Americans Today Think Term Paper

Pages: 13 (3610 words)  ·  Bibliography Sources: 0  ·  Level: College Senior  ·  Topic: Energy  ·  Buy This Paper

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[. . .] On the surface there was an easy solution: legalization of the new status quo by confirming the previous sea borders of the former republics amongst the newly independent states, just as was done with territorial borders. However, the problem was complicated by political struggles over the new situation.

Among the key political questions that were raised a decade ago was whether the newly emerged Central Asian republics -Azerbaijan, Kazakstan, Turkmenistan, and Uzbekistan - would take their place at the top of the economic food chain of the industrialized world by becoming significant exporters of oil and natural gas. They seemed to have the petroleum reserves to be able to do so, but whether they could build the economic and political infrastructures necessary was very much in doubt.

One of the most important political questions was whether the newly independent republics had enough political muscle to go up against Russia. Each country involved is, of course, trying to get the best deal possible for itself:

Both Russia and Iran want to see the five states share the resources since their immediate offshore waters do not contain significant reserves. At first, Russia took a hard line, opposing any division of the Caspian among the five states.

Since then, Russia has proposed a condominium approach whereby the seabed would be divided into five sections, but the water above shared. This means that to start an oil project, all five littoral states would still have to vote on it beforehand.

Motivated by a feeling that oil and gas development will go on regardless of legal issues and a desire to share in Kazakhstan's success, Russia came to an agreement with Kazakhstan on demarcation lines in August 1998.

Iran, on the other hand, is still arguing for a shared seabed -- either that or a redrawing of demarcation lines that would give Iran a substantial increase in offshore reserves. Turkmenistan is reluctant to agree to divide the seabed because of three reasons: a dispute with Azerbaijan over an offshore oil field, close ties to Iran, and a lack of its own offshore reserves.

Even today, as a pipeline to bring these oil reserves to world markets seems almost a certainty, doubts about the ability of these countries to maintain control of the pipeline and the gas persist.

Much of the continuing doubts about the economic viability of the pipeline stem from the disagreements that exist among experts as to the extent and quality of the gas and oil reserves in the region. The International Energy Agency has estimated that Transcaucasia may have oil reserves of up between 15 billion and 40 billion barrels. The groups also estimates that there may be an additional 70 billion to 150 billion barrels.

The IEA thus compares the Caspian Sea findings not to the oil fields of the Middle East but to the oil fields of the North Sea: "As such, it could be a significant alternative source of oil and gas supply, helping to increase world energy security."

With so much money to be made by all of the countries concerned, one might think that they could relatively quickly have reconciled their differences. This has not proven to be the case: The same political, cultural, religious and economic differences that helped to cause the break-up of the Soviet Union to begin with have proven to be remarkably intractable.

The most problematic of the purely political problems (although of course when dealing with petro-dollars it is probably inaccurate to speak of politics and economics as being separable from each other) was probably a 1998 plan put forth by the Azerbaijan International Operating Co.. The AIOC is an international consortium that has been developing offshore fields; in 1998 it announced its plan to build a main export pipeline for Caspian Sea oil from the region.

The United States at that time - and this continues to be the case today - has argued for an "energy corridor" extending across the Caspian Sea region. This plan backed by the considerable economic and political might of the United States is in fact what has come to be called the Baku-Ceyhan pipeline because of the terminus points of the pipeline - the Azerbaijani capital of Baku and the Turkish Mediterranean port of Ceyhan.

The United States also has advocated that an additional pipeline be built in the region that would lie underneath the Caspian Sea and would funnel gas from Kazakstan and Turkmenistan into the Baku-Ceyhan pipeline. U.S. officials within the Clinton regime - and this remains fundamentally true today as well - have argued that this route makes the most sense politically given the unstable alliances in the region.

The Clinton administration has pushed the 1,200-mile Baku-Ceyhan route as an alternative to the current pipelines through Russia, or any route through Iran. Having the pipeline transit Turkey -- a U.S. ally -- is an important strategic consideration for the U.S., oil experts said.

BP Amoco, Exxon Mobil Corp., Unocal Corp. And other foreign companies have contracts to drill oil in the Caspian Sea. Some companies with contracts in the region have said they favor waiting for more oil reserves to be proven before participating in the Baku-Ceyhan pipeline.

The United States along with other international supporters of this particular pipeline plan has taken the position that this particular method of shipping the oil out of the region would increase the political and economic power of the Caspian republics (because it would give them access to world markets without being dependent on either of the regions political heavyweights, Russia and Iran).

But the U.S. government's history of backing pipelines for political as opposed to engineering reasons has not always proven to be wise, as was proven in a different region of the world a generation ago:

second fantasy which came to naught was the push 20 years ago by earlier administrations for a gas pipeline from Alaska across Canada into the northern continental United States. Termed the Alaska Natural Gas Transportation System, his project would have created market access for the large volumes of natural gas stranded on the North Slope. The orphaned gas is real, but the prospects were not. This scheme foundered for reasons parallel to those which crippled the several Caspian proposals.

Firstly, commercial backing was fragile. Shipping costs for that long distance were very high-marginally acceptable if and only if oil prices remained in the range of $30, the price which prevailed briefly after the oil shocks between 1978 and 1980.

Secondly a competitor stepped in: the Canadians proposed to build the "first leg" of the project, connecting gas fields in northwestern Alberta with pipeline grid into the U.S. Their "leg" was built. It preempted much of the market promised for Alaskan gas, and the linchpin of U.S. natural gas policy disappeared into history. A third effort at pipeline diplomacy also led to debacle, this time U.S. opposition to Russia's mega-project in the late 1970s to build four 56-inch gas pipelines from Siberia towards the west, connecting into Europe. The United States tried to stop the project, blocking sale of U.S.-designed or U.S.-licensed compressors and sending teams to convince Europeans that Russian gas was too risky. The United States was more concerned about European energy security than the Europeans themselves. Administration officials also lectured the Norwegians on the capacity and capabilities of Norway's fields, rather to the amazement of their much more competent Norwegian counterparts.

Many of those outside the region believe that a strengthening of these republics will work to make them more politically and economically stable - conditions that are devoutly to be wished in this region. The major drawback to this particular pipeline plan has always been that it will by all accounts be the most expensive of all the possible plans in terms of construction and maintenance of the pipeline itself.

The AIOC itself has at least at times advocated a shorter pipeline running to the Black Sea port of Supsa, from which Georgian port tankers could then transport the oil through the Bosporus Strait. This plan has been consistently opposed the Turkish government because of the potential environment harm that could be caused by tankers negotiating these treacherous waters.

People in Istanbul could die" if there is an accident, warned Capt. Cahit Istikbal, head of the Turkish Maritime Pilots' Association. "The Bosporus cannot take the load anymore."

Foreign Minister Ismail Cem has warned repeatedly that Turkey will not allow the Bosporus to become an oil pipeline.

Six accidents occur on the Bosporus every 1 million transit miles (9 1/2 per kilometer), twice the accident rate of the Suez Canal and 30 times that of the Mississippi River.

While such claims about the difficulty of transporting oil safely through the straits are no doubt true, it is also most likely that Turkey (which has not headed the list of the nations most dedicated to environmental protections) is acting out of economic motivations rather than purely environmental ones:

Some critics, however, point out that… [END OF PREVIEW]

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