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The Forging of
'Pipelineistan'
Oil, Gas Pipelines High
Priority for U.S. in Central Asian Military Campaigns
by Dale Allen Pfeiffer, FTW
Contributing Editor for Energy
[Copyright 2002, From The Wilderness
Publications, www.copvcia.com. All Rights Reserved. May be
copied, distributed or reposted for non-profit purposes only]
[Ed. Note: The need for
major oil companies to
monetize billions in investments in Central Asian oil fields
has been cited frequently by FTW as one of the
major motivations for
U.S.
complicity in the attacks of last September. Other motives
have included economic control of an estimated $200 billion in
cash generated by the opium trade from the region,
geopolitical neutralization of potential threats to
U.S.
global dominance and, more recently, an apparently frenzied
and progressively less coordinated effort to do whatever is
necessary to sustain a failing
U.S.
economy.
We felt it important, 10 months after
9-11, to take a close look at the status of the various
pipeline projects in and
around
Afghanistan.
The results are surprising.
There is no doubt that the removal of Al Qaeda and the Taliban
has added to the stability of the entire region by removing
their support for a number of Islamic terrorist groups in
Central Asia, Russia and the Caucasus -- all of which
threatened any pipeline construction
projects from the Caspian Sea
and Central Asia. Even though Unocal still affirms that it has
no interest in a trans-Afghan gas pipeline it abandoned in
1998, credible sources are indicating that it has not written
off participation in an oil pipeline that will follow the same
route. But Afghan stability remains an apparently unachieved
objective.
What is becoming more apparent is that an
arrogant and increasingly criminal administration is less and
less effective in realizing its foreign policy
objectives and the resulting
dangers of a global conflagration are
increasing. Is there an even
larger agenda being pursued? Perhaps. But what we know, 10
months after 9-11, is that there is less of the coveted oil in
the region than was thought, and that the political stability
necessary to complete the pipelines is apparently more elusive
than the Bush Administration has hoped it would be.
Nonetheless, pipeline construction is still a high
priority.
In this context we note a July 6 story
from the Moscow Times reporting that the first-ever direct
shipment of Russian oil to the
U.S.
consisting of 200,000 metric tons arrived in
Houston July 3. --
MCR]
July 10, 2002, 19:45 PDT (FTW) -- Pipelines
and oil deals seem to be spreading out all over Central Asia.
The players include all of the
major oil companies,
especially those with close ties to the Bush Administration,
along with Russian oil companies, the World Bank, the Asian
Development Bank, and the Central Asian republics themselves.
Only the Afghanistan pipeline seems to be moving slowly.
Meanwhile, Caspian Sea oil reserves have been
downgraded, British Petroleum shows more signs of industry
downsizing, and Matthew Simmons, an oil industry insider, is
warning of a perfect energy storm.
Who Owns Caspian Sea Resources?
Following the collapse of the Soviet Union,
the world energy industry began drooling over the newly formed
Central Asian republics and the Caspian Sea. Exploration
quickly found what appeared to be enormous, untapped fields of
oil and natural gas. Throughout the 1990s, deals were made
with various countries claiming ownership of energy reserves.
Unfortunately, according to the Department of Energy (DOE),
the legal status of the Caspian Sea has yet to be resolved.
Prior to 1991, the only countries bordering
the sea were the Soviet Union and Iran. These two countries
were bound by the 1921 and 1940 bilateral treaties, which
stated that Caspian resources were to be owned
jointly. Since the
dissolution of the Soviet Union and emergence of Kazakhstan,
Turkmenistan and Azerbaijan,
there have been numerous disputes about resources in the
Caspian Sea. Disputes came to a head in July 2001, when
Iranian gunboats confronted a British Petroleum research
vessel and ordered it out of waters to which Iran lays
claim.
Negotiations among the littoral states have
made very slow progress in ironing out the disputes. A summit
of the heads of state from the various Caspian Sea countries
was postponed several times in 2001, as it became apparent
that parties could reach no final agreement. For this reason,
while many deals have been proposed between various energy
consortiums and republics, none have materialized. Until the
ownership status of the Caspian Sea has been resolved, there
will be no further development of the SeaÕs oil and gas
resources. (See source 1 below)
'Pipelineistan'
Ownership disputes do not extend to
continental reserves, as international borders have been
clearly delineated. Therefore, the development of land-based
resources has been met with a flurry of activity. Considering
that the countries of Central Asia are largely landlocked,
there has been enormous pipeline building activity to bring
Central Asian energy resources to the markets where they are
needed.
Projects are
underway to ship energy north through modified Russian
pipelines. The largest of these
projects is a 980-mile
pipeline from KazakhstanÕs Caspian Sea oil fields across
Kazakhstan and Russia to the Black Sea port of Novorossiisk.
Construction began in 1999, and this pipeline is the largest
single American investment in the region. As reported by
AlexanderÕs Gas and Oil Connections website, the main client
for this pipeline will be TengizChevrOil, half of which is
owned by Chevron, a quarter by ExxonMobil and a quarter by
Russian and Kazakh partners. (See source 2)
There are also several
projects to either truck or
pipe energy through Georgian territory, according to the DOE.
Chevron has a strong interest in this option, along with
Conoco. The U.S. Trade and Development Agency funded a
$750,000 feasibility study by Enron for a natural gas pipeline
from Turkmenistan, through
Azerbaijan and Georgia, to
Turkey. Another feasibility study was completed by Unocal.
There have been negotiating problems among the various
countries, and PSO (co-operator with Royal Dutch/Shell) closed
its Turkmenistan office in 2000. Talks about the
project have resumed, but the
legal issues of Caspian Sea ownership complicate the
project. (See source 3)
ChevronÕs involvement throughout the region
is quite ubiquitous. AlexanderÕs Gas and Oil Connections
reported the company has invested more than $20 billion in
Kazakhstan alone. From 1989 to 1992 National Security Adviser
Condoleezza Rice was on the board of directors of Chevron, and
was its main expert on Kazakhstan.
Other
projects are also underway,
most of them ending with energy in Turkey, where it would be
transported through the Bosporus Straits to markets in Europe.
There is a great deal of concern about Bosporus Straits
traffic, which has already become a
major bottleneck for oil
tankers. There are environmental concerns about possible
collision, and for this reason, options are being considered
for oil transiting the Black Sea to bypass the Bosporus
Straits.
As for the market, the big question has been:
should the pipelines flow east or west? The western route
would be easier, as much of the infrastructure is already in
place. There are several
projects underway or
completed for bringing energy resources to the west. However,
European oil demand over the next 10 to 15 years is expected
to grow by only one million bbl/d, while Asian demand is
expected to grow by at least 10 million bbl/d over the same
period. Therefore, greater profit is seen in piping these
resources to the east.
Unfortunately, an eastward route would
require the longest pipelines in the world. Formidable
mountains would require long detours to the north, or a
shorter route to the south through either Iran or Afghanistan
and Pakistan. The Iranian route is prohibited under the Iran
and Libya Sanctions Act. Therefore, Afghanistan and Pakistan
are the choice for energy flowing eastward. (See source 4)
The Trans-Afghanistan Pipeline
Efforts to revive the trans-Afghanistan
pipeline began soon after the U.S. incursion into that
country. The pipeline from Turkmenistan to Pakistan was first
discussed in the late-1990s, with a consortium led by Unocal
pushing the project. Unocal
backed out in 1998 after international financial institutions
refused to help cover the cost of the
project so long as
Afghanistan was racked by armed conflict. (See source 5)
As reported by the Asia Times, in July 2001 a
strategy to topple the Taliban and replace it with a
Òbroad-based government,Ó was discussed during the G8 summit
in Genoa, Italy. (This
subject was first broached in
Geneva at a May 2001 meeting between the U.S. State
Department, Iran, Germany, and Italy.) Following within days
of the G8 summit, secret negotiations were conducted in a
Berlin hotel between American, Russian, German and Pakistani
officials. Pipelineistan was the central topic of these
negotiations, and a plan was set up for military strikes
against the Taliban from bases in
Tajikistan to be launched
before mid-October 2001. (See source 6)
Soon after the invasion began in October, the
pipeline project was
discussed in Islamabad between Pakistani Petroleum Minister
Usman Aminuddin and American Ambassador
Wendy Chamberlain.
Subsequently, during a visit to Ashgabat, Turkmenistan on Jan.
31, Deputy Secretary of State Elizabeth Jones told Turkmen
President Saparmurat Niyazov that Washington would support
such pipeline projects so
long as they were commercially viable. (See source 7)
In April Niyazov called for the United
Nations to support a plan to build a gas pipeline linking
Turkmenistan to Pakistan, reported EurasiaNet. The
project was being touted for
bringing stability to Afghanistan. Support from the UN would
boost the status of the
project and clear the way for
guarantees from international institutions like the UN
Development Program. (See source 8) Also in April as reported
by Agence France-Presse, World Bank chief
James Wolfensohn said he had
held talks about financing the Trans-Afghanistan gas pipeline.
Wolfensohn, during a visit to the Afghanistan capital, Kabul,
stated that a number of companies had already expressed
interest in the project. (See
source 9)
So far, no corporations have been named as
firmly signing on to the
project. Several sources have
stated that Unocal will likely come forward again to
join in the
project, according to the
DAWN Group of Newspapers. (See source 10) Most notably, Afghan
Minister for Mines and Industries Mohammad Alim Reza has
stated that Unocal was still in the lead attempting to win the
$2 billion trans-Afghanistan pipeline. (See source 11)
According to NewsBase, Unocal followed this announcement with
a statement that it has no intention of reviving the Central
Asia Gas Pipeline (CentGas)
project. (See source 12)
However, Unocal has made no statement contradicting reports
that it has a project to
build the Central Asian oil pipeline, linking Turkmenistan
both to RussiaÕs existing Siberian oil pipelines and to the
Pakistani coast. This oil pipeline will run parallel to the
proposed gas pipeline route through Afghanistan, reported the
Asia Times. (See source 13) It is possible that UnocalÕs
denial of interest in the gas pipeline could
just be for public
consumption. Prior to stepping down from the CentGas
project, Unocal was targeted
by human rights groups for its dealings with the Taliban.
Energy experts have indicated that companies
owned or formerly managed by Bush senior and Vice President
Dick Cheney are showing a keen interest in Caspian Sea
reserves, the DAWN Group reported. (See source 14) And the
U.S. is expecting investment from U.S.-based energy
conglomerates through Overseas Private Investment Corporation
(OPIC) to resuscitate the Afghan pipeline
project. (See source 15) It
has been noted that despite assurances from Afghan and
Pakistani leaders, continued volatility in the region is
deterring energy corporations from offering to help build the
pipeline. It is suggested that it may take several years of
political stability before the
project could be seriously
revived. However, the Asian Development Bank (ADB) is also
keenly interested in the
project. ADB loans will
likely be used to cover part of the cost of building the gas
transport system, with funds from donor countries for the
reconstruction of Afghanistan covering the rest, according to
the BBC and NewsBase. (See sources 16 and 17) It will be
interesting to see what role Halliburton, formerly chaired by
Cheney, plays in the pipeline construction.
On May 30 AfghanistanÕs interim leader, Hamid
Karzai, TurkmenistanÕs President Niyazov, and Pakistani
President Pervez Musharraf met in Islamabad to sign a
memorandum of understanding on the trans-Afghanistan pipeline
project. As a first step, the
three countries will begin work on a feasibility study. A
preliminary assessment will be issued in late-September and
the three leaders will meet for more talks on the
project in October, reported
NewsBase. (See source 18) The Turkmen-Afghan-Pakistani gas
pipeline accord has been published and can be viewed at the
following website:ááá
http://www.gasandoil.com/goc/news/nts22622.htm.
Caspian Oil Estimate Revised Down
Early estimates of Caspian Sea oil reserves
ranged from 115 billion to 200 billion barrels. These
estimates have been rightfully viewed with scepticism as they
were based on a 10 percent probability of recovery -- that is,
they were considering oil that could not be recovered. Now
this assessment has been severely downgraded by oil industry
insiders.
Speaking on April 8 in Almaty, Kazakhstan at
the Eurasian Economic Summit, Gian Maria Gros-Pietro, chairman
of ItalyÕs Eni oil company, said the Caspian contains 7.8
billion barrels of oil, the Interfax news agency reported.
This is confirmed by AgipÕs statement in Energy Day of May 30
that the recoverable reserve potential of Kashagan is only 1.2
billion barrels. With these revisions, it is questionable
whether the Caspian Sea region will ever approach the
importance of the Middle East with regard to energy reserves,
according to the Association for the Study of Peak OilÕs
(APSO) June newsletter. (See source 19)
Finally, in reference to the table below of
world energy reserves, note that the Caspian Sea region is
included in the Former Soviet Union, amounting to less than
one tenth of Middle East reserves. In fact, added together,
the rest of the world only contains 364.5 thousand million
barrels in proven reserves, or 53 percent of the proven
reserves of the Middle East.
Source: BP Statistical Review of World Energy
2002; http://www.bp.com/centres/energy2002/index.asp
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enlarge |
More Evidence of Oil Company Downsizing
Also from the June APSO newsletter, we find
more evidence of oil company
downsizing. The newsletter
cites World Oil articles stating first that British
Petroleum has decided to
completely curtail political contributions in the U.S. BP
spent $834,000 in such contributions in 2001. The APSO
observes that this decision says more about reduced activity
than anything else. [Ed. Note: Although it may say something
about BPÕs grand jury
exposure for bribery allegations in the U.S. and its 2000
campaign donations to Attorney General
John Ashcroft. -- MCR]
Likewise, BP is replacing staff with consultants. The aim is
to downsize the staff of various drilling operations by
between 30 percent and 40 percent. This does not speak well
for future drilling activity. (See source 20)
The Perfect Energy Storm
Finally, from a presentation at the June 21
Energen Corporation Board Retreat, Matthew R. Simmons,
president of Simmons & Company International (an
investment banker for the energy industry) spoke about a
looming natural gas crisis.
Toward the end of his presentation, Simmons
listed the following ingredients for a perfect energy storm:
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