This week a ceremony will be held in Azerbaijan to mark the actual construction phase of the Baku-Tbilisi-Ceyhan pipeline. The pipeline will be the main route for export of the Caspian Sea oil to world markets. The representatives of concerned countries will take part in this occasion.
The decision to build the controversial pipeline was first made by Azerbaijan, Turkey, Kazakhstan and Georgia on 18 Nov. 1999. At that time, they singed a document called "Istanbul Declaration." The United States President, Bill Clinton was then in Turkey for a formal visit, and he signed the Istanbul Declaration as a witness (Text of the Istanbul Declaration is attached to the present article). They agreed that Baku-Tbilisi-Ceyhan -it is in fact read as Jeyhan because the letter "C" in Turkish stand for "j"- would be the main export pipeline for oil produced in the Caspian Basin.
The pipeline had something for everyone. As far as Turkey was concerned it meant:
As far as the Republic of Azerbaijan was concerned, it meant:
As far as Kazakhstan was concerned, it meant:
Georgia was looking to:
As far as the USA was concerned, it meant:
However, the Baku-Ceyhan pipeline had still many problems. Some of them were as follows:
A. The expenses of Baku-Ceyhan pipeline were very high. It was originally estimated to cost 3 to 4 billion dollars.
B. Some sources claimed that Baku-Ceyhan pipeline was a political pipeline and it would crash eventually under the pressure from economics. Some people thought that the political barriers in relations between Iran and the USA might be removed by developments in Iran. In that case the Americans might stop opposing the Iranian route, which was the most economical way to export the Caspian oil and gas products. For the same reason, the Iranian officials in charge of Caspian affairs (including Firooz Dolatabadi, the Director General of Iranian ministry of foreign affairs in charge of the Caspian sea affairs) declared decisively after the conclusion of the Istanbul Declaration that the Baku-Ceyhan would never be built and it was going to stay on paper forever.
C. Some experts argued that there was not enough oil in the concerned areas to justify the Baku-Ceyhan pipeline.
D. The 1760 kilometers pipeline was too long and crossed politically volatile areas such as Georgian territory which was an unstable territory.
E. The Baku-Ceyhan pipeline crossed too many countries in its way.
After several years of discussions and meeting in various political and technical levels the Baku-Ceyhan pipeline is going to be built. Michael Lelyveld, the researcher of Radio Free Europe (http://www.rfel.org/nca/features/2002/08/05082002153431.asp) has reported on 08/08/2002: "at a ceremony in London, officials from Azerbaijan, Georgia, and Turkey witnessed the founding of the BTC Pipeline Company, which will construct and own the 2.9 billion line. The biggest interests belong to Britain's BP oil company with 34.7 percent, followed by the 25 percent share of the Azerbaijan state-owned oil firm SOCAR. The moves leave little doubt that the project to pump 1 million barrels of oil per day will now take as planned... The construction of the pipeline still seems likely to be one of the major developments in the Caspian region since the Soviet breakup. But without the spark of controversy, the Western press has also apparently concluded that there is less to report."
On 18 Sept.2002, the construction of Baku-Ceyhan starts in a ceremony hosted by the Azerbaijan president. The pipeline is 996 millimeters in diameter, it will be 1760 Kms, and it will be ready sometime in 2005.
The reasons for building the pipeline are:
a) Position of US government in denying Iran and the Russian Federation the benefits of passing oil and gas routes from those countries is more strategic than was thought. It seems that even in case of a fundamental change in the regime of Iran or Russia, still US prefers the main pipelines do not pass through Iran or Russia.
b) Iran has already lost the chance for a fundamental change in its relations with the West. The pipelines have to be built and when they are in place, no body is going to change them.
c) The Western countries, especially the USA, following the 9/11 terrorist attacks in US, are more determined to find alternative oil resources for the oil from Arab countries that may be endangered because of special relations of the USA with Israel.
d) Kazakhstan has concluded a strategic oil and gas treaty with the USA. According to this treaty they have agreed to try connecting Kazakhstan's oil to the Baku-Ceyhan route. This meant a great breakthrough in answering the question of available oil for exports through the Baku-Ceyhan pipeline and it had a considerable role in making Western oil companies interested in following the Baku-Ceyhan project. Kazakhstan was originally one of the signatories of the Istanbul Declaration. During the negotiations for Istanbul Declaration, the Kazakh president had presented a separate statement in support of Baku-Ceyhan pipeline, which was then attached to the Istanbul Declaration. However, following the Istanbul summit meeting, the Kazakh officials showed some doubts in going along with the planned pipeline. They even made it clear in several occasions that Kazakh interpretation of "Multiple Pipelines Idea" was different from the US interpretation. The main difference was that Kazakhstan considered the Iranian route as a possible way that should be considered. It seems that several points changed the Kazakh position in this regard:
e) The Russian Federation has reduced the degree of its opposition to the Baku-Ceyhan pipeline. This is partly due to:
f) Iran is so involved in the conflict of conservatives and reformist groups and also it is so entangled in discussions about the US attack to Iraq (some officials in Iran openly think that the US is going to attack Iran after, during or even before Iraq) that there is no place for Baku-Ceyhan or any active diplomacy in all issues related to the Caspian sea. (See: Iran-US-Iraq-Russia: What is happening? ).
(Dated: 18 November 1999)
In furtherance of the Ankara Declaration in realizing Baku-Tbilisi-Ceyhan as the Main Export Pipeline within the East-West energy corridor signed on 29 October 1998, the Turkish, Georgian and the Azerbaijani Working Groups have agreed on a package of Agreements to realize the Baku-Tbilisi-Ceyhan Main Export Pipeline. This Project will transport oil produced in the Caspian Basin and Central Asia through the territories of the Azerbaijan Republic, Georgia and the Republic of Turkey. On 18 November 1999 Azerbaijan, Georgia and Turkey signed an Intergovernmental Agreement, and initialed Host Government Agreements. Furthermore, Turnkey and Government Guarantee Agreements with Turkey were also concluded.
With a view to achieving their desired objectives of transporting the oil resources of the region through environmentally safe, secure and commercially viable routes the Governments of Azerbaijan Republic, Georgia, the Republic of Kazakhstan and the Republic of Turkey have agreed:
They welcomed the Declaration by the Government of The Republic of Kazakhstan (Annex), reconfirming its desire, stated earlier, to ensure the transportation of significant amount of oil produced in Kazakhstan to the world markets via the Baku-Tbilisi-Ceyhan Main Pipeline, without prejudice to its existing commitments.
They also reiterated that the transportation of oil to the world markets through pipelines is indispensable to avoid the dangers and threats with regard to the environment, life, and property and navigation safety due to the potential increase of the tanker traffics, particularly in the Turkish Straits.
Done in Istanbul, on 18 November 1999
For the Azerbaijan Republic
For the Republic of Kazakhstan
For the Republic of Turkey
Witnessed by the United States of America.
About the author:
Dr. Bahman Aghai Diba is a consultant on international law affairs for several US companies, and at the moment he is in Virginia. His new book: "The Legal Regime of the Caspian Sea, with special reference to Iran" is under publication.
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