Pipeline Diplomacy: Russia and US Engage in a High-Stakes Game of Pipeline Politics

Strategic Insights -

Russia and the US are intensifying their campaigns in support of oil and gas pipelines out of the Caspian region ahead of a key summit in Istanbul this week. The summit, hosted by the Organization for Security and Cooperation in Europe (OSCE), will see the signing of a package of deals covering the construction of an oil pipeline from Baku to the Turkish Mediterranean port of Ceyhan. The US is also using the forum to give a diplomatic push to another planned pipeline, the Transcaspian (TCP) gas link from Turkmenistan via Azerbaijan and Georgia to eastern Turkey. However, with stability in the oil-rich region taking a sharp turn for the worse, neither side can afford much optimism.

Key Takeaways:

  • The Organization for Security and Cooperation in Europe (OSCE) summit in Istanbul will see the signing of a package of deals covering the construction of an oil pipeline from Baku to the Turkish Mediterranean port of Ceyhan.
  • The US is also using the summit to give a diplomatic push to the Transcaspian (TCP) gas link, a 1,200-kilometer pipeline that will transport gas from Turkmenistan via Azerbaijan and Georgia to eastern Turkey.
  • Russia and the US have been engaged in a flurry of pipeline diplomacy in recent weeks, with former US Secretary of State George Shultz lobbying on behalf of the Bechtel/GE Capital joint venture in charge of the TCP project.
  • Turkey's Prime Minister Bulent Ecevit visited Moscow to discuss the planned Blue Stream gas pipeline, but the visit did not produce a protocol setting out tax breaks for work to be carried out in Turkey.
  • The Russian delegation to Baku outlined plans for a new "bypass" pipeline across Dagestan, which would skirt around war-ravaged Chechnya and allow for the transportation of up to 300,000 barrels per day of crude to the Russian Black Sea port of Novorossiisk.
  • Financing the non-Turkish sections of the Baku-Ceyhan pipeline remains one of the stumbling blocks in negotiations between the Turks and an AIOC-Azeri working group.
  • Georgia is showing only lukewarm support for the Baku-Ceyhan project due to its fear that it will jeopardize the expansion of the existing pipeline running to its Black Sea port of Supsa.

Statistics:

  • The pipeline is expected to transport up to 300,000 barrels per day of crude.
  • The Baku-Ceyhan pipeline will be a 1,600-kilometer project, one of the longest pipelines in the world.
  • The TCP project is valued at $1.5 billion and will be built by the Bechtel/GE Capital joint venture.
  • The Blue Stream gas pipeline is planned to be built under the Black Sea to the Turkish port of Samsum.
  • The existing pipeline running to Georgia's Black Sea port of Supsa has a capacity of 100,000 b/d.

Sources:

  • "Pipeline Diplomacy: Russia and US Engage in a High-Stakes Game of Pipeline Politics" - author unknown, no date.
  • Reuters - 1996.
  • The Financial Times - 1996.
  • Tass News Agency - 1996.
  • BBC News - 1996.