Moscow Times - 11.27.2001

 

The Moscow Times

U.S.-Russia Rapport Put to Test in Caspian  

Combined reports

A new spirit of collaboration between Moscow and Washington in the wake of the Sept. 11 attacks may end their traditional rivalry over how to pipe the Caspian Sea's vast oil reserves to markets, analysts said Monday.

U.S. Energy Secretary Spencer Abraham arrived in Russia on Monday to officially represent the U.S. government at a ceremony marking the completion of the Caspian Pipeline Consortium route from Kazakhstan to the Black Sea.

But the visit will also give him the chance to meet his Russian counterpart, Igor Yusufov, and further cement the cozy U.S.-Russian relations established at the summit between presidents George W. Bush and Vladimir Putin.

"Better U.S.-Russia relations mean the desirability or necessity of having pipelines that do not go through Russia is much reduced," said Stephen O'Sullivan, head of research at United Financial Group. "One of the main tenets of [former U.S. President Bill] Clinton's policy was energy independence for Central Asia and the Transcaucasus, so we saw a lot of American diplomatic push aimed at making sure pipelines out of Central Asia did not pass through Russian territory."

The CPC line carries oil from Kazakhstan's huge Tengiz field to the Black Sea port of Novorossiisk.

Abraham was due in Novorossiisk on Tuesday for the official launch of the CPC, in which U.S. companies have invested more than $1 billion. He is scheduled to return to Moscow later that day and hold talks with CPC and various officials Wednesday, Interfax reported. On Thursday, the secretary will be meeting Nuclear Power Minister Alexander Rumyantsev for talks that will focus on nuclear nonproliferation issues, the Nuclear Power Ministry said.

Sergei Glazer, chief strategist at Alfa Bank in London, said Russia and the Central Asian countries' roles as secure producers compared to Middle Eastern OPEC members could speed long-stalled Caspian agreements on status and territory.

"I think that we can now expect to see a more aligned position towards the development of oil reserves in the Caspian," he said. The Caspian Sea, with reserves estimated at equivalent to those in Europe's North Sea, has yet to be divided between the five states surrounding it.

Tensions flared in July when an Iranian gunboat ordered an oil exploration ship, licensed to explore Azeri waters, out of what it regarded as the Iranian sector.

"But now we have a good political environment where we can go for some kind of comprehensive development of the reserves, which could be high enough to counterbalance OPEC countries and keep their influence under control," he said.

Russia's decision to cut fourth-quarter crude exports by a paltry 50,000 barrels a day while delaying a decision on the first quarter of next year should also please the United States, analysts said.

"Of course it is not in U.S. interests for the oil price to collapse completely, but they need somehow to maintain it at $20 or under so that consumer sectors will be happy and the prospect of economic recovery will increase," Glazer said.

Iran had been bidding to see oil move across its territory, and a $3 billion, U.S.-backed pipe from the Azeri capital, Baku, to the Turkish port of Ceyhan, bypassing Russia altogether, had been gaining support.

Some analysts said Baku-Ceyhan would be sidelined in favor of other secure routes through northern Russia, although others said it could still have a chance. "It would not be a bad thing to have two export lines from the whole Caspian region -- one to the Black Sea and one to the Mediterranean," O'Sullivan said.

(Reuters, AP)