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LONDON, Nov. 19 (UPI) - On the sidelines of the European security summit in Istanbul, Turkey, President Clinton has given his seal of approval and support to one of the most ambitious energy projects on the cusp of Asia and Europe that promises to change the economic fortunes of several impoverished republics of the former Soviet Union.
Clinton oversaw the signing Thursday of two sets of agreements on the construction of an oil pipeline between Azerbaijan and Turkey and a gas pipeline linking Turkmenistan and Turkey, both through Georgia. Putting their names on the documents were the presidents of all key parties to the projects, which are estimated to cost at least $5.2 billion before their completion in the first decade of the next century.
The Caspian Sea basin is host to some of the largest known untapped fossil fuel resources. Experts representing a whole range of interest groups, from the Central Intelligence Agency to oil multinationals, have toyed with estimates of up to 200 billion barrels of oil. That would make the region the world's second largest oil reserve after Saudi Arabia, surpassing the proven deposits in Iran and Kuwait combined. Not surprisingly, the projects have taken several years to come this far.
Political rivalries and greed played a part in the negotiations as unscrupulous interest groups in governments and businesses vied with each other for a piece of the action. But saner minds have prevailed and, with the papers signed Thursday, the projects are well on their way.
"It's an important positive development," a spokesman for BP Amoco told United Press International, reacting to the oil pipeline deal.
BP Amoco, the world's third-biggest publicly traded oil company, leads a Western oil consortium drilling for oil in and around the Caspian Sea and has extensive experience in the region.
The outcome starkly reflects the end-of-century geopolitics and uncertainties in the area. Besides signifying a personal triumph for President Clinton, the deals bypass Russia, the region's erstwhile ruler but one that strategists feel increasingly uncertain about, as well as Iran, which has historical and cultural ties and shares borders with both Azerbaijan and Turkmenistan.
In the fast evaporating aura of Western-Russian partnership, the exclusion of Russia makes sense to most analysts and to the signatory countries that are wary of continued Russian hegemony. The isolation of Iran similarly reflects the ambivalence that Washington feels toward a key regional player, forever oscillating between the modernism of its moderate rulers and the radical obscurantism of a staunchly anti-Western religious hierarchy.
In contrast both projects are set to bestow huge rewards on Turkey, the NATO partner hit by sanctions against its neighbor Iraq and lately by a series of earthquakes. The Iraq sanctions deprived Turkey of earnings from lucrative cross-border trade, construction projects in Iraq and an Iraq pipeline terminating at Ceyhan on the Mediterranean, the terminal chosen as the final destination for both Caspian pipelines.
The 1,196-mile (1,994 km) oil pipeline is estimated by experts to cost $2.5 billion before completion in 2004, and will involve several major Western partners, including BP Amoco, Unocal Corp., Norway's Statoil and Russia's Lukoil Holding.
The 1,250-mile (2,000-km) gas pipeline is estimated to be ready about two years earlier, around 2002, but cost more - about $2.7 billion. It will carry Turkmenistan's gas to Ceyhan for international customers and likely will involve Shell Oil Co., General Electric Co. and the Bechtel Group.
In hard economic terms, the pipelines are seen by industry analysts as cheaper and securer options to either the Russian or the Iranian alternative.
The oil pipeline will need to pump about a million barrels a day of crude to be economically feasible for all those involved. The gas pipeline will require about 65 billion cubic feet (16 billion cubic meters) of output to break even.
Both pipelines will traverse some of the most unstable territory from the Caucasus along eastern Turkey to its southern coast, near the Syrian border.
Turkish security authorities are already well versed in defending oil pipelines. The existing pipeline from Iraq to Ceyhan was frequently under attack from separatist Kurdish guerrillas with like-minded allies in both Iraq and Iran.
The pipelines are seen by both Turkish and Western strategists as a way of loosening Russia's hold on the Caucasus, increasingly under international scrutiny with Moscow's controversial military operations in Chechnya. Turkey and Turkish-speaking Azerbaijan see the oil pipeline project as a way of cementing historical, racial and economic ties. Added attractions are Turkey's offer to absorb some of the Turkey- based costs if they overrun and Turkey's experience with large-scale construction and engineering projects in the region.
Both the companies and governments have been encouraged by the doubling of oil prices since February, which they hope will be sustained near current levels, about $23 a barrel, through the new year.