Berger Oil Execs to Talk Caspian Policy Next Week

WASHINGTON (Reuters)-US National Security Adviser Sandy Berger is to meet oil industry executives Oct. 22 to discuss US interests in Caspian energy projects–a US official said on Wednesday.

"Sandy is going to meet with the oil executives next week…he’ll talk about the broad outlines of our policy," the official said.

The United States has been pushing oil companies to build a 1,080-mile pipeline from Baku–Azerbaijan–on the Caspian Sea to the Mediterranean port of Ceyhan–Turkey–as part of a US aim to exclude Iran from major transportation routes from the Caspian region.

The Caspian region is estimated to hold between 100 billion and 200 billion barrels of crude oil–according to government and private-sector analyses.

Washington wants a "commercially and environmentally sound" project that includes participation by Russia–as part of a multiple pipeline transportation system for the region’s oil–the official said.

The pipeline is expected to cost approximately $3 billion and would carry up to 1.2 million barrels of oil a day once fully operational. Such a high price tag has led to speculation that major companies believe the pipeline would not be economical–especially given today’s low crude prices–and a shorter route through Georgia to a port on the Black Sea would be better.

The official reiterated the Clinton administration’s denials of a New York Times story on Sunday that the project was on the brink of failure.

"We continue to engage the companies and the countries and we are pursuing a broad-based policy that meets our core objectives," he said.

Deputy Secretary of State Strobe Talbott said on Wednesday that the US-backed pipeline project is not dead as reported by the newspaper. He called the story "wrong and inaccurate."

Talbott–speaking to the Washington Institute for Near East Policy–said discussions on the project are at "an extremely sensitive time" and added that the US coordinator for the Caspian–Richard Morningstar–would visit the region later this month.

A consortium of international oil companies–which includes several US producers–are scheduled to make a recommendation by the end of the month on the best pipeline route for moving Caspian oil to the West.

The government of Azerbaijan–whose capital of Baku would be at the beginning of the East-West pipeline–will then decide whether to accept or reject the companies’ recommendation.

A State Department official said the Clinton administration would be willing to help arrange financing and insurance for the project through the Export-Import Bank and the Overseas Private Investment Corp.–but he emphasized that the United States won’t pay for the pipeline.

"The US government doesn’t view it as having a role in paying for pipelines. These are commercial ventures that should not be financed by American taxpayers," the official said.

During next week’s meeting–the official said the administration wants to know what breaks in taxes–tariffs and transport fees the oil companies want from the countries that the pipeline would cross.

"We are going to be working with companies on both sides of the Caspian…and the countries–too–to find out exactly what everybody needs to make that Baku-Ceyhan pipeline commercially viable," the official said.

The official also suggested the administration may find "creative ways" that the countries along the pipeline route could provide financing for the project.


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