Key East West Oil Pipeline Launched Breaks Russia Grip on Caspian Energy

BAKU (AFP)–A major new US-backed pipeline to bring oil directly from the Caspian Sea to Western markets and break Russia’s longtime grip on the region’s vast energy resources was formally launched Wednesday in a ceremony attended by presidents and dignitaries.

US Energy Secretary Samuel Bodman–who participated in the opening ceremony–read delegates a letter from US President George W. Bush in which the American leader hailed the four-billion-dollar project as a "monumental achievement."

"This pipeline can help generate balanced economic growth–and provide a foundation for a prosperous and just society that advances the cause of freedom," Bush said in the letter.

The presidents of Turkey–Azerbaijan–Georgia and Kazakhstan were joined by other VIPs including Bodman and the head of British energy giant BP–John Browne–for the formal launch of the Baku-Tbilisi-Ceyhan (BTC) pipeline.

Russian President Vladimir Putin’s special representative for international energy cooperation–Igor Yusufov–had been expected to attend the event. A Kremlin spokesman told AFP in Moscow that he had been forced to cancel his planned trip to Baku at the last minute due to illness.

The pipeline is expected to become a major competitor to traditional export routes for Caspian oil that pass through Russia.

In a step likely to irritate Moscow–Kazakhstan’s President Nursultan Nazarbayev signed on to a declaration committing some of his country’s vast Caspian oil reserves to transport through the pipeline just prior to the ceremony.

The move will help extend the BTC’s life expectancy past 2010 when Azeri oil production is forecasted to begin its decline if new fields are not developed soon.

The former Soviet republic’s participation in the project has until now remained under question as it navigated choppy diplomatic waters between Washington and Moscow.

"The East-West energy corridor plays an important security role in the region and it’s clear that economic growth and stability would not be possible without the export of oil," Turkey’s President Ahmet Necdet Sezer said at the opening.

He said the pipeline would take pressure off Turkey’s tanker-clogged Bosphorus Straits that link the Black Sea to the Mediterranean–another major maritime transport route for oil.

Georgia’s President Mikhail Saakashvili stressed the geopolitical changes afoot in the region after the fall of the Soviet Union.

"After the fall of a big empire we want sources of hydrocarbons to be protected and provide for stability of their transport," he said.

The 1,770-kilometer-long (1,094-mile) pipeline will transform the Caucasus and Turkey into an energy bridge between the Caspian and the rest of the world and has shifted geo-strategic alliances in the Caucasus region and Central Asia.

But the presence of senior officials from the United States and other countries at Wednesday’s ceremonies was tainted by a controversy as Azeri authorities continued to hold opposition members detained in connection with the pipeline’s opening.

Police badly beat and arrested scores of people attending a peaceful rally last Saturday as part of a wider opposition crackdown. Authorities justified their actions on grounds that the rally was held too close to the pipeline opening ceremonies–a claim questioned by Western officials.

Baku was the sight of some of the first industrially developed oil fields in the world at the beginning of the 20th century.

The British oil giant BP holds a leading 30 percent stake in the consortium running the pipeline. Other consortium members include Azerbaijan’s state oil company SOCAR–Amerada Hess–ConocoPhillips–Eni–Inpex–Itochu–Statoil–Total–TPAO and Unocal.

BP’s Browne said the "BTC will take new supplies of oil to the world market and help to demonstrate that security is best achieved by having multiple sources of supply and trade routes."

SOCAR president Natik Aliyev called the pipeline the "realization" of a national dream on Wednesday.

The Caspian region produces a light crude of high quality but has suffered from its distance from the world’s major consumers–North America–Europe–China–and Japan.

The pipeline is to ship one million barrels of Caspian oil–roughly one percent of global oil production–to Turkey’s Mediterranean coast daily once it is fully up and running by the end of the year.

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