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Georgia: A small pawn in the Great
Game
By Sergei Blagov
MOSCOW
- As Georgia welcomes in a new president this week after
the US-encouraged regime change in November - despite
Russia's last-minute efforts to mediate between warring
sides - Moscow and Washington appear to be on the verge
of a micro-Cold War over the country. Subsequently, the
Kremlin remains wary.
Russian President Vladimir
Putin has made it clear that Moscow is concerned that
Eduard Shevardnadze's resignation took place under
"forceful pressure". Foreign Minister Igor Ivanov stated
that the regime change was not entirely democratic.
Moscow and Tbilisi have been divided on a
variety of issues, including the continued Russian
military presence in Georgia and its breakaway republic
of Abkhazia. However, tensions between Russia and
Georgia have been seen in a wider context of the Great
Game over lucrative transit routes for crude oil from
untapped fields in Central Eurasia.
It has been
understood that Georgia's continued status as a failed
state would have disrupted the United States' plans for
a new pipeline from the oil-rich Caspian Sea to the
West. Therefore, a stronger leadership was needed to
secure the Baku-Tbilisi-Ceyhan (BTC) pipeline from
Azerbaijan's and Kazakhstan's Caspian oilfields through
Georgia to Turkey's Mediterranean port of Ceyhan. The
US$2.75 billion project is due to start pumping oil in
2005.
Georgia's apparent president-elect,
US-trained lawyer Mikhail Saakashvili, has repeatedly
pledged to prioritize the BTC despite maneuverings by
some external forces. Last month, Avtandil Ioseliani,
head of Georgia's Intelligence Department, warned that
the BTC might be blown up by terrorists on Georgian
soil. Yet the real issue in discussions over the BTC and
other oil-transit routes seems to be the control over
outflows of crude from the Caspian region, while Georgia
per se remains of little significance.
Russia
has been sending mixed signals about the BTC pipeline,
raising questions about Moscow's strategy for the
US-backed project. For instance, Russia's special
Caspian envoy, Deputy Foreign Minister Viktor Kalyuzhny,
stated earlier that he "personally, as a Russian
citizen, is against the construction of this pipeline".
Kalyuzhny and other Russian officials have argued that
Baku-Ceyhan is not "economically viable", yet they
carefully refrained from attacking the BTC, for
political reasons.
Russia's stated economic
concerns over the BTC include questions about whether
the pipeline will attract enough oil to fill its
capacity of 1 million barrels per day (b/d).
Meanwhile, Moscow rushed to build an alternative
transit route. The Caspian Pipeline Consortium's (CPC)
$2.5 billion, 1,500-kilometer line from the Tengiz
oilfield in Kazakhstan to the Russian port of
Novorossiisk on the Black Sea opened in 2001. Russia has
the biggest share in the CPC pipeline, with a stake of
24 percent. The CPC crosses Russian territory and pays
Russian transit fees.
The CPC's capacity is at
present 600,000 b/d, and will eventually be expanded to
1.34 million b/d by 2015. The CPC indicated it would
pose serious competition to the BTC concerning the
export of crude from Kazakhstan. In December 2001,
Kazakh officials created a working group to study the
feasibility of exporting oil from the Kashagan oilfield
through the CPC.
The BTC's capacity of 1 million
b/d (50 million tons per annum) was designed largely on
the premise that Kazakh oil would be part of the flow
stream. If the CPC and other alternatives are
implemented, Azerbaijan, Georgia and the US would be on
the losing side, both strategically and economically.
Kazakhstan's participation in the BTC remains uncertain
as Astana is now seemingly leaning more strongly toward
the alternative routes for exporting oil from the giant
Kashagan field.
During the Organization for
Security and Cooperation in Europe summit held in
Istanbul in November 1999, Kazakh President Nursultan
Nazarbayev signed a protocol pledging Kazakh oil for the
BTC. Subsequently, Nazarbayev clarified that the
protocol was meant merely to signify intention, since
new oil deposits in Kazakhstan had not yet been
confirmed.
That was before discovery of the
giant Kashagan oilfield off the Kazakh coast in the
northern Caspian. The discovery of oil in Kashagan
East-1 by the Offshore Kazakhstan International
Operating Co (OKIOC) in July 2000 heightened interest in
Kazakh oil exports.
In late 2000, Nazarbayev
raised the prospect of extending the BTC eastward to
Aktau, a Kazakh seaport on the Caspian coast. In March
2001 Nazarbayev, reportedly under urging from the US,
signed a memorandum of understanding (MoU) in Astana
confirming Kazakhstan's intention to join the BTC. US
officials hailed the document as a positive development
for the east-west energy corridor long promoted by the
United States.
Subsequently, Kazakhstan further
distanced itself from the BTC. Kazakh officials
"clarified" that Kazakhstan favored multiple routes, and
that the BTC was only an option. Kazakh officials
indicated their preference for multiple pipelines, at
times hinting at the Iran route as one of their choices.
In October 2000, Kazakhstan commissioned TotalFinaElf, a
shareholder in the OKIOC, to study the feasibility of
exporting Kashagan oil through Turkmenistan and Iran.
Kazakhstan has also signed an MoU with the Kashagan
consortium to study the feasibility of a sub-sea
pipeline across the Caspian from Aktau to the Iranian
border.
A trans-Caspian sub-sea pipeline
connecting Kashagan to the BTC, while favored by the
United States, currently stands little chance.
Representatives of Kazakh oil companies told Azerbaijani
officials in December 2001 that they would not
participate in the construction of a sub-sea pipeline
from Aktau to Baku, citing high-cost concerns. Russia
and Iran are both strongly against such an underwater
pipeline, purportedly on ecological grounds.
Moreover, Kazakh officials' support of the BTC
has appeared half-hearted. For instance, Nazarbayev has
stated that the "efficiency of the Baku-Ceyhan is not
proven", echoing Moscow's argument. Last month, Yerzhan
Utembayev, deputy head of the Kazakh presidential
administration, stated that Kazakhstan would be able to
supply crude for the BTC "no earlier than 2010 or even
2015".
Without Kazakh oil, and unless new
Azerbaijani oil reserves are discovered in the near
future, it is unlikely that the BTC will reach the
planned 1 million b/d peak capacity.
Kashagan
production is scheduled to start in 2005. One way to
transport early oil is to use tankers and barges from
Aktau to Baku. To facilitate this alternative, the
United States has financed studies aimed at upgrading
port facilities at Aktau and Dubendi, the latter a tiny
port on the Absheron Peninsula in Azerbaijan.
Now, Kazakhstan is a mid-sized independent oil
producer. The country pumped 303.6 million barrels (41.3
million tons) of crude oil from January-November 2003,
or nearly 9 percent up on a year-on-year basis.
Kazakhstan plans to more than triple oil output to about
3 million b/d by 2015.
Russia has been pressing
Kazakhstan to sign a long-term agreement to transport
its oil via the CPC. The deal could discourage
Kazakhstan from using other routes, including the
US-backed Baku-Ceyhan pipeline. Moscow has also urged
Astana to upgrade the existing Atyrau-Samara oil
pipeline's capacity from 17 million tons up to 25
million tons a year.
A compromise solution,
splitting Kashagan's oil between the BTC and the CPC, is
not out of the question. The transport of Kashagan
crude, depending on reserves, could require construction
of one or more pipelines, through Iran, Russia,
Afghanistan and possibly China. With Kashagan reserves
possibly as high as 10 billion to 12 billion barrels of
oil, it may require several alternative pipelines. Hence
a geo-strategic rivalry between US- and Russian-backed
oil-transit routes seems set to continue in the Caspian
region.
(Copyright 2004 Asia Times Online Ltd.
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