RUSSIAN OIL THROUGH BTC PIPELINE: A POLITICAL SCHEME OR ECONOMIC STRATEGY?

Speaking at his quarterly press conference, David Woodward, President of BP-Azerbaijan, surprised attendees with the announcement that BTC Co. shareholders, together with the British-Russian oil company TNK-BP, were considering the possibility of transporting Russian oil through the Baku-Tbilisi-Ceyhan pipeline (Zerkalo, December 22). The independent daily Zerkalo also speculated that this procedure could be done by exporting Siberian oil from the Russian city of Novorossiysk to Baku, as had been planned during the Soviet times. Currently this pipeline is working in the reverse direction, exporting Azeri oil to Novorossiysk.

Established in September 2003, TNK-BP is the third-largest oil company in Russia, employing 100,000 people and working in such geographic areas as Western Siberia, the Far East, and the Urals. It is far less familiar to Azerbaijan than is the Russian oil company Lukoil, which until recently was a shareholder in the Azerbaijan International Operating Company (AIOC), a consortium of foreign oil companies developing the Azeri-Chirag-Gunehsli oil field in the Azeri sector of the Caspian sea.

Azeri political analysts welcomed this new development. “From the beginning of the BTC idea, Russia opposed it and argued that it was not commercially viable,” Vafa Guluzadeh, a former presidential advisor on foreign affairs, told EDM (January 3). “Russia lobbied hard to prevent the construction of BTC, yet it failed. Now it seeks ways to participate in this project, because BTC is the best option in the region for exporting oil to the European markets due to overcrowding in the Bosporus straight,” continued Guluzadeh.

Another prominent political scientist in Baku, Nasib Nasibli of the opposition Musavat party, said that the participation of Russian companies in BTC would only increase the stability of this pipeline. “I don’t think it will make Azerbaijan dependent on Russia. On the contrary, Russia will become a partner in this project” (phone interview with EDM, January 4).

Zerkalo argued that the willingness of the BTC shareholders to invite more players into the BTC pipeline could be explained by the increasing costs of the project. Indeed, at the same press conference, Woodward disclosed that the construction costs of the pipeline had increased due to rising prices for the construction materials and equipment on the world markets. Furthermore, he did not rule out the possibility of transporting Kazakh oil through BTC. Kazakhstan currently ships its oil to Iran from the Russian port of Astrakhan (Echo, December 24).

The Russian daily Nezavisimaya gazeta suggested that Russia intends to boost its presence in the Caucasus energy projects in order to balance the increasing influence of the United States in the region (Nezavisimaya gazeta, December 24).

Meanwhile, other analysts believe that the idea of inviting the Russian company into the BTC project has nothing to do with geopolitics but rather is purely economic in nature. Economists argue that BTC has the capacity to transport more oil that Azerbaijan can afford, thus creating a need for an additional input. Half of TNK-BP’s shares belong to BP (TNK-BP.com). Thus, transporting Russian oil through BTC would quite well suit the interests of BP. TNK-BP shareholders also own 50% of the Russian-Belarusian oil company Slavneft, known for its close connections with the Azerbaijani government.

While regional analysts continue to speculate on the true reasons behind the Russian oil company’s plans regarding BTC, the TNK-BP press office announced, “It was too early to speak about the involvement about the company in the ‘project of the century’ ” (Nezavisimaya gazeta, December 24).