Stolyarov Boris

The Caucasian Oil Circle

by Igor Borisov

Three months ago into the world press leaked information about regular meetings between American and Iranian "diplomats" discussing armaments and oil. Journalist could never guess there were actually 3 groups meeting, not 2. Who was the third? Russians...What did they chat about? We don't know...

A month and a half later there was a message in the media :ayatollah Ali Hameni had publicly condemned provocative statements made by the President concerning nuclear crisis with the West, having indicated that highly authorities and politicians should in fact avoid making provoking and illogical declarations. Accidental coincidence?

2 months prior to the above events the members of the strategic oil problems of the American Investigation Dept met with the top management of British Petroleum in London, secretly.

In June the Iran News press agency advised that Russia and Kazakhstan expressed their readiness to participate in building of new Iranian oil pipeline Neka-Jusk. A few day later Azerbaijan decided to join the "couple".

On 6 August a Russian Gazprom delegation unofficially arrived in Turkmenistan. What for? To get agreement on a fixed Turkmen gas price for 20 years ahead in exchange for setting up energetic infrastructure in the country. Nobody understood a thing -what was the fixed price, when in this year it will reach $500 per cubic meter and double up in the following year. After the haze had gone there were 2 oil logistic experts noted amongst the delegation leaving for Moscow. What did they do here? Obviously not sunbathing.
I then wrote - Should there be explanations or comments, I would adduce them soon after. The comments have emerged. 

I draw your attention it was written a few days prior to the X hour.

A week prior to the X hour the USA refused Israel's request for armament supply as it could conduce to Israel's attack on Iran. The USA politely forewarned it ally in the Middle East the attack on Iran was unwanted. And - NB! - the USA c demanded Israel's compulsory report in case of attacking Iran's nuclear objects.

Israel diplomatically snarled having shown its teeth for the first time over decades, showing its right for warfare should diplomatic sanctions fail. But diplomats were perplexed - what happened? Why the US president's standpoint changed dramatically? Analysts decided that the USA were against attacking Iran.

In light of the preceding, Ahmadinejad's reverse didn't make the due effect. Ahmadinejad stated that withdrawal of American troops from Iraq will aggravate stability and territorial integrity in Iraq and jeopardize safety in the region. Something new to hear...

An x-hour fell on an opening ceremony of the Olympics in Beijing. It was weird to hear about beginning of war in the Southern Osetia. The message ran counter to the Olympic atmosphere in the world and seemed being a hoax - wars never started during the Olympics!

Authoritative broadcasting station "Radio of Freedom", backed by the US Congress, refuted a new message about Russians' air raid over the key posts of the oil pipeline Baku-Tbilisi-Jeikhan. The pipeline was safe. It cannot be so! The modern military techniques are precise and a rocket may hit a nail. But the pipeline was safe. It means they wanted to leave it safe.

On the same date the British Petroleum, an operator of the oil pipeline  Baku-Tbilisi-Jeikhan advised they did not want to risk and stopped oil export to Jeikhan and also along the Baku-Supsa oil pipeline through Georgian ports Batumi and Kulevi.

A day after the president of the State-run oil company of Azerbaijan Rovnag Abdullaev urgently advised at the press-conference that his company commenced an export of crude in the Russian direction through an old Azeri branch of the oil pipeline Baku-Novorossiysk.

But what about your and your BP operator's recent comments over the low carrying capacity of the CPC (Caspian Pipeline Consortium) and its unbearably high tariffs? - Georgian journalist asked spitefully. Veteran oil industry worker Rovnag Abdullaev didn't even glimpse at him leaving the question without answer. He waived his hand - Have you got other questions?

The artillery bombardment of the Georgian segment of the Baku-Tbilisi-Jeikhan oil pipeline failed to convince Rovnag Abdullaev that the pipeline is being poorly secured and it was necessary to convert

the oil pumping towards the sea terminals. However the fire on a Turkish segment of the Baku-Tbilisi-Jeikhan oil pipeline resulted in burning of 20 tons of oil, brought "the work" to a logical end.

Who committed the arson? - you can ask irately. The Turks...

As of the next morning, oil started being dispatched to Novorossiysk by 10-12 thousand tons every day and by 20 thousand tons via the safe part of Georgia, by railway into the microscopic Black Sea ports with antiquated equipment. Yet earlier more than 100 thousand tons of crude were pumping through Baku-Tbilisi-Jeikhan oil pipeline every day. Where have the other daily 70 thousand tons gone?

It has been rumored that this oil was loaded into oil tankers at nights, with the mandatory projectors switched off. The tankers virtually disappeared into the darkness of the Caspian Sea. In mornings, the tankers were spotted within the close zone of the Iranian oil terminal Neka. 5-6 hours later the contraband oil was draining through a non-export diameter pipelines to the Tegeran oil-processing plant and in a little while the freshly made fuel was finishing its life in the smoking Iranian "Samadah".

The Georgians realized they have lost to Russia. And after the pressure has dropped down in another pipeline - gas pipeline Baku-Tbilisi-Erzerum - it has become clear that they lost to Russia again, with gas now.

Colleagues, what's happened? Where is gas? - Georgian minister was calling the Azeri Ministry of Energy and Natural Resources in the intermissions between calls from Turkey. The answer he got was disappointing - for reasons we cannot disclose the extraction of gas at the Azeri deposit Shakh-Deniz has been cut down. But the worried Turks were assured in receiving gas in full volume.

Where from? How? When?  Hot Turks were out of their mind.

From Russia and Iran, through pipelines, today - said their Azeri colleagues and BP.

Baku-Tbilisi-Erzerum, as well as oil pipelines Baku-Tbilisi-Jeikhan and Baku-Supsa skirted Russia and left it deprived of several years: in Soviet times the Caspian Sea was invested billions and its successor, who paid off the Soviet debts, is in its full right waiting for repay. But there is no repay - oil is being transported through the stranger's pipeline, not Russia's one.

10-14 million cubic meters of gas is being pumped to Turkey though the Baku-Tbilisi-Erzerum pipeline daily. So far, it went to Georgia and Turkey only. But there were 2 counter-Russia plans. First of all, the Caspian gas from Erzerum should have fraternized with Iranian gas from the Persian Gulf and travel together to the southern Europe through the pipeline Nabucco (quite Iranian name!). But the southern Europe has been gas supplied by Russia, so what do? Besides, Russia was prepared to direct its gas flows to the southern Europe by 2 lines: the "Blue Stream"s branch from Turkey onward the Apennines and the branch of the powerful Southern Siberia-central/southern Europe pipeline.

Secondly, the lobbying of the Transcaspian pipeline, the mortal enemy of the Caspian pipeline. Either the first or the second - Bolivar won't bear the both of them - there is not that much gas in the Caspian region. And this is the Caspian gas pipeline near Saratov's small town Alexadrov Guy, which should have been flown into that pungent pipeline leading from the Southern Siberia to the central and southern Europe.

"Disgusting" Transcaspian pipeline, worth "only" 12 billion dollars, was supposed to allow for the Turkmen gas reach the Baku-Erzerum pipeline. And it is the most important element of the Gazprom's mortal rival Nabucco who is ready to hop from the Turkish Erzerum into Austria and further non stop. Iran, USA and Azerbaijan incline to give the Turkmen gas to Erzerum, and Russia - to Alexandrov Guy. This is the major problem!

Prior to 2006 Russia was the sole supplier of the natural gas and electro-energy to Georgia. After the Baku-Tbilisi-Jeikhan and Baku-Tbilisi-Erzerum pipelines started operating in 2006, the Georgian president Mikhail Saakashvili announced energetic independence of Georgia. I reckon this has triggered tension in the relationship resulted in warfare 2 years later.

During the war, when Baku had to direct the high quality, premium Azeri, Kazakh and Turkmen oil into the common collector with less premium Russian oil, Iran has unexpectedly raised its voice: welcome to Neka.

Neka is an Iranian port and oil terminal in the southern part of the Caspian sea equipped at a high end. The Iranian export oil pipeline Neka-Jusk rises in Neka and further connects the Caspian Sea with Persian Gulf. It was put up as an alternative to the oil pipeline Baku-Tbilisi-Jeikhan.

Neka-Jusk? But it is only in drafts whilst the oil industry workers are eager to find out what should they do during the construction period.

The Neka-Jusk pipeline will hardly become an alternative to Baku-Tbilisi-Jeikhan pipeline. It leads to the Persian Gulf which is not less dangerous than the territory of Georgia, and the "Georgian" leads to the Mediterranean Sea. And more importantly- what does Russia gain from this "foreign" project? Nothing.

Who's at a loss? Georgia, Turkey, Egypt and... Israel. Don't be surprised, and Israel too. If you remember, Israeli modern pipeline Ashkelon-Eilat, skirting the Suez, is geared up and Azerbaijan calls it "darling" because it allows to shortcut to the South-Eastern Asia. It is worth to mention that as far as expenditures are concerned - oil industry workers count every cent - the Israeli path is indeed more profitable. However the Georgian conflict brings the Israeli option to naught.

And now the key issue. Russia and Kazakhstan expressed its readiness to partake in construction of the oil pipeline Neka-Jusk. What will these biggest oil players get in return?

Firstly, they will get commercial ground in the Persian Gulf cooperating with Iran by the "oil substitution" scheme (we give you Caspian oil, you give us your oil in the Persian Gulf). Secondly, they "dump" the problem-causing pipeline Baku-Tbilisi-Jeikhan which is an alien to Russia and half alien to Kazakhstan. And about Azerbaijan in a sense? Easy - if Kazakhstan drives oil to Iran by tankers through Neka, the pipeline Baku-Tbilisi-Jeikhan will lose its meaning - Azerbaijan will never feed it with oil on its own. Baku does a pre-empting step - Azeri oil industry workers are very experienced.

Why does USA need a strong Iran? It is a common place that the US believe that the Iranian regime can be "fed" and thus, tamed. And Georgia? It's different with Georgia because it has inner inconsistencies and problems, complex political conjuncture, lost in a recent war. In future it might be a country with high level of internal antagonism and most importantly - an apple of discord between NATO, Russia and EU, comprised of countries supporting Georgia "against Russia".

Why does USA need a strong Russia? Because it does not need a weak country, unable to resist common enemies which the US consider all types of terrorists, China with zero natural resources and all aggressive regimes (from the US point of view) which will emerge on the world map.

So why does USA in the current circumstances still establish a counter-missile defense in Poland and other European countries? One does not obstruct the other but rather helps in secret negotiations. By smiling at each other rivals become more pliable and compliant. Americans' friends/rivals - Great Britain, Russia, Israel - act the same way in their personal sectors of interests. For example - sensible or insensible - you are to judge - Israel's conduct during Georgian conflict. So was sensible or insensible? As far as the national security concerns it was sensible and Russia will memorize this gesture of removal which put its own little contribution into the world's attitude. And countries do not have other concerns.

As you may see, I haven't written anything about gas, post-war pipelines and relationships. But I'm sure there is one decision that could reconcile everyone. Just open a side "door" Baku-Tbilisi-Erzerum for safe and reliable Russian gas flowing to Europe - on the same day the Georgian conflict will disappear. You (I address the owners) will not cope with it on your own, especially with such a warlike rhetoric. Business does not like noise. And by the way (I address the Israeli now), the situation in Israel will improve. The "Blue Stream", leaving Jeikhan through the Mediterranean Sea towards gas terminal in Haifa, would calm down all rivals in this region.

Of course, I have made it up - I gathered the scattered facts and interpreted them in my own logical way to you. I provided you with an explanation of the war conflict as I see it. Mass media tells you children fairy tales about adults' games.

At last, I regret there is no wise, real Brecht's Solomon, who - as in the parable - would judge the present complicated Caucasian oil conflict and put everything in places, thus having rendered assistance to the oil industry workers.


Pipelines going through Georgia have lost its attraction because they go through the countries with complex system relation (artificial or natural) and undecided problems which will become aggravated in future.

It is very hard to restrain the sliding puzzle. It became obvious long before the war, not after. The Russian oil strategic survey should be given full credit. They noticed the problems and, being qualified specialists in the area of hydrocarbon logistics, played their part excellently.

Iran is a different story. It is a geographical massive without risks inherent in the Caucasus. Conversely, there are different sort of problems. It does not indicate that Iran will now love the US, no - people will continue to hate them and the oil will continue to be transported across Iran. This way or the other, the oil pipeline Neka-Jusk (not existing yet) and the Caspian pipeline will rank top places. I do not exclude other decisions for transporting the oil.

It does not mean that tomorrow all will change dramatically. If the US do not find convincing and attractive arguments and agree with Russia, we shall be witnessing changes in the Caspian oil policy. It's impossible to relocate the arguing countries on the map, rather, will remodel the oil transportation system.

We shall see...

(Transl.-Olga Korikovsky)

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People in this conversation

  • Guest - Anders Valeria

    Dear Igor,
    Yours detective story about the natural gas epic it is written not only captivatingly, but also with the great knowledge of the matters, with the analytical distribution and the comparison of interesting assembled by you data. And you could represent complex questions intelligible and simply, by accessible for understanding few readers prepared in this region. To me are seemed convincing your reasons about the fact that the military actions in the Caucasus have “petroleum background”. It does mean, Sergo was rights, when he did write about this in kommente ? To it they objected - “where Iran, and where Osetia!?” But [Sergo], occurs, intuitively felt that the fact that Igor Borisov calculated with the aid of the analytical approach. And it turned out that precisely petroleum interests and conduits determined the military actions:
    " The conduits through Georgia lost attractiveness, since they penetrate the countries with the system relations - the unresolved problems, which now will aggravate still more, and in the future only it will be added these problems. To retain this being departed " pazl " - it is very difficult. And clearly this became undoubtedly not after war, but long before ."

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  • Guest - Vera Stremkovskaya

    Your articles all the time is so interesting and so impressive as materials very much intelligent and analytical. Thank you for your work and for your wishes to share with us your regards, Vera

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  • Guest - 'Guest'

    Dear Igor!
    By thanks behind the interesting material, capable of enriching each, who its reads.
    Me it seemed by especially interesting given about oil and influence of the interests of petroleum and gas concerns on decoupling of war in the Caucasus. But here it is not entirely agreeable with this part of the text: “During opening of Olympiad in Peking, and it was at first even wildly hear - in South Osetia the war began! Communication in no way was entered in “the ears and the eyes” of billions of spectators, it seemed “by duck” - wars in the Olympiads still never began!”
    you will recall, Afghan shameful war Russia (then still the USSR) unleashed before the discovery of the Olympic Games in Moscow in 1980.! This decreased the number of its participants and delegations, which protest against the cynicism of Russian authorities, and many countries they preferred to participate in the Goodwill Games as in the alternative. And Chechen wars Russia did not cease during the world Olympiads! And here now - war in the Caucasus! It turns out that in Russia the tradition to untie of war in spite of the Olympic Games becomes shameful antihuman custom. So that centuries-old historical tradition to cease fire in all wars for the period of Olympiads not for Russian army ! Alas!

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