The axis of oil: how a plan for the world's biggest pipeline threatens
to wreak havoc
By Philip Thornton and Charles Arthur
28 October 2003
It is a story of empire-building, intrigue, espionage, double-dealing
and arm-twisting that Rudyard Kipling would have been proud to write.
Kipling popularised the phrase "The Great Game" to describe the secret
battle to dominate central Asia fought between the British Empire,
Russia and France.
But 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.
Inevitably, 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.
The 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.
By this time, the Middle Eastern members of OPEC would be looking to
supply half of that need.
The 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.
The 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 conflict-ridden nations.
The project will cost up to $4 billion (#2.4bn) 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.
The 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.
On Thursday, the project receives its first public test when the
International Finance Corporation, an arm of the World Bank, meets to
approve its loan.
The 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.
Opponents say if the pipeline is built it will wreak environmental,
social and economic havoc along its length.
The 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.
It handed over a 220-page dossier earlier this month claiming the
pipeline would break public lending guidelines on 173 counts.
The Department for International Development steadfastly refused to
comment until after the vote, but the opponents are more than happy to
fill the vacuum.
They 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.
They 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.
In 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.
Environmental 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.
"The 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.
"In 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 endangered species."
In 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.
The 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.
But 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.
Amnesty 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.
BCC 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.
The 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.
A 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."
However, critics say the pipeline will destroy the livelihoods of
farmers and fishermen along the route and fuel ethnic tensions.
Since 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.
The 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.
In 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 foreign power."
The role of the World Bank and the EBRD is to provide the imprimatur
of public approval for the project.
This 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.
Although 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.
BP 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
He 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.
"We would have to find another approach that worked, but we feel
confident and comfortable that the funding will come through," he
said.
BP 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 Gulf.
It 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.
Protesters 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.
Scheduled to begin working in 2005, the pipeline is expected to bring
in more than #65m annually to the regions through which it passes.
But there are doubts about whether the money generated will benefit
people and the environment in the area - or simply corrupt officials
among the "corridor" governments.
Of 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.
Mr 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."
http://news.independent.co.uk/world/environment/story.jsp?story=457996