Sunday, Jan 11, 2004
Russia upstages U.S. in Caspian oil game
By Vladimir Radyuhin
MOSCOW, JAN. 10. Russia has stolen a march on the United States in the race for control of Caspian oil, winning long-term commitment from Kazakhstan to use Russian pipelines for exporting its hydrocarbons to Europe.
The Kazakhstan President, Nursultan Nazarbayev, told the visiting Russian President, Vladimir Putin, that Russia was a "priority transit route for Kazakh oil."
"We have discussed ways of piping more Kazakh oil across Russia via new pipelines to the Baltic Sea and by expanding the capacity of the existing oil and gas lines," the RIA Novosti news agency quoted Mr. Nazarbayev as saying at a joint press conference with Mr. Putin in the Kazakh capital Astana.
Kazakhstan, which produced 45 million tonnes of oil last year, pumped 32 million tonnes for export through the pipelines of the Caspian Pipeline Consortium running from northern Caspian across Russia to the Black Sea port of Novorossiisk. The Kazakh leader said the piping of Kazakh oil via the CPC line could be increased to 48 million tonnes.
CPC pipeline is the main rival of the U.S.-supported Baku-Tbilisi-Ceyhan pipeline being built from Azerbaijan across Georgia to Turkey. Azerbaijan's oil reserves, however, are insufficient to fill the BTC pipe when it becomes operational in 2005, and the U.S. has been lobbying Kazakhstan, which plans to triple its oil output, to channel its main oil exports through BTC. The agreements reached by Mr. Putin in Astana dealt a blow to Washington's hopes.
"Russia and Kazakhstan are drafting a long-term programme for the transit of Kazakh oil across Russia till the year 2020," the Russian Deputy Premier for Energy, Viktor Khristenko, told reporters after Mr. Putin's talks with the Kazakh leadership. He said a separate programme would cover the transit of Kazakh gas via Russian territory.
A Russian Government source reiterated Moscow's negative view of the alternative BTC route.
"We continue to believe that this pipeline is economically inexpedient," the source told RIA Novosti. "It is a money-losing project, as its rated capacity is 60 million tonnes of oil a year, but there is outlook for no more than 28 million tonnes of oil, and only half of it has been tapped so far."
On the sidelines of Mr. Putin's visit the Russian oil major Lukoil signed an accord for the investment of $3 billions into joint development of Kazakhstan's oil and gas fields in northern Caspian.
Copyright © 2004, The Hindu.