Caspian pipeline deal believed close

An agreement to build a multibillion-dollar pipeline to export oil from the Caspian Sea region to Western markets through Turkey is likely to be signed in Istanbul later this month, a senior U.S. official said earlier this month.

John Wolf, President ClintonÆs special adviser on Caspian basin energy resources, told the Washington Post that he was ôvery, very hopefulö that officials from Turkey, Azerbaijan, Georgia and a Western energy consortium would iron out remaining ôtechnicalö glitches in time to sign the agreement at a European security summit in Istanbul that Clinton will attend.

The proposed 1,240-mile pipeline, which would run from Baku, the capital of Azerbaijan, via Georgia to the Turkish Mediterranean port of Ceyhan, is at the center of a fierce battle for regional influence between the United States and Turkey, on the one hand, and Russia and Iran, on the other. Unlike other major oil producers, the Caspian states are landlocked and all existing oil and gas pipelines run through Russia.

For the Clinton administration, construction of the Baku-Ceyhan pipeline and a parallel natural gas pipeline running from Turkmenistan to Turkey constitute a crucial step toward reducing MoscowÆs influence in the energy-rich Caspian region and preventing neighboring Iran from stepping in to fill the void.

Turkish and U.S. officials acknowledge that the signing of an agreement sets out only the legal and political framework, leaving the question of the projectÆs financing to be settled. It would mark only the beginning of a protracted process of negotiations between the BP-Amoco-led Azerbaijan International Operating Company, the consortium known as AIOC, and the host governments.

RussiaÆs first deputy prime minister, Nikolai Askyonenko, traveled to Baku earlier this month to try to persuade Azerbaijan President Heydar Aliyev to abandon the Baku-Ceyhan line and stick to an existing Russian export system ring through Chechnya.

Just months ago, prospects for building the pipeline seemed bleak, not least because BP-Amoco has long argued that to be viable, the Baku-Ceyhan line would need to carry at least 1 million barrels of crude oil per day. The AIOCÆs own production is expected to peak at around 800,000 barrels per day, and not before 2005.

The consortium had been clinging to the idea of incrementally expanding an existing line running from Baku to GeorgiaÆs Black Sea port of Supsa, bypassing Turkey entirely. But last month, BP-Amoco unexpectedly announced its support of the construction of the Baku-Ceyhan pipeline.

The Independent

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