A War for Bananas? - Part II, Caspi-Stan & The Eternal Pillars of Fire

The Pool

Ancient Zorastrians worshipped the gaseous Eternal Pillars of Fires that shot into the heavens from the soil of Baku. Trudging through Central Asia, in the 13th century, Marco Polo reported rumors of a spring in Baku that produced a black liquid, which, though not edible, was "good to burn," and useful for cleaning the mange off camels. In those days, the West was more interested in pepper and noodles so it would be several centuries before it took a more than passing interest in camel-grooming goo.

By the 19th century, goo was gold. Baku, the Azerbaijani port-capital on the Caspian Sea, was back on the map. In 1873, Robert and Ludwig Nobel made their way to Baku where they taught the natives how to pump -- rather than scoop -- for oil. By the end of the century, the Nobels and the Paris Rothschilds, were competing for control of the region’s reserves which, at the time, supplied approximately half the world’s oil.

During the 1919 Paris Peace Conference, Wilson noted that “There came in a very dignified and interesting group of gentleman from Azerbaijan - I was talking to men who talked the same language that I did in respect of ideals, in respect of conceptions of liberty, in conceptions of right and justice.”

Evidently in respect of the same conceptions, the Bolsheviks annexed Azerbaijan and took control of its resources. Following the collapse of the Soviet Union, the ex-Soviet republics of Central Asia, believing oil to be the fastest way for them to secure their economic and political independence, have sought to exploit their oil wealth.

The region's untapped oil reserves are estimated to be worth up to $2,000 billion. Six US oil giants -- Unocal, Total, Chevron/Texaco, Pennzoil, Amoco and Exxon/Mobil -as well as British Petroleum - have invested billions in the massive oil-field potential in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan -- the so-called “stan-countries”. According to the Asia Times, Jim Baker, Brent Scrowcroft John Sununu and Dick Cheney -- the Bush I team -- have all closed major deals directly and indirectly on behalf of the oil companies.

Of course, there are always the smaller deals, such as the $30 million contract Haliburton signed in early 2001 with the State Oil Company of Azerbaijan to develop a 6,000 square-meter marine base to support off shore oil construction in the Caspian.

But among the biggest and most geo-politically important deals was a $20 billion production agreement between Chevron/Texaco and Kazahkstan signed in 1993 for the development of the Tengiz field considered the world's largest oil find inthe past two decades. The deal undoubtedly owed a lot to Cheney who served on the Kazakhstan Oil Advisory Board and had close ties with Chevron and Texaco. Exxon/Mobil owns a further 25 per cent interest in the field.

In 2002, Kazahkstan sought to raise its fees, claiming among other things that Chevron and Mobil had created a bio-hazard by dumping and spewing sulfur. The oil companies countered that a little sulfur was no big deal and that the government was trying to extort additional revenue. By the end of the year, the dispute was resolved by comprise.

Although some initial estimates in the frenzied 90’s have turned out to be a little over-optimistic, it remains the case that behind Saudi Arabia and Iraq, the “Caspi-Stan” is probably the world’s third largest pool of oil. But development and production is the easy part. The vexing difficulty is how and through whom to transport the oil and, in particular, how to supply the energy-hungry Asian-Pacific economies.

The Pipes

There are three main pipeline routes for Caspi-Stan oil. Knowing what they are is to know the problems involved.

1. The Northern (East-West) Russian Route - Tengiz - Novorossiysk - Bosporus

The first new $2.65 billion pipeline of the Caspian Pipeline Consortium - a joint venture including Russia, Kazakhstan, Oman, ChevronTexaco, ExxonMobil links the enormous Tengiz oil-field in northwestern Kazakhstan to the Russian port of Novorossiysk on the Black Sea. From there oil can be shipped to the world through the Bosporus. Turkey, however, does not favor this route because, it says, of the environmental hazard to the straits.

2. The Southern (East-West) Turkish Route - Baku-Tbilisi-Ceyhan

The Baku-Ceyhan pipeline cuts diagonally across eastern Turkey to outlet on the Mediterranean at the very juncture between Turkey and Syria. The pipeline consortium for Baku-Ceyhan, led by British Petroleum, is represented by the law firm Baker & Botts, the principal partner of which is Texan superstar James Baker, former U.S. Secretary of State. Turkey favors this route as does Israel.

3. The Trans-Caspian - Tengiz to Baku

The Southern Route is only half the journey, however. It is still necessary to get the oil from Tengiz to Baku To this end the Cheney/Bush White House has promoted the development of multiple trans-Caspian pipelines that would bypass the Northern/Russian route. Enron - the biggest donor to the Bush campaign of 2000 - conducted the feasibility study for the $2.5 billion trans-Caspian pipeline to be built under a joint venture signed almost three years ago between Turkmenistan and Bechtel and General Electric. The go-between in the deal was the Israeli Mehrav Group which, according to the Asia Times, “spent a fortune hiring the Washington lobbying firm Cassidy and Associates to seduce official Washington with the trans-Caspian pipeline project.”

4. The Persian (North-South) Route

In so far as getting oil to the Orient is concerned, the North-South route through Iran is both traditional and logical. From ports on the Persian Sea, oil can be tankered to India, China and Japan without the circuitous bottle neck involved in getting oil from the Mediterranean to the Indian Ocean. As far back as 1979, while Americans were being held hostage in Tehran, Russia and Iran signed up on a joint gas pipeline. Russia is the likely co-partner for the development of parallel oil pipelines.

5. The Great Pipe of China.

A logical alternative which receives little attention in the West is the proposed Eastern Route from Central Asia to China's Xinjiang province. As yet in the proposal stage, such a pipeline (for oil, gas or both) would be under primary control of the China National Petroleum Corporation (CNPC), most likely in partnership with the so-called “Shanghai Six” (the Shangahi Cooperation Organization ) consisting of China and Russia, plus four Central Asian republics (Kazakhstan, Kyrgyzstan, Takijistan and Uzbekistan).

The Plans

Before the September 11 attacks, the US Energy Advisory Board outlined American government thinking on Caspian oil: “Stated US policy goals regarding energy resources in this region include fostering the independence of the states and their ties to the west; breaking Russia's monopoly over oil and gas transport routes; promoting western energy security through diversified suppliers; encouraging the construction of east-west pipelines that do not transit Iran, and denying Iran dangerous leverage over the Central Asian economies.”

Initially, American oil companies were not entirely adverse to transporting oil through a North-South Iranian pipeline, since these would be cheaper than theEast-West Caspian Sea alternatives. However, Iran is anathema in Washington and the Clinton Administration exerted tremendous pressure on the oil giants to build more expensive Caspian pipelines, equally avoiding reliance on Russia.

Given the official mind-set in Washington it is somewhat mystifying why the Mehrav Group should have spent a fortune hiring Cassidy and Associates to lobby for the trans-Caspian pipeline project. Whatever the case, and whether or not Russia is allured with partnerships in the Caspian Pipeline Consortium, Washington’s Central Asian policy is in place.

A front-page story in the Jan. 9, 2002 New York Times revealed that “the United States is preparing a military presence in Central Asia that could last for years,” including the building of a permanent air base in the Kyrgyz Republic, formerly part of the Soviet Union. The Bush II Administration says that it just wants to keep an eye on postwar Afghanistan, but few students of the region buy the official story.

China and Russia reached their own conclusions. In June 2002, they pulled the four central Asian republics into a “Shanghai Cooperation Organization”. Its purpose, according to Jiang Zemin, is to “foster world multi- polarization”, by which he means contesting the uni-polarity of US policy often referred to as the doctrine of “full-spectrum dominance”.

The Asian Times reports that China is using the SCO to align Russia economically and politically towards China and northeast Asia. At the same time, Russia is using the SCO to maintain its traditional hegemony in Central Asia. The name of the game for solidifying the alliance is Russian export of its enormous reserves of oil and gas.

©WCG, 2003
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