Russia fears losing to US on Caspian oil

Ulhas Joglekar ulhasj at SPAMbom4.vsnl.net.in
Thu Nov 18 05:24:57 MST 1999



15November1999
Russia fears losing to US on Caspian oil
Sebastian Alison

Moscow: Russian Defence Minister Igor Sergeyev's claim on Friday that the US
wants a weak Russia and to dominate the Caucasus reflects growing Russian
anger that the US is winning the race to control Caspian oil, analysts
said.Sergeyev said US and NATO policy towards Russia was of "weakening its
international position and ousting it from strategically important regions
of the world, above all the Caspian region, the Trans Caucasus and Central
Asia."
Oil and gas are the economic lifeblood of the Caspian basin, and oil exports
from the region have traditionally moved by pipeline across the Caucasus and
through Russia's rebel region of Chechnya to Russian ports on theBlack Sea.
This gave Russia effective control over the region. But since the end of
Soviet power in 1991, the new Caspian states have been trying to secure
their independence from Russia by seeking new export routes.
The United States has given them enthusiastic support, to Russia's
undisguised dismay.
The US has for years employed a specialadviser to the President on Caspian
energy issues, whose main function is to persuade governments and companies
in the region of the desirability of building export routes avoiding Russia
and Iran.
"One of the key tenets of US Energy policy is to prevent dependence of
Central Asia and the Trans Caucasus on Russia, and to allow them
independence not only politically but economically," Stephen O'Sullivan,
head of research at United Financial Group in Moscow, said. "Obviously
transport routes are part of this."
He added that US interests in the region included energy and general
political stability, "but the political stability is only important because
energy routes transit the region."
Russia losing influence to US interests
Russia has suffered significant setbacks in recent months.At the beginning
of the year, Russian crude oil pipeline monopoly Transneft effectively lost
control of the main crude pipeline running across Chechnya from Baku in
Azerbaijan to the Black Sea Port of Novorossiisk,and was forced to close it.
It attempted to limit the damage by moving oil by rail through Dagestan,
which neighbours Chechnya, and last month began building a new pipeline
there bypassing Chechnya.
But while Azerbaijan has agreed to export a certain volume of oil every year
across Russia, it has so far failed to agree to commit any extra volumes
through the new line, making it a potential white elephant.
In April a pipeline opened from Azerbaijan to the Georgian Black Sea coast,
allowing Azerbaijan's main foreign producer, a consortium led by BP Amoco,
to avoid Russia altogether.
And persistent diplomatic pressure from the US Caspian energy adviser, John
Wolf, appears to be paying off.
In a major about-turn, BP Amoco said last month it supported a main export
pipeline from Azerbaijan and the Caspian which would run to Ceyhan on
Turkey's Mediterranean coast, a key US aim which incidentally ensures main
exports will avoid Russia.
On top of this, the US is also urging that Turkey should receivenatural gas
from Turkmenistan and Azerbaijan by a pipeline running under the Caspian
Sea.Russia sees this as undermining its own project to supply gas by a
pipeline from Russia running under the Black Sea.
Analyst Julian Lee of the Centre for Global Energy Studies in London said
Sergeyev's belief that the US was trying to weaken it was justified."The
Russian attitude is very understandable. There is a genuine desire (by the
US) to make sure that Russia doesn't have a stranglehold over hydrocarbon
exports from the Caspian."
"This is not necessarily because Russia is a bad business partner, but more
because the US is keen to see the development of independent states between
Russia and Iran."
O'Sullivan said no regional country was deliberately looking to keep Russia
from acting as a regional power, but by supporting other routes they were
diminishing its influence.
"US policy is not necessarily opposed to Russia, but it actually does oppose
Russia because of what it's saying."
-- REUTER
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.

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