Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts
Volume 3, Number 39 November 2 - 8, 2003 Quezon City, Philippines
Axis of Oil: How a Plan for the World's Biggest
Philip Thornton and
is a story of empire-building, intrigue, espionage, double-dealing and
arm-twisting that Rudyard Kipling would have been proud to write.
popularised the phrase "The Great Game" to describe the secret battle
to dominate central Asia fought between the British Empire, Russia and France.
even he would have blanched at plans by the United States - with the help of the
oil giant BP and British taxpayers - to establish a hegemony across an area
stretching from the Russian borders to the Mediterranean Sea.
the need for oil is at the heart of the story. Two former Soviet states,
Azerbaijan and Kazakhstan, between them have oil reserves three times the size
of America's. The "game" is to find the safest way to get that black
gold into the petrol tanks of American cars.
US has been pushing for a new pipeline since Bill Clinton was in office. At
first, companies were reluctant, but the rising price of oil, allied to threats
in the Persian Gulf and the likelihood of huge reserves of oil and gas worth as
much as $4 trillion under the Caspian, has made them increasingly bullish. The
US Environment Department estimates that by 2010, the Caspian region could
produce 3.7 million barrels per day. This could fill a large hole in world
supplies as world oil demand is expected to grow from 76 million a day, in 2000,
to 118.9 million by 2020.
this time, the Middle Eastern members of OPEC would be looking to supply half of
geopolictical stakes are high - the pipeline would be able to pump as much as
4.2 million barrels per year, easing the US's reliance on the unstable Gulf
states for oil.
answer is the world's longest export pipeline, a 1,090-mile, 42-inch wide pipe
snaking its way within a 500-metre corridor from the Caspian Sea port of Baku,
in Azerbaijan, to Ceyhan, in Turkey, via some of the world's most unstable and
project will cost up to $4 billion (L2.4bn) and is being built by a consortium
of 11 companies led by BP. Almost three quarters of the funding will come in the
form of bank loans including some $600 million of taxpayers' money.
consortium has asked the World Bank and the European Bank for Reconstruction and
Development for $300 million each in loans. In addition it has asked government
agencies, including Britain's Export Credit Guarantee Department (ECGD), to
underwrite the risk of the project being sabotaged by civil war or terrorism.
Thursday, the project receives its first public test when the International
Finance Corporation, an arm of the World Bank, meets to approve its loan.
decision will be taken on a vote of its 173 country members, although two of the
most influential are the US, with almost a quarter of the votes, and the UK,
which has 5 per cent of the voting power.
say if the pipeline is built it will wreak environmental, social and economic
havoc along its length.
Baku Ceyhan Campaign (BCC), which includes Friends of the Earth and the Kurdish
Human Rights Project, last week lobbied Hilary Benn, the international
development secretary, to vote against it at the IFC.
handed over a 220-page dossier earlier this month claiming the pipeline would
break public lending guidelines on 173 counts.
Department for International Development steadfastly refused to comment until
after the vote, but the opponents are more than happy to fill the vacuum.
say the environmental threat is two-fold - what happens if the pipeline goes
wrong and the destruction it would wreak even if it goes right.
warn the risk of a serious tanker spillage - on the scale of the Exxon Valdez
that polluted miles of coastline when 258,000 tonnes of oil leaked - would be
multiplied once the oil starts to flow.
addition, they say that Turkey lies in an earthquake zone with 17 major shocks
in the last 80 years. Since the Baku line will be in place for some 40 years, it
says there is a high chance of a major earthquake during its operation.
groups say that the pipeline poses multiple threats. The potential for havoc
begins at the Caspian Sea where the sturgeon fish, whose eggs provide caviar -
are already under threat. The Caspian is one of the most polluted bodies of
water in the world, and the World Bank estimates that each year a million cubic
metres of untreated industrial wastewater is dumped in the sea. Much of this is
from oil production, the critics say, and increased production would make it
worse at a time when sturgeon numbers are reckoned to be collapsing due to
pollution and overfishing.
proposed route crosses more than 20 major rivers and several seismic areas. In
Azerbaijan, it traverses a desert area that will require at least 10 years for
complete habitat recovery," said Carol Welch of Friends of the Earth US.
Georgia, the project will clear areas in two dense primary forests, crosses the
buffer zone of a protected natural park, and could badly affect several rare and
Turkey there were more than over 500 endemic plant species within the corridor,
while a third of the country's globally-threatened vertebrates are to be found
within 250 meters of the corridor.
route crosses two sites protected under national legislation, including a
wildlife protection area for the Caucasian grouse, a threatened species. There
are two critically endangered plant species and 15 bird species with nesting
pairs numbering 500 or less are within the corridor.
objectors say the impact goes even wider. They claim legal agreements make BP
the effective governing power over the corridor, over-riding all environmental,
social, human rights or other laws for the next 40 years.
International, which is urging the Government to reject the request for export
guarantees, accuses the consortium of concluding an unprecedented agreement with
the Turkish government which, it claims, will strip local people and workers of
their civil rights.
says that Turkey has handed so much power to the consortium that it in breach of
treaties it signed with Brussels ahead of its accession to the European Union.
EBRD is due to make its decision at a meeting on 11 Nov-ember while Britain's
Export Credit Guarantee Department may not make a recommendation on the request
for an undisclosed amount of cover to ministers until next year.
spokeswoman for the ECGD said: "Cover would only be given if the ECGD were
satisfied the relevant environmental, social and human rights impacts had been
properly addressed, and the financial and project risks were acceptable."
critics say the pipeline will destroy the livelihoods of farmers and fishermen
along the route and fuel ethnic tensions.
the 11 September 2001 terrorist attacks, the US has enthusiastically started
building military bases across a region that was off limits during the Cold War,
offering financial aid to country governments in exchange for permission.
pipeline will be guarded either by the US Army or by local forces that are
dependent on US support. Inevitably, opposition groups to the current
governments are labelled terrorists by the Americans.
his authoritative book, The New Great Game, journalist Lutz Kleveman says:
"The US-led Afghan campaign has fundamentally altered the geostrategic
power equations in central Asia, which has become the new focus of American
role of the World Bank and the EBRD is to provide the imprimatur of public
approval for the project.
is politically significant to some of the smaller, state-owned oil companies in
the nine-member consortium in the project, including SOCAR, the Azerbaijani
state oil company, which owns 25 per cent of the shares.
the financial authorities will decide whether public money goes into the
project, BP has warned that it is "commercially robust" and that it
will press ahead anyway.
mounted a stout defence of its project and of the consultation it has carried
out. Toby Odone, its Baku spokesman, said the consortium had carried out
extensive consultation in all three countries involved. "We feel we have
done plenty in preparation and have done environmental and social assessments
for two years," he said
said the project, which began building in May and is now 40 per cent complete,
would go ahead even if the IFC turned it down and other members of the
consortium pulled out.
would have to find another approach that worked, but we feel confident and
comfortable that the funding will come through," he said.
has a 30 per cent stake so failure would jeopardise some $1 billion of revenue.
But is more important significant in terms of finding oil supplies outside the
recently signed a $4 billion deal with TNK, the Russian oil giant, but the
arrest on Sunday of Mikhail Khodorkovsky, the head of rival oil gain YUKOS,
highlights the risk involved.
have also delighted in contrasting the Baku proposals with BP's attempt in 2001
to re-brand itself as "beyond petroleum" with more focus on hydrogen
and renewable energy.
to begin working in 2005, the pipeline is expected to bring in more than L65m
annually to the regions through which it passes.
there are doubts about whether the money generated will benefit people and the
environment in the area - or simply corrupt officials among the
course there are alternative routes for a pipeline from the Caspian Sea. The
problem, however, is not environmental but geopolictical. Iran has suggested a
route along the eastern shore of the Caspian to Turkmenistan and through Iran to
the Persian Gulf. It has offered $1.6 billion towards the cost, but this is
unlikely to be accepted. Another possibility would be a south-eastern route to
post-Taliban Afghanistan. Lastly Russia is lobbying for the oil to be pumped
through its network to the Black Sea port of Novorossiisk, but that would put US
oil supplies at risk.
Kleveman warns that imperial ambitions in the region will end in the same way
they did for the British and the Russians: "The actors may have changed
since Kipling's time but its culmination in war and death remains the same and
the victims are nearly always innocent civilians," he writes. "They
know why oil is called the Devil's tears."
October 28, 2003