Pipeliners

MOSCOW (RIA Novosti economic commentator Vasily Zubkov) - The ceremony of commissioning the Azerbaijani section of the new Baku-Tbilisi-Ceyhan (BTC) pipeline again drew the attention of analysts to the project. Moscow did not support the idea of the pipeline but did not interfere with it either, though it had said that it would not provide oil to it. Sergei Grigoryev, vice-president of Transneft, had said that each state had an inalienable right to build what it needs. I would add, even if the project were unprofitable. Baku cannot supply as much oil as the new, highly expensive pipe from the Caspian to the Mediterranean can pump. Nobody is talking any more about the allegedly giant underwater oilfields on Azerbaijan's shelf. The truth is that the bulk of oil is concentrated on the eastern, Kazakh, coast of the sea. The competition of oil companies for transportation routes, which is always tough, has never been so politically loaded as in the case of the BTC, described as the main geopolitical project of the U.S. in the former Soviet states. The late president of Azerbaijan Geidar Aliyev had said that the pipeline would pump oil in one direction and politics in the other. Oil has not started flowing west yet, but Georgia, a member of the project, has been shaken by a pro-American revolution. Americans spent through the nose to create the first stage of the Great Oil Road, laying pipes by a route bypassing Russia, which, as it grew stronger economically, is making public its view of developments in the former Soviet states, in particular on its southern borders, increasingly often. But will this pipe lower the transit potential of Russia? The new supermodern ports on the Baltic Sea, the upgrading of the Baltic Pipeline System to 60 million tons this year, and the nascent construction of pipelines in Russia's European north and the Far East will guarantee Russia a long geopolitical transit life in Eurasia. The rerouting of Azerbaijani oil from Novorossiisk to the new pipe was hardly noticed, because it accounted for a mere 1% of Russia's oil exports. Baku says openly that it would like Russian oil companies to become its clients; it needs them to ensure the BTC's estimated capacity of 50 million tons a year. Besides, the capacity of the Russian pipe monopolist, Transneft, has been larger than the oil output for a second year running, according to its president Semyon Vainshtok. The production of oil is lagging behind the construction and modernization of pipelines and ports, though this year Transneft plans to increase export deliveries by 16% to 255 million tons. There will be a surplus of pipe capacities in the future, and so Russia does not plan to change export routes. A spokesman of LUKoil, which works energetically on the Caspian shelf, told RIA that the current rates and the absence of "lines" for Transneft's pipe suit his company. Rosneft and other oil majors do not plan to change export routes either. Russia plans to complete the construction of an alternative route to the BTC, from Burgas in Bulgaria to Alexandroupolis in Greece, bypassing the Turkish straits. It will be more profitable than the BTC: its length is slightly more than 300km (1,767km in the case of the BTC), its throughput capacity is 35-50 million tons (50 million) and it will cost about $700 million (some $4 billion). With the completion of this pipe, tankers with Russian oil will no longer have to spend weeks in the Turkish straits. Baku thinks that the Kazakh oil can "save" the BTC, to a degree. President of Kazakhstan Nursultan Nazarbayev was the highest foreign guest at the commissioning ceremony and expressed interest in the pipe, but his republic will not hurry to sign a contract. This proceeds from the recent statement by Lyazzat Kiinov, deputy minister of energy. He said that his country had an operating project Aktau-Baku and hence the new pipe would be filled exclusively by Azerbaijani oil. Kazakhstan will ponder participation in the BTC project only when the new pipeline to the Mediterranean is completed. What effect would it have on the Transcaucasus? Though there is not enough oil for the pipe so far, the aggregate capital of companies in the BTC consortium is $1 trillion, which makes the pipe an instrument of powerful political influence in the region. This is the opinion of Eduard Agadzhanov, of the Armat Center of Democratic Development and Civil Society (Armenia). In view of the unsettled Armenia-Azerbaijan conflict over Nagorny Karabakh, the powerful U.S. assistance to Baku is radically changing the geopolitical situation in the region.