Regards, Ivan
Posted on 05/24/2005 3:50:15 PM PDT by MadIvan
A new pipeline will pump Azeri oil to the mediterranean directly
THE elegant mansions of Baku’s first boom town are crumbling and overgrown, hollow relics of the days when this port on the Caspian Sea provided half the world’s oil.
The original oil barons — the Nobels and Rothschilds — abandoned them when Baku’s oil industry was nationalised after the 1917 Bolshevik Revolution. But almost a century later, the city stands on the brink of a second oil boom with the official opening today of a controversial pipeline built to take Caspian oil to the energy-hungry West.
President Aliyev of Azerbaijan will open the taps of the Baku-Tblisi-Ceyhan (BTC) pipeline this morning in front of world leaders and oil executives at the Sangachal oil terminal, south of Baku, the Azeri capital.
The pipeline, billed as the world’s biggest energy scheme, winds its way for 1,094 miles from Baku, through Tbilisi, the capital of neighbouring Georgia, to the Turkish Mediterranean port of Ceyhan.
When fully operational by 2009, it will carry a million barrels of oil a day — 1 per cent of global production — from fields off the coasts of Azerbaijan and Kazakhstan.
The $4 billion (£2.1 billion) pipeline — built by a consortium led by BP — will alter the geopolitical map by allowing Caspian oil to bypass Russian pipelines and the congested Bosphorus strait.
It will provide the West with a long-sought alternative energy source to the Middle East, and consolidate the strategic foothold of the United States in Moscow’s traditional backyard.It will allow Baku to reclaim its status as the original oil boom town. “I do not doubt that very soon Azerbaijan will turn into a rich state,” President Aliyev said last week. “Each citizen of Azerbaijan should take advantage of this chance.”
Already the city’s historic Old Town is being smothered by high-rise flat blocks, neon-lit shopping malls and the fumes from countless top-of-the-range SUVs and Mercedes.
The pipeline’s proponents talk breathily about Azerbaijan becoming a new Kuwait — even a Norway. The risk, analysts say, is that it turns into another Nigeria. And some question the wisdom — and huge cost — of building a pipeline through one of the world’s most volatile regions to access oil reserves that have so far failed to meet expectations.
The pipeline passes close to Azerbaijan’s tense ceasefire line with neighbouring Armenia, runs near to separatist regions in Georgia and skirts Kurdish areas in Turkey.
Horseback security guards will patrol it daily in Georgia and Azerbaijan, which have also formed special forces units to combat terrorist attacks.
And in the past week, a government crackdown on the opposition in Azerbaijan has highlighted another potential source of political instability that could disrupt the pipeline.
On Saturday, Azeri police detained 30 leading opposition members and then severely beat and arrested another 45 during a peaceful prodemocracy demonstration in central Baku. The Azeri authorities said that the rally was banned because it was too close to today’s ceremony, which will be attended by foreign dignitaries including Lord Browne, chief executive of BP, the Duke of York and Sam Bodman, the US Energy Secretary. But David Woodward, the president of BP Azerbaijan, told The Times: “It’s very unfortunate. I don’t see that there was a risk to those attending the ceremonies.”
He added: “We want to be operating in a country where people are fairly represented. Stability is most likely to be ensured by continuing the democratic process so that all people can benefit from our presence and the revenues from the oil business.”
Richard Boucher, the US State Department spokesman, also said that the Azeri Government’s actions were “regrettable”. The crackdown was especially embarrassing for Washington as only two weeks ago President Bush hailed neighbouring Georgia as a “beacon of liberty” in a speech in Tblisi and vowed to spread democracy around the region.
Azerbaijan is considered to be one of the former Soviet Union’s most authoritarian regimes — and a potential site of a revolution like those that overthrew the corrupt postSoviet elites in Georgia in 2003 and in Ukraine last year.
The Azeri opposition accuses the Government of rigging the last presidential election, when Mr Aliyev succeeded his late father, Heydar, and of planning to fix parliamentary elections in November. It has urged Western governments and companies to put pressure on the Azeri Government to guarantee media freedom and a fair election. “We will struggle to end this dictatorial regime. The international community must react seriously and apply pressures on Azerbaijan, which is heading towards authoritarianism,” said Sardar Jalaloglu, deputy-chairman of the opposition Azerbaijan Democrat Party.
Yet Western governments and oil firms have backed the pipeline project which, starting from next year, will bring some $5 billion annually into the Azeri Government’s coffers.
The key issue, analysts say, is how that money is spent. Farhad Aliyev, the Azeri Minister for Economic Development, said that the Government would use the oil revenues to improve basic infrastructure, education and healthcare. “Our objective is not just to sell Azeri oil abroad, but to contribute to the social, economic and political development of Azerbaijan,” he said. “We need to use the oil revenues in the most effective way. As oil revenues grow, we must try to make sure the economy does not just depend on oil.”
But he grew defensive when asked about the opposition crackdown. “The opening of the BTC pipeline is a historic occasion,” he said. “There was no reason for the opposition to hold their demonstration.”
The Government has taken some steps in the right direction. It has won international praise for setting up a state oil fund, where a large chunk of oil revenues is placed to be invested for future generations. But some economists already see danger signs. Inflation is in double figures; the economy is at risk of overheating as investors rush to cash in on a property and retail boom.
A recent assessment by Transparency International, the anti-corruption watchdog, placed Azerbaijan 140th out of 146 in its world rankings. With Azeri oil expected to run dry by 2020, the pace of economic and political reforms needs to increase dramatically if the country is to avoid the sort of upheavals that struck Georgia, Ukraine and Kyrgyzstan.
“Unless people feel they are benefiting from our presence then it’s not going to be a sustainable environment for us to do business,” Mr Woodward said. “We need to be here not just for a few years, but for the next few decades.”
Regards, Ivan
Ping!
I don't think I'm interested in doing business there.
Would love to have an excuse to visit Prague and some of the other countries around the Caspian Sea (if that is possible)
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