THE RISKS OF CLOSING CASPIAN OPTIONS

By Oksana Antonenko

After a decade of geopolitical maneuvering among the key international players, the fate of Caspian oil and the Caspian Sea region as whole may be decided within a few weeks: The Azerbaijan International Operating Company (AIOC) is expected to announce its choice for the main export pipeline for the “late” Azeri oil at the end of October. However, a number of reports indicate that the U.S. State Department has advised AIOC to delay a formal decision.

The delay may be attributed to two very different factors. On the one hand, it looks very likely that if the AIOC does make its decision this October, it will probably opt to support the more economically viable Baku-Supsa pipeline–rather then the Baku-Ceyhan route–as the main thoroughfare for Caspian oil. Last week the U.S. government announced that it is ready to give US$800,000 to Turkey to help fund the Supsa-Ceyhan portion of the pipeline, which is estimated to cost more than US$2 billion. On the other hand, a delay in announcing the main pipeline could be used to reconsider the U.S. policy on supporting a competitive “main pipeline” approach and to propose a meaningful cooperative multilateral framework for developing Caspian energy resources. This article argues that such a multilateral framework is central for assuring stability and security in the Caspian Sea region

U.S. SUPPORT FOR THE EAST-WEST ENERGY CORRIDOR