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News

New Caspian pipeline to secure Western oil supply[fr][de]

Published: Friday 27 May 2005 | Updated: Friday 29 June 2007

Energy Commissioner Andris Piebalgs has attended the opening ceremony (on 25 May) of a Caspian energy pipeline with huge political significance.

Background:

After the fall of the Soviet Union in 1991, all Western eyes turned to the Caspian region, which was supposed to be the 'next Middle East' as regards global energy reserves. Most major western oil companies started to invest in the area. The United States and the EU took a keen interest in developing the necessary infrastructure to transport the potential oil and gas riches to the West.

Fourteen years later, the biggest and most expensive oil and gas pipeline was officially opened in Baku in the presence of the heads of state of Azerbaijan, Georgia, Kazakhstan and Turkey, and several high-level representatives from the West.

Other related news:

The 1768 km long Baku-Tbilissi-Ceyhan (BTC) pipeline connects the Caspian and the Mediterranean sea. It will transport over 1 million barrels of oil (about 1 per cent of world production) a day once it is fully filled.

The geopolitical significance of the pipeline cannot be underestimated. The new "Silk Road of the 21st century" (in the words of Turkish president Ahmet Necdet Sezer) will turn some of the poor countries of the region into wealthy energy states and change the political balance of power in the region. Russia, which has been bypassed, is one of the biggest losers of the project (economically and politically). The United States, which has given substantial support to the BTC construction, has a strong interest in guaranteeing a constant military presence in the strategically important area.

The Caspian pipeline was mainly built to relieve the West's oil dependency on the unstable Middle East and the OPEC producers. Its key objective was to improve American and European security of energy supply. But the original hype over the vast Caspian reserves has tailed off. Energy experts from the American Energy Information Administration (EIA) now estimate the oil reserves of the region at between 17 billion and 33 billion barrels (comparable to the North Sea oil reserves) and several big oil companies have decided to pull out of exploring in the region. Some are even questioning the economic viability of the 2.5 billion euro BTC project.

Positions:

The construction of the pipeline was also heavily opposed by international and local NGOs (Friends of the Earth and Amnesty International) due to concerns for the environment, human rights issues and social problems.

However, the biggest investor in the project, British oil major BP, says it has consulted substantially with local groups and NGOs to take these environmental and social issues into consideration.