Darlings Of The West – III**

British Petroleum (BP) Chairman Lord Browne has complained that state-owned petroleum companies from Asia where skewing the oil market. He claimed that oil producing nations could be best served if only they made deals with private international companies like BP. He said the Asian firms benefited from government-to-government deals, which did not always make economic sense. Lord Browne would have been right if we did not have things like the BTC pipeline. This project is evidence to the fact that Big Oil can leverage funds that exist beyond their balance sheets. Why else would the U.S. government pour billions of dollars of American taxpayer’s money setting the stage for a largely British project in which American companies have only marginal investments?

Billed as “the project of the century”, the Baku-Tbilisi-Ceyhan oil pipeline is now complete. BP says it cost $3.6 billion* to build – making it the costliest oil pipeline in the world. The pipeline starts in Azerbaijan, goes through Georgia and ends in Turkey, connecting the landlocked Caspian Sea with the Mediterranean. The ideal route to take Caspian oil out to its markets would have been through Iran or Russia but this is something the West has been keen to avoid.

The U.S. has established an airbase near Ceyhan at Incirlik. A massive military deployment around the pipeline has been planned. F William Engdahl, writing in Asia Times, says:

On April 12, Defense Secretary Donald Rumsfeld went to Baku, his second vist in four months, to discuss demands to create a US military base in Azerbaijan. The Pentagon already de facto runs the Georgian military with its US Special Forces officers and Georgia has been asked to join the NATO. Now, Washington wants to have direct bases in Azerbaijan proximate to Russia as well as to Iran. The Pentagon has also allocated $100 million to build a Caspian Guard of special forces military, ostensibly to guard the new BTC pipeline, though the latter was deliberately built underground to make it less vulnerable, one reason for its high cost. Part of the Pentagon money would go to build a radar-equipped command center in Baku, capable of monitoring all sea traffic in the Caspian. The US wants airbases in Azerbaijan, which naturally would be seen Tehran and Moscow as a strategic provocation.

The 1,770 kilometer-long pipeline will take 6 months and 10 million barrels of oil to fill from end to end. Oil filled at Baku will take 10 days to reach Ceyhan. The pipeline is expected to carry 1 million barrels a day from the Caspian sea. But, where is this oil going to come from?

Production in the entire Caspian region currently stands at only 2 million barrels per day (bpd). The Caspian sea has proven reserves of 33 billion barrels of oil, making it the third largest in the world. (The Persian Gulf has over 700 billion barrels.) Turkey has no oil. Georgia has lots of mineral water. And, Azerbaijan? Well, it is suspected that Azeri authorities vastly overestimated their reserves and sold the idea to the Americans, who seemed to have swallowed it whole. Either that or the Americans have some secret information about the oil reserves that they are not telling anyone.

To make the pipeline more viable, Azerbaijan offered to let Russia send its oil through the pipeline. To add pressure, Turkey placed restrictions on Russian oil tankers that currently take oil across the Black Sea through the narrow Bosphorous straits. Russia has so far refused to join the project adding that its oil will bypass the Bosphorous with the new Burgas pipeline, which runs over Bulgaria to Greece. Thus, the only other country that can make the project viable is Kazakhastan. However, President Nursultan Nazarbayev of Kazakhastan is a cool player who does not place all his eggs in one basket. He likes to keep a safe distance from both Moscow and Washington. Today, companies from Russia, North America, and Europe are already working in Kazakhastan. There is a possibility that Kazakhastan’s oil and gas go East to China. If it did, then the BTC pipeline would be doomed. So, many observers wondering if the U.S. is giving shape to a “color revolution” for Kazakhastan.
USAI YellowBook records billions transferred to Ukraine via Soros-run Freedom House

A study of the color revolutions of Eastern Europe and Central Asia are a good way to measure how much money the U.S. has spent to help make Western oil companies like BP richer. During elections in Ukraine, the U.S. embassy was seen in great action. Special camps were conducted to train journalists in “democratic values.” The U.S. financed the exit polls, which predicted a huge win for the pro-Western candidate Yushchenko. When Yushchenko lost, the “pro-democracy activists” from the youth movement called Pora (It’s Time) (which again was financed by the U.S.) effected the “Orange Revolution.” Elections were conducted again and the pro-US candidate Yushchenko won. In Azerbaijan, a “good dictator” (pro-American) Haidar Aliyev was in power when the pipeline talks began. Engdahl continues:

Former US national security advisor Zbigniew Brzezinski was a consultant to BP during the Bill Clinton era, urging Washington to back the project. In fact, it was Brzezinski who went to Baku in 1995, uofficiall in behalf of Clinton, to meet with then Zeri president Haidar Aliyev, to negotiate new independent Baku pipeline routes including what became the BTC pipeline.

Brzezinski also sits on the board of an impressive, if little known, U.S.-Azerbaijan Chamber of Commerce (USACC). The chairman of USACC in Wahsington is Tim Cajka, president of ExxonMobil Exploration. Other USACC board members include Henry Kissinger and James Baker III, the man who in 2003 personally went to Tbilisi to tell Eduard Shevardnadze that Washington wanted him to step aside in favour of the US-trained Georgian Shaakashvili. Brent Scowcroft, former national security advisor to George H W Bush, also sits on the board. And, Cheney was a former board member before he became the U.S. Vice-President. A more high-powered Washington team of geopolitical fixers would be hard to imagine. This group of prominent individual certainly would not give a minute of their time unless an area of utmost geopolitical strategic importance to the US or to certain powerful interests there.

When Haider Aliyev died, his son Ilham Aliyev succeeded him in an election that was rigged but to the U.S. was fair. But, things are not going very well for him. The U.S. is now financing opposition groups fashioned on the Ukrainian Pora. Central Asian republics lying in the direction of a possible Kazakhastan-China route are now facing serious threats. A radical Islamic movement led by Hizbut-Tehrir (HT) and the Islamic Movement of Uzbekistan (IMU) is operating from the Ferhana valley whose stated aim is to create a pan-Central Asian caliphate covering Uzbekistan, Kyrgyzstan, Tajikistan and Kazakhstan. Hizbut Tehrir operates from Whitehall, London. Britain has refused to ban it although Germany has already done so. Interestingly, the group is now headed by an IT professional named Jalaluddin Patel.

* – The project was financed by the International Finance Corporation (IFC), which is owned by Western countries.


‡ – They literally coached him – no metaphor is used here.

† – The pipeline goes through the Borjomi region of Georgia. Borjomi is home to Georgia’s mineral water industry, which contributes 10% percent of Georgia’s exports. It is also the largest employer and contributor to the budget in this economically depressed region. While the BTC consortium has pledged to adopt extra safety measures in the Borjomi region, such as thicker pipes and additional block valves, members of the mineral water industry worry that the market for mineral water is dependent on image and reputation, and that the Borjomi brand could suffer irreparable harm, even if there is no spill or leakage. Georgia is known throughout the former Soviet Union (FSU) for its mineral water resources. The Borjomi brand of mineral water has been distributed throughout the FSU for more than a century and is widely recognized. There have been reports that the BTC did not really fulfill the promises in their haste to complete the project ahead of schedule. The Georgian government is powerless to do anything because as part of the agreement with the BTC consortium it has ceded sovereignity over the narrow stretch of land where pipeline has been laid. This has prompted many commentators to refer to the BTC pipeline as Pipelineistan.

UPDATE (04/01/06): Last year, China acquired PetroKazakhastan, a Canadian company with operations in Kazakhastan. China also built the 988-kilometer-long Atasu-Alashankou pipeline a record 10 months to carry the oil from the oil fields of PetroKazakhastan.

** – This post is yet to be completed.