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US Supports Diversification in Caspian Oil Market


The Caspian region of Central Asia is home to some of the world's largest oil and gas discoveries in recent decades. A top U.S. diplomat says western countries are eager to expand capacity and production, and support plans to build a second pipeline in the region. But Russia and Iran, which border the Caspian basin, are critical of the project. VOA's Victoria Cavaliere has more details on the discussion Friday at the Council on Foreign Relations in New York.

In 2005, a pipeline moving oil from Baku, Azerbaijan, through Georgia to the Turkish port of Ceyhan began pumping up to one million barrels of oil per day to the world market. Investors say the 1,600 kilometers Baku pipeline unlocked access to some of the world's largest oil reserves.

The pipeline is supported by western countries and Azerbaijan, and bypassed Russia. Moscow had previously controlled access and shipping of the region's crude oil.

Now, the European Union, Kazakhstan and the United States want to construct another pipeline that will also bypass Russia. The so-called "Trans-Caspian pipeline" would transport oil from the major Kazakhstani oilfield at Kashgan under the Caspian Sea, connecting with the Baku pipeline, drastically increasing output to western markets.

Evan Feigenbaum, the Deputy Assistant Secretary of South and Central Asia Affairs at the U.S. State Department, says former Soviet countries like Kazakhstan and Turkmenistan have strong economic incentives to diversify their supply routes.

"Being independent means having options," he said. "[It is] not just one pipeline, but more. More than one pipeline. More than one market. More than one trading partner. So, almost everything the United States is doing in this part of the world is designed to build capacity."

Turkmenistan has emerged as the untapped giant of Central Asian oil and gas reserves. The country's new government says it supports the U.S-backed trans-Caspian pipeline project.

But during an October regional Caspian summit in Iran, Russian President Vladimir Putin said any future pipeline projects would need the approval of all nations in the region.

Steve Levine, the author of The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea, says Russian and Iranian objections to the pipeline are in part an effort to gain political capital with the West.

"Iran and Russia have formed an alliance of convenience on that issue, but meanwhile, Putin and Ahmadinejad are really enjoying poking their finger in the Western eye," he noted.

Earlier this year, Turkmenistan's government held talks with Russia and Kazakhstan on plans to build a separate pipeline that will run north from the Caspian Sea.

Feigenbaum says the U.S and European nations are supporting Turkmenistan's bid to expand in all directions, and are not trying to shut out Russia.

"This is a region that has been oriented to the north and to the West," he said. "I think we are mindful and respectful of that. But it just so happens that the most dynamic economies of today happen to be to the east and to the south."

This week, Turkmenistan hosted an international oil and gas conference that drew some 500 international energy officials vying for access to the nation's oil and gas reserves.

So far, the only concrete agreement Turkmenistan has signed is for a large pipeline to China.

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