EAST CASPIAN OIL AND GAS MAY FLOW INTO BAKU-CEYHAN.

The governments of Kazakhstan and the United States and leading oil and gas companies have agreed to conduct a feasibility study for laying westward export pipelines out of Kazakhstan. The state company Kazakhoil and Foreign Minister Kasymzhomart Tokaev signed the agreement on December 9 in Washington with the Shell, Chevron, and Mobil companies and with U.S. Energy Secretary Bill Richardson. The companies have committed US$20 million to financing the study of the project. It envisages laying parallel oil and gas pipelines from Kazakhstan across the Caspian seabed to Azerbaijan, to branch into the planned Baku-Ceyhan pipeline system. The trans-Caspian sections would carry oil and gas from both Kazakhstan and Turkmenistan, with a preponderance of Kazakh oil and Turkmen gas (Wall Street Journal, December 10; AP and Reuters, December 9).

The concept is key to turning the Baku-Ceyhan oil pipeline project into an East-West Energy Corridor as envisioned by the governments of the United States, Turkey and the Caspian-Caucasus countries. The combination of oil and gas pipelines and the addition of East Caspian volumes to West Caspian ones would ensure the commercial profitability of the project and make it attractive to private investment even at a time of low oil prices.

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