs in Russian, English and
Azeri in downtown Baku.
The Caspian Sea basin has long been a source of oil and natural gas. The
fire-worshipping Zoroastrian religion was founded on the western shores
of the Caspian as Zoroastrians built temples around local pillars of fire
fed by escaping natural gas. The two great pre-World War I oil fields
were in Texas and the Caspian Sea region of Imperial Russia. After the
war, when civil war raged between Russian Whites and Reds, British forces
landed in Batumi in a failed attempt to influence the future of Caspian
Sea oil. During World War II, Adolph Hitler launched Operation Blau to
capture the Caspian Sea oil fields.
Now that the Soviet Union has dissolved, Caspian Sea oil draws
international attention once again. Western oil companies, hoping to find
new reserves at a reasonable cost, have cut deals with Azerbaijan,
Kazakhstan, Turkmenistan and Russia. Caspian region oil reserves might be
the third largest in the world (following Western Siberia and the Persian
Gulf) and, within the next 15 to 20 years, may be large enough to offset
Persian Gulf oil. Caspian Sea oil and gas are not the only hydrocarbon
deposits in the region. Turkmenistan's Karakum Desert holds the world's
third largest gas reserves—three trillion cubic meters—and has six
billion barrels of estimated oil reserves.2 Other oil fields in adjacent
Uzbekistan, Tajikistan and Kyrgyzstan further increase the known reserves
of cheap energy available to oil-dependent economies and are drawing
outside investors.
The presence of these oil reserves and the possibility of their export
raises new strategic concerns for the United States and other Western
industrial powers. As oil companies build oil pipelines from the Caucasus
and Central Asia to supply Japan and the West, these strategic concerns
gain military implications. The dominant role of the Middle East energy
supply may be offset by new suppliers operating from an even less mature
and stable environment. The uninterrupted supply of oil to global markets
will continue to be a key factor in international stability.
Various political, economic, sovereignty, military and cultural issues
could threaten uninterrupted delivery of oil from the Caspian region.
Should the United States continue to play a vigorous role in supporting
regional stability, US Armed Forces will need to understand the
political, economic and cultural dynamics, as well as US interests in
this region where Western oil companies already have signed contracts
potentially worth more than $100 billion. Hopefully, US forces will be
spared future regional presence beyond advisory and assistance roles
since effective military presence would require basing rights and
significant investment to develop theater infrastructure and establish
forward supply and staging areas.
The Persian Gulf, Caspian Sea, Russia and Central Asia
Petroleum geologists claim to have discovered 17 billion barrels of crude
oil in the Caspian Sea, an amount roughly equal to the European North Sea
fields and almost one-third of Venezuela's holdings.3 Current estimates
indicate that, in addition to huge gas deposits, the Caspian basin may
hold as much as 200 billion barrels of oil—33 times the estimated
holdings of Alaska's North Slope and a current value of $4 trillion.4 It
is enough to meet the United States' energy needs for 30 years or more.5
This sizable estimation still does not match the Persian Gulf states'
estimated reserves. However, with the collapse of the Soviet Empire, the
Caspian region has assumed new global importance. Projected oil reserves
for the Iranian, Kazakh, Azeri, Turkmenian and Russian Caspian littoral
are 25 billion metric tons—nearly 15 percent of the world's total oil
reserves (and 50 percent of its gas reserves).6
During the Soviet era, Soviet oilmen extracted Caspian Sea oil mainly for
use within the Soviet Union and Warsaw Pact. The known Soviet Caspian Sea
oil sites had been producing for a century and were nearing depletion.
Soviet oil exploration and exploitation concentrated on sites that were
more geographically and technologically accessible. However, recent
surveys reveal oil reserves in the Caspian Sea that could significantly
boost the economies of its five bordering states—Russia, Azerbaijan,
Iran, Turkmenistan and Kazakhstan.
But it takes money to make money; in this case, money to exploit the
difficult-to-reach deposits, money to remove the hydrosulfuric and
mercaptan contaminates from the east shore oil, money to deal with the
region's high geopressures, money to repressurize some of the prematurely
abandoned fields and money to move oil to the consumer. Since the Soviet
Union did not develop advanced technological solutions to these problems,
Western money and technology are now key to exploiting energy in the
region. Predictions abound and most are probably overstated. Still, if
Western oil companies are able to begin producing oil from fields in the
Caspian Sea, Central Asia and Russia, almost five million barrels of oil
per day could be pumped from these fields into the open market by 2010.7
The Pipeline Blues
Bringing oil and gas from the Caspian Sea and Central Asia to market is
difficult. Pipelines are the only feasible way to move commercial
quantities. A major factor in developing Central Asian hydrocarbons and
supporting oil and gas pipelines is the price of oil. Recent higher
prices raise the prospects for Caspian Sea energy, but they also
encourage reopening some closer, already-developed, marginal fields.
Transport costs affect oil prices. Transporting Persian Gulf oil costs $2
to $5 per ton; North Sea oil costs $10 per ton; Caspian Sea oil costs $17
per ton; Siberian oil costs $35 to $45 per ton.8 Historically, the only
pipeline from the Caspian Sea region ran through Chechnya via Baku-Grozny-
Novorossiysk. Current uncertainty about political stability is holding
back aggressive pipeline development; however, pipelines are being
planned, laid and used.
The Russian route. Most Caspian Sea oil and gas are pumped through
Russia. The oil flows northwest and eventually reaches Russian and
European markets through a well-developed pipeline system. Soon it will
again move to the Black Sea, bypassing Chechnya, for transport through
the Dardanelles to the Mediterranean. Oil and gas are critical to the
struggling Russian economy, in some years constituting 42 to 44 percent
of all exports. The Russian government realized $1.5 billion annually
from direct foreign oil sales and raised 21 percent of its revenue from
duties on foreign trade—the biggest portion of which comes from oil and
gas sales.9 Russia's neighbors complain that Russia asserts a proprietary
interest over all Caspian Sea oil and uses the pipelines as leverage in
negotiations. The Russians, who discovered the oil fields, developed them
and built the transportation and refinery infrastructure, controlled
Caspian Sea energy for more than 100 years. The Russians feel entitled to
a share and get it by controlling the flow of other nations' oil across
Russian territory.
Thus, in spring 1996, Russia reduced the amount of oil it would transport
from the huge Tengiz oil field on the northeast Caspian shore. The
Russians' reason for reducing the flow was that the Tengiz oil sulfur
content was too high and was damaging the pipe. This oil does have a high
sulfur content but was shipped from the same field through the same pipe
for many years when it belonged to the Soviet Union. Now Chevron and
Kazakhstan operate the field on a 50-50 basis. During the Soviet era, no
one counted costs. With the reduced flow, Russia attempted to control
Kazakhstan's oil industry and economic viability. In 1997 the Caspian Sea
consortium of Chevron, Mobil, Russia's Lukoil, Oman and the Kazakh state
oil company acceded to Russia's pressure and agreed to build a $2-billion
pipeline from Kazakhstan through Russia to Novorossiysk (Route 1).10 This
route maintains Russian control of oil shipment from the region.
The historic Russian line from Baku through Chechnya to Novorossiysk
(Route 2) was closed because of the Chechens' continuing struggle with
Russia. Both sides reportedly hit the pipeline during the wars, and
Chechens exploited it as a source of free oil. Reports from the region
indicate that Chechens placed more than 100 taps on the line, drawing off
oil to their clandestine refineries and selling cheap gasoline in Grozny.
Russia has recently completed a bypass around Chechnya and reactivated
the pipeline. Russia has proposed exporting oil north to join its
existing pipeline system and reach Novorossiysk or Europe (Route 3). This
development could further remove the pipeline from Chechnya and maintain
Russia's substantial control of Caspian Sea and Kazakh oil.
The Transcaucasus route. The Azerbaijan International Operating Company
(AIOC) is the first international oil consortium set up in Azerbaijan. US
oil companies own 39.9 percent of the consortium—Amoco, 17.0 percent;
Unocal, 10.0 percent; Exxon, 8.0 percent; and Pennzoil, 4.8 percent.
Other countries in the consortium include Britain, 19.0 percent;
Azerbaijan, 10.0 percent; Russia's Lukoil, 10.0 percent; Norway, 8.6
percent; Japan, 3.9 percent; Turkey, 6.8 percent; and Saudi Arabia, 1.7
percent.11 This consortium built an initial line from Baku through
Georgia to the Georgian port of Supsa on the Black Sea (Route 4). This
pipeline has been pumping a limited amount of oil since l999. While this
is a relatively inexpensive option, the oil still has to move from Supsa
by oil tanker through the Black Sea and the Bosporus.12 Turkey controls
the traffic between the Black and Mediterranean Seas and does not want
increased oil tanker traffic through the straits because of environmental
concerns. Russia objects to this route because none of the pipeline
passes through Russia. Further, this pipeline runs through domains of
many fractious mountain tribes.
The AIOC is also considering a line to the Turkish Mediterranean port of
Ceyhan (Route 5). This would give Turkey primacy in exporting Caspian gas
and oil, and would cut Russia out of pipeline fee profits and port fees
from Novorossiysk. However, there are some problems with building a
pipeline to Ceyhan. The route runs through Azerbaijan and Armenia, whose
war over Nagorno-Karabakh is at a stalemate. Thus, the Baku-Armenia-
Ceyhan route is not a near-term option. Should this conflict be settled,
the route also passes through the Kurdish part of Turkey where a
suppressed insurrection still simmers. The route would cost $2.9
billion.13
The Clinton administration tried to promote a pipeline route from Baku to
Tbilisi to Supsa (Route 4) and then underwater from Supsa to Turkey where
it would cut across Kurdish Turkey to Ceyhan. An underwater pipeline from
Turkmenistan across the Caspian Sea to Baku would back this pipeline.
This expensive option required regional political acceptance and oil
company backing—neither of which the Clinton administration could obtain.
The Iranian routes. The US government opposes a Baku-Iran-Ceyhan route
because of Iran's alleged support of international terrorism. US oil
companies are not allowed to ship their oil through Iran, although it is
the shortest, cheapest and easiest route to an open port. Iran's
preferred route is a pipeline south from the Caspian Sea to the Persian
Gulf (Route 7). Iran has an extended pipeline system in place, and
Turkmenistan opened a gas pipeline into Iran in December 1997.14 This
comparatively inexpensive option would bring the oil and gas to the
troubled Persian Gulf with its easily closed Strait of Hormuz. The United
States opposes this pipeline and tries to enforce the sanctions, but
other nations' oil firms ignore the sanctions and cut oil deals with
Iran. France (Elf Aquitaine and Total SA); Italy (Agip); the Netherlands
(Royal Dutch/Shell and Lamaj); Spain (Repsol); India (BHP); Russia
(Lukoil, Zarubezhneft and Mashinoim-port); and China (China National)
have all completed or are negotiating major oil deals with Iran.15 US
firms also have interests in such a route and have been lobbying in
Washington, DC, for improved relations with Iran.
The Afghanistan route. Several major oil companies have investigated
building pipelines from Central Asia through Herat and Kandahar,
Afghanistan, and on to Quetta and Karachi, Pakistan, (Route 8) at an
estimated cost of $1.9 billion. The distance is relatively short and
would bring oil to the Indian subcontinent market. However, Afghanistan
is still locked in civil war.16 Many area residents feel that Unocal
backed the Taliban forces financially in return for future pipeline
rights in Afghanistan.17 Unocal and other companies have abandoned
attempts at establishing this route since the political situation seems
unresolvable.
The China route. China and the Pacific Rim are potentially huge markets
for Caspian Sea and Central Asian oil. Oil companies are considering a
pipeline from western Kazakhstan through China to the Pacific to serve
the Chinese, Japanese and Korean markets (Route 9). The savings realized
over current tanker deliveries would have to offset the $8 to $12 billion
required to build the pipeline. The Chinese have signed a memorandum of
understanding to build a shorter $3.5-billion pipeline that would stop in
China proper.18
Western Involvement and Concerns in Caspian Sea and Central Asian Energy
More than 40 upstream projects in Kazakhstan and Azerbaijan involve 11 US
companies, 24 other Western companies and two Russian companies. The
total value of these projects exceeds $100 billion. Companies such as
Exxon, Amoco, Mobil and Chevron were negotiating additional contracts in
the region and were involved in upstream exploration and production
projects as well as various downstream activities—pipeline development,
infrastructure development, and environmental restoration and repair. Oil
profits represent the likely major revenue for the countries of the Trans-
caucasus and Central Asia for the next 15 to 20 years. Oil revenue could
also attract other Western business to the region, which should help
develop infrastructure and diversify their economic base. US oil
companies, smaller oil support and service companies, and engineering and
environmental firms would benefit initially, but secondary industry
attracted by the region's economic potential could also benefit. However,
the region's political instability and US government policies toward
Azerbaijan have slowed or stopped many of these projects which peaked in
1998.19
The US Supreme Court has ruled that a US corporation has the same rights
as an individual citizen under the 14th Amendment to the Constitution.
The US government could reasonably concern itself anywhere US business
operates.20 But in this era of multinational firms and joint ventures,
what is and is not a US business is open to interpretation. The concerns
of business may become the concerns of gov-ernment and, by extension,
military concerns. Oil company concerns in this region include the threat
of nationalization; Russia's role in the affairs of its former colonies;
the final division of Caspian Sea resources among Russia, Iran,
Azerbaijan, Kazakh-stan and Turkmenistan; the future of US-Iranian
relations with its impact on energy production and distribution; the
impact of Western countries and Japan cutting deals with Iran separate
from US oil company interests; how far Russia might go to protect its
perceived interests; and pipeline security.
Azerbaijan social and security concerns. Oil has not brought national
prosperity to this region's people.21 Azerbaijan provides a good example.
Oil has transformed Baku from a provincial Soviet capital into an
international city with a new airport, new hotels and a modern downtown
business area.
An oil derrick on the Caspian Sea coast with a motorist water point in
the foreground. Aging but serviceable oil infrastructure covers the land
and sea of Azerbaijan.
The transformation from the gray Soviet past is striking. Fountain
Square, with its McDonald's, fashionable shops, cafes and new business
buildings, speaks of wealth and connections to the developed world. There
are many well-dressed young women and no sign of the chador, a large
cloth used as a head covering, veil or shawl. But in a city of 1.7
million, the small Western part is surrounded by poverty, unemployment
and collapsing infrastructure. Most citizens shop in open bazaars. The
elite have grown richer and left the rest of the city behind. Most common
folks respect President Heydar Aliyev because he brought order, but they
complain of terrible economic conditions—a teacher makes $20 per month to
support a family, while others cannot find work at all. Bright young
entrepreneurs are trying to leave the country. For many, the oil boom
seems to have already played out. The litany among older citizens is that
life was much better under communism.
East meets West. A Russian Grandfather Frost and Mickey Mouse greet New
Year's crowds in nominally Islamic Baku.
International investment connected with Caspian Sea oil has not been as
vast or influential as expected. The Azeri national trauma is the Nagorno-
Karabakh war, and the one million refugees who live on the margins of
society are constant reminders. The national passion is to regain
Karabakh. Large numbers of Chechens who fled the Russian-Chechen wars add
to the refugee population. Azeri military presence is not conspicuous,
but regular and special police are prominent.
Turkey and Iran battle for influence. Turkey's influence is secular and
addresses economic, cultural and political transformation. Iran's
influence is religious and conservative-reactionary, and speaks to the
myth that fundamentalist Shia Islam would rectify the new order's
injustices. So far, there seems to be little evidence that Islamic
fundamentalism has made any inroads into Baku. Russian presence remains
pervasive in terms of speech on the streets and national norms. New
Year's is celebrated in traditional Russian manner, with Grandfather
Frost and Mickey Mouse thrown in for good measure. Islam is relaxed and
alcohol is common. Before the Communist Revolution, Baku was a
cosmopolitan city and an oil town. Post-Soviet Baku is still cosmopolitan
but would like to become a petroleum giant. Short of that, it will settle
for Aliyev's version of order.
Many of Azerbaijan's eight million people live in the country. Many are
peasants whose farming and livestock are unaffected by advanced
technology. The central part of Azerbaijan is fairly arid, and the north
is forested with birch and oak. High-quality apples, melons, nuts, oats
and grapes are prominent crops. Main roads are in disrepair, and
secondary roads are mud tracks for four-wheel-drive vehicles. Large
numbers of unemployed men stand about on workdays. Few young men and
women are visible in the countryside, perhaps indicating flight to the
cities. Factories closed with the collapse of the Soviet Union, and power
outages are so common that people ignore them. The contrast between Baku
and the countryside will continually bring people into the capital where
the newcomers will join the displaced refugees from Karabakh. The Azeri
government lacks the means and will to provide social services for this
marginalized population. Whoever organizes those services will have the
political leverage to shape Azerbaijan's future.
Azerbaijan is nominally a Shia Islam country, but the call to prayer is
not heard in Baku. The proscriptions against alcohol are not observed,
and women are not in purdah—secluding them from public observation.
However, mosques are reopening, and many new ones are being built as
gifts from Iran. Reasonably priced Iranian religious material is sold
outside many of these mosques.
Russian President Putin's motorcade rushes past a Chevron billboard
(left) during his visit to Baku, January 2001.
Russian President Vladimir Putin visited Baku in January 2001 to
demonstrate that Russia is still a major factor in the area. Putin
mounted a political assault on the notion that Azerbaijan could or should
link its future to the Georgia, Ukraine, Uzbekistan, Azerbaijan and
Moldova (GUUAM) group as a counterweight to Moscow. Putin stressed a
broad range of economic benefits Russia could offer Azerbaijan and made
it clear that Russian forces compelled to leave Georgia would redeploy to
Armenia, having backed Armenia during the Azeri- Armenian war. Rather
than risk heavy Russian pressure, the Aliyev government honored the
Russian president. Putin won cooperation on energy rights in the Caspian
region and pledged support to Azerbaijan's territorial integrity in
settling Karabakh. Putin spoke of a solution to regional problems as a
matter for negotiation and cooperation among the Caucasus Four—Russia,
Azer-baijan, Armenia and Georgia. The Azeri press noted that he did not
mention Iran or Turkey as Caucasian states.
The Azeri government seems to have tacked to a Russian line, in part, as
a result of Russian hardball regional policies following military
intervention in Chechnya. Only days before Putin's arrival in Baku,
Moscow had cut off Georgia's supply of natural gas, plunging the country
into the cold and dark. Russia had accused Georgia of allowing Chechnya
to use its territory and had threatened to eliminate the Chechen presence
forcefully, with or without Georgian cooperation. Aliyev's government has
calculated that confronting Putin involves too much risk. Azerbaijan
clearly needs Russian economic and technical assistance with its
collapsing infrastructure.
Russia also has influence over Karabakh, especially if Azerbaijan sees
the West embracing Armenian interests at the expense of Azerbaijan and
Turkey—its closest Western friends. Azeris speculate about another
rationale for the latest tack toward Russia. Domestic politics in
Azerbaijan has been fueled by running speculation about presidential
succession after Aliyev, who has been ill. Russian intervention to
support some faction could undermine stability, so Azerbaijan needs an
early understanding with Russia and its interests. The Azeri press
presented the Putin visit as a Russian victory and a US loss.
Operational concerns and pipeline security. Military security of the
Caspian Sea region is difficult. The various regional militaries are
small, un-derresourced and better designed for theater war than for
combating guerrillas, narcotraffickers and gangs who threaten the area.
It is difficult for outside forces to access the area. The west-east
route from the Black Sea through Georgia to Baku is easily cut and
supports a limited line of communications. Primary access routes into the
Baku area for division and larger forces are north and south—through Iran
or Russia. These access routes each have two poorly maintained two-lane
roads and a set of double railroad tracks. A well-placed battalion could
close the access routes indefinitely at some points and could only be
dislodged by an amphibious end run.
The region is politically unstable, and most proposed pipeline routes run
through areas of current or recent conflict. Who will secure the
pipelines and at what price? AIOC representatives have met with Chechen
leaders who stated that no oil would flow through any pipeline in
Chechnya, Georgia or the Transcaucasus unless they received a share of
the consortium. Similar difficulties exist along other proposed pipeline
routes. Currently, Russia is losing major quantities of oil and gas in
the pipeline that runs through Ukraine into Europe. Despite Russia's best
efforts, it cannot negotiate safe passage of energy in a fairly settled
region.22
During the Soviet-Afghan war, the Soviets built tactical pipelines along
the eastern (Termez to Bagram) and western corridors (Kushka to Shind-
and). Although the Mujahideen preferred more heroic attacks on Soviet
convoys and forces to mundane attacks on pipelines, the Mujahideen
conducted enough attacks on the Soviet pipelines to tie down a
significant number of forces. Sometimes the Soviets lost more than 500
metric tons of petroleum, oils and lubricants (POL) in a day. The average
pipeline break cost 20 to 25 tons. The Soviets patrolled pipelines,
established security outposts along them in high-risk areas and cut deals
with local chieftains to exchange POL for pipeline security. Despite all
this, the modern mechanized Soviet force never could guarantee pipeline
security.23
In the next 10 to 15 years, oil and gas exports from the Caspian Sea and
Central Asia could possibly match those from the Persian Gulf, although
this projection may be based on optimistic estimates. The United States
considers the Persian Gulf an area of vital interest. Will the Caspian
Sea region also become an area of vital interest? Increased Western
commercial activity, US strategic interests and US law point in that
direction. If so, the United States should examine its relationship with
Russia, Iran, Turkey and the other regional states. Developing a new
market source of inexpensive energy would provide an alternative during
tense or crisis situations. Should a rogue power close the Strait of
Hormuz or organize a global cut in production, this new region would
provide alternatives to armed confrontation or diplomatic capitulation.
However, this new region is not easily accessible to the West and will
create new security concerns that eventually will affect military
planners.
A mosque nears completion at the "Five Fingers," a sacred geological
site, as vendors wait for customers for their US and regional soft
drinks. Neighboring Iran has funded largely Azerbaijan's huge upsurge in
mosque construction.
Turkey declined an Azeri government invitation to build a base in
Azerbaijan. A Turkish presence in this area could work to US advantage,
but Russia is openly opposed to such basing. To date, US attempts at
presence have been spectacular but hardly sustainable. In September 1997,
500 soldiers of the 82d Airborne Division flew 12,500 kilometers in 19
hours to conduct an airborne drop in Kazakhstan. Retiring commander in
chief, US Atlantic Command, Marine Corps General John J. Sheehan led the
drop. Although the paratroopers participated in a regional peacekeeping
exercise with troops from Kazakhstan, Uzbekistan, Kyrgyzstan, Georgia,
Latvia, Turkey and Russia, many in the region saw the US move as an
advertisement for US power-projection capability. Sheehan stated that
"The message, I guess, is that there is no nation on the face of the
earth that we cannot get to."24 The fundamental question is whether the
United States can maintain a meaningful presence there during a crisis or
conflict.
An airhead in an underdeveloped theater thousands of kilometers away from
theater logistics stocks is not power projection, nor are 500
paratroopers an operational force. Should the United States decide it
needs to get more involved in this region, it should begin with advisory
and assistance efforts to promote regional stability. There are have and
have-not nations and groups in the region. An agreement with one party
will often make an implacable enemy of another. Hopefully, commercial
well-being will transfer to national and regional well-being—though this
has seldom been the case with oil wealth—and the region will ensure the
safe transit of oil and gas without any outside interference.
Should the United States decide to establish a strong presence in the
area, it would have to create the supporting logistics and staging
infrastructure in advance. This would be an expensive step, requiring
expenditure of domestic and international political capital; approval of
local nations; a clear vision of US future strategic interests; and
construction and maintenance of a new, large overseas base.25 Perhaps a
wiser approach is to promote closer relations and provide additional aid
to our long-term regional partner, Turkey.
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1. S. Rob Sobhani, "Tapping into a Pipe Dream," Washington Times, 1
February 2001, 17. Much of this article is based on Lester W. Grau,
"Petroleo y Gas Natural del Mar Caspio, y Asia Central," Spanish-language
edition of Military Review (March-April 1998), 73-81.
2. Ahmed Rashid, "Power Play," Far Eastern Economic Review (10 April
1997), 22.
3. Tyler Marshall, "Caspian Sea: Oil in a Tinderbox," The Kansas City
Star (8 March 1998), K-6; the oil reserves of Venezuela are some 63.3
billion barrels. See "Venezuela," Jane's Sentinel (Jane's Information
Group, 1995), 26.
4. Ruth Daniloff, "Waiting for the Oil Boom," Smithsonian (January 1998),
26; Extrapolated from Marshall.
5. Stephen Kinzer, "Pipe Dreams: A Perilous New Contest for the Next Oil
Prize," The New York Times (24 September 1997), IV-1.
6. Discussions with Garrett Fonda and Tom Banks of Foreign Systems
Research Center of Greenwood Village, Colorado. The size of the Caspian
oil reserves are a matter of continued conjecture. Some sources put it at
10 percent of the world's oil reserves or five times US oil reserves. See
Sobhani.
7. Fonda and Banks. Sobhani estimates that the 5-million-daily production
will be achieved earlier in 2005.
8. Timothy L. Thomas, "Russian National Interests and the Caspian Sea,"
Perceptions (December 1999-February 2000), 75-96.
9. Leslie Dienes, "The Russian Oil and Gas Sector: Implications of the
New Property System," The National Bureau of Asian Research (March 1996),
22.
10. "Pipeline Poker," The Economist, (7 February 1998), 8; a special
Central Asia survey insert. Map is derived from the map used in this
article.
11. Carol J. Williams, "Caspian Sea Change: Moscow, Through Oil Giant
Lukoil, is Taking a More Pragmatic Approach in the Quest for its Former
Colonies' Natural Bounty," Los Angeles Times (8 December 1996), extracted
from the Internet. The figures have been rounded off.
12. "Pipeline Poker."
13. Ibid. Moving oil by supertanker is cheaper than moving oil by
pipeline, but supertankers cannot operate in the Dardanelles.
14. Ibid.
15. Bhushan Bahree, "Demands for Oil Influence Policy in Gulf," The Wall
Street Journal (23 February 1998), A17.
16. "Pipeline Poker," 11.
17. Comments to the author during an extended sojourn in Pakistan during
fall 1996.
18. "Pipeline Poker."
19. Armenia and Azerbaijan have been fighting over the Nagorno-Karabakh
region since 1988. The Soviet Union backed Armenia and invaded Azerbaijan
in January 1990—occupying Sumgait and Baku. Armenia now holds 20 to 25
percent of Azeri's territory. Azerbaijan blockaded land-locked Armenia in
response. The US Congress imposed Section 907 of the 1992 Freedom Support
Act on Azerbaijan. This prohibits virtually all US government aid to
Azerbaijan. Section 907 stipulates that the United States cannot give
assistance until hostilities cease and Azerbaijan halts its blockade of
Armenia and the breakaway Nagorno-Karabakh region. The legislative
restrictions assume that Azerbaijan is the aggressor and Azerbaijan is
violating norms of international conduct by maintaining a blockade
against its neighbor. The blockade has caused hardship to Armenia. US
economic and humanitarian aid has supported Armenia. Section 907 hinders
the United States' ability to influence Azerbaijan's development,
inhibits efforts to diversify the US energy supply and damages US
economic interests.
20. In the 1950s, the Eisenhower administration determined that access to
international oil was a US strategic concern and that antitrust laws did
not apply to international oil corporations. See Burton Ira Kaufman, The
Oil Cartel Case: A Documentary Study of Antitrust Activity in the Cold
War Era, and Trade and Aid: Eisenhower's Foreign Economic Policy, 1953-
1961.
21. The author visited Baku 20 years ago and again in January 2001 with
his associate, Dr. Jacob Kipp. Much of this section is based on their
impressions from these visits.
22. Discussions the author had with acquaintances in Moscow in December
1997.
23. Boris V. Gromov, Organichennyy kontinge [Limited Contingent] (Moscow:
Progress, 1994), 289-90.
24. Hugh Pope, "US Plays High-Stakes War Games in Kazakstan," The Wall
Street Journal (16 September 1997), A16.
25. For further background, see the following Conflict Studies Research
Centre studies: Charles Blandy, "The Caspian: A Sea of Troubles," 1997;
"Oil is not the Only Stake," 1997; "The Impact of Baku Oil on Nagornyy
Karabakh," 1997; and "The Caspian: A Catastrophe in the Making," 1997.
Michael Off, "The Regional Military Balance: Conventional and
Unconventional Military Forces Around the Caspian," 1995. An excellent
history of the region is Dilip Hiro, Between Marx and Muhammad: The
Changing Face of Central Asia (Glasgow: Harper Collins, 1994). An
excellent history of oil is Daniel Yergin, The Prize: The Epic Quest for
Oil, Money and Power (New York: Simon & Schuster, 1991).
[ Volta ]