'Fight
Smart' Update - 10 December 2004 'Peak' Oil And
Gas
"The energy crisis
we are in today is entirely different from the temporary problems we experienced in
1973-74, 1979-86, 1990-91 and 2000..... There was always sufficient worldwide geological
capacity to produce additional barrels of crude oil to meet the world's needs. No longer.
In the next major energy crisis, that capacity will likely be eroded. So the crisis should
have a severe impact, be global in scope, and be difficult to solve. Plainly, it will be
unprecedented.... Over the next 25 years, a new world energy economy will arrive in three
waves. We are near the top of the first and smallest one, a warning wave. A second more
powerful wave likely will hit in the 2009-2010 period when the non-OPEC world may reach
its all-time highest output of crude oil, subsequently declining to become ever more
dependent on OPEC for incremental barrels of production. The final wave should break
around 2020, or earlier, as even OPEC's vast reserves are tapped at a maximum rate of
production. After that, oil volume should head down and keep falling, never to revive..... An international economic disturbance of
this magnitude will create potential conflicts between
nations and civil competition within societies. These could
be a trial for us and for our children, made worse in the early years by our lack of
preparation and our failure to understand what is already
happening to us." "A cold
war-style confrontation over Ukraine’s presidential
election escalated yesterday as Moscow and Washington traded heated words and an
EU-brokered deal to end the deadlock in Kiev fell through. Colin Powell, the US Secretary
of State, sharply rejected an accusation by President Putin of Russia that the West was
playing 'sphere-of-influence' politics by backing Viktor
Yushchenko, the Ukrainian opposition leader.... Russia
openly backed Viktor Yanukovych,
the Prime Minister, who advocates closer ties with Moscow, fearing that Mr Yushchenko
would pull Ukraine out of its strategic orbit and into Nato and the EU." "So much is still obscure, corrupt and
inauthentic in Ukrainian politics, but at the very heart of this change is something very
authentic: human beings hoping to take control of their own destiny.... Great outside
interests are at stake here - Russia and the US struggling
for mastery in Eurasia, the shaping of a new European Union -
but that is not the story you hear on the streets and the square. Even the most
pro-European intellectuals admit that the attractions of turning from a post-Soviet union
towards the European Union played only a small part in the campaign." "Yet, even for many Ukrainians, Mr. Yushchenko himself remains something of an
unknown quantity. His supporters may call him 'the Messiah', but his background and nature
are more that of a moneychanger than a charismatic radical...... His wife Kateryna
Chumachenko, with whom he has three children, has also been dragged into the fray. A US
citizen of Ukrainian descent, she worked in the White House during the Reagan presidency,
a fact that deeply irks Mr. Yushchenko's political rivals. Although he is portrayed as the
people's president, Mr. Yushchenko has powerful wealthy friends. One close associate is
Petro Poroshenko, the owner of car and confectionery factories and a shipbuilding yard.
Other supporters include David Zhvania, a Georgian businessman, and Wolodymyr Martynenko,
an oil and gas magnate who is one of Ukraine's 10 richest people. " "Interpol has reportedly asked Russian
prosecutors for additional information on the fraud case against senior Ukrainian opposition politician Yuliya Tymoshenko even as that international
police organization has removed a warrant for her arrest from its official website,
Russian and international media reported today.... ITAR-TASS and dpa reported that Interpol temporarily removed the warrant for Yuliya Tymoshenko's arrest
from its official website (http://www.interpol.org) pending further information. A warrant
for her husband, Oleksandr Tymoshenko, remains in force, according to the Interpol
website." "Two weeks
before, on May 12, the European Commission passed an official document, the Message on the
Development of the Energy Policy of the Enlarged European Union, Its Neighbors and
Partners. One of the priorities was stated as cooperation with neighbor-countries in
ensuring safe transportation of oil by sea, including the extension of the Odessa-Brody pipeline to Poland’s Plotsk
to be later connected either to the Druzhba or the existing pipeline, which runs to the
Polish Baltic port of Gdansk..... Ukraine is becoming 'a key nation for the transit
and diversification of energy supplies to Europe,' stated Hages Mingarelli, Chief of the
EC Directorate for Eastern Europe, Caucasus and Central Asia.... Malcolm Rifkind, the former British defense and foreign minister, now a senior consultant with PriceWaterhouseCoopers, who presented his
business plan concept first in Kyiv and now in Brussels, stressed several times that this
project is advantageous to all..... On the one hand, the consumption of carbohydrate fuels
is growing steadily, and on the other, there are objective obstacles to increasing oil
supplies to the EU market, primarily the limited transit
capacity of the Bosporus straits. Also, there is not a
sufficient infrastructure in existence for delivering light Caspian oil to potential
markets. Authoritative experts maintain that Ukraine has the strategic possibility to make
the Eurasian Oil Transportation Corridor a bypass alternative to the Bosporus....... The Europeans are also worried by shrinking extraction in the North Sea. According to the forecasts made at the Brussels conference, by 2015 it will have decreased by 87% (!)......... The project is wholeheartedly supported by the United States..... The most
promising and feasible route that can help the Bosporus problem is Odessa-Brody-Plotsk. 'A project very seldom
appears so positive and profitable for so many participants. And this underscores our
opinion about the importance of this project, because it
attains a strategic goal, it is commercially realistic and it
meets the interests of different nations,' US Ambassador to Ukraine Carlos Pascual stated
when the business plan concept for the Odessa-Brody project was presented in Kyiv..... So
what is going on? In our opinion, Moscow’s stubborn insistence on operating the
Odessa-Brody pipeline in the reverse mode is of the same kind as its attempts to drag
Ukraine into a customs or even an economic union in the framework of the so-called
Integral Economic Zone..... The Kremlin certainly
doesn’t want Ukraine to become a key supplier of Caspian oil to the European market
and, consequently, to become more independent economically.". "As of today, preliminary agreements
have been reached with several Caspian oil producers about their supplying crude oil for
the Odessa-Brody pipeline. At
the initial stage, the oil is most likely to be coming from Kazakhstan and Turkmenistan. Sporadic supplies of Azerbaijani oil are not unlikely,
either. The volumes of the latter are going to grow as oil production in the Azerbaijani
sector of the Caspian Sea expands. Europe says it needs Caspian oil… Leonid Kuchma and Vitaliy Haiduk were
expected to meet later this week. However, according to some of the ZN sources, the
President’s schedule has changed: instead of meeting with the Ukrainian Vice Prime
Minister he is scheduled to have negotiations with the Transnafta President Semen
Weinstock, who has come to Kyiv to discuss, yet another time,
the reverse use of the Odessa-Brody pipeline." "If the
ruling party holds on to power in Ukraine, a
new cross-Ukraine pipeline designed to feed U.S.-financed, Kazakhstani
oil from the Black Sea north to European markets will likely see a peculiar reversal
of roles. It's likely the
Odessa-Brody pipeline would literally reverse its flow and instead be used to ship Russian
oil south through the Mediterranean, strengthening Russia's export position, undermining
U.S. energy and investment interests in Kazakhstan, and preventing any European
diversification away from Russian energy." "The current hot spots for major oil companies are the oil reserves in the
Caspian Sea region. Former Soviet states Azerbaijan, Kazakhstan and Turkmenistan all are seeking to quickly develop their oil
reserves, which languished during the years of Russian domination, says Halliburton Co. Chief
Executive Officer Dick Cheney. Cheney was in Amarillo during May for the Panhandle Producers and Royalty Owners
Association annual meeting.....The potential for this
region turning as volatile as the Persian Gulf does not concern Cheney. 'You've got to go where the oil is,'
he said. 'I don't worry about it a lot.' Cheney's ties to the region grow out of his international connections when he
was part of first the President Ford administration, then the Reagan administration and
his term as secretary of defense under President Bush. Now he
is on the 12-member Kazakhstan Oil Advisory Board.... Various
forecasts indicate that the growth in petroleum demand will average about 2 percent a
year, while the depletion of oil reserves is averaging about 3 percent a year, he said. That means within the next 12 years the oil industry will need to produce
48 million barrels of oil per day more than the current amount of about 73 million to 74
million barrels per day, Cheney said." "James Giffen, an independent banker
described by former
CIA agent Robert Baer in his book 'See No Evil' as 'Mr
Kazakhstan,' features prominently in investigations that
Mobil violated the US trade embargo. Baer says Giffen was the de facto US ambassador to Kazakhstan, and that he arranged high-ranking
meetings, fixed deals, and got chunky commissions. In April 2003, a grand jury in New York
issued indictments against Giffen and Bryan Williams, senior executive in charge of
Mobil's overseas crude transactions. All the accused deny any wrongdoing. The ties between
big oil and political power also get too close for comfort. Nowhere are they closer than
in the US. During the period in which the bribery and the illegal oils swaps took
place in Kazakhstan, Vice President Dick Cheney was president of Halliburton. Halliburton, the world's biggest provider
of oil services, is involved with ExxonMobil and BP in Kazakhstan." "Federal prosecutors have said that
President Nursultan Nazarbayev of Kazakhstan accepted large bribes in connection with dispensing his country's oil
concessions during the 1990's, and later tried to obstruct the federal inquiry into the
payments, which came from American oil companies, according to legal documents. The
allegations were made by the Justice Department in a sealed motion and described
recently in a letter of complaint from Kazakhstan's lawyers to the deputy attorney general. The letter was part of a quiet
effort to exempt Mr. Nazarbayev from prosecution.... Kazakhstan is a crucial part of the administration's strategy to reduce dependence
on Persian Gulf oil and to stem Islamic militancy in Central Asia. But the corruption
inquiry and its fallout illustrate the diplomatic and economic difficulties that can arise
in a quest for energy security." "Here we are
in an election year and Mr. Dick [Cheney] is our Republican nominee for vice president. He
used to sit on the Oil Advisory Board of Kazakhstan
and out of that nation has surfaced quite a scandal and our Major Media just cannot seem
to get around to telling us 'mushroom Americans' about it. Mobil Oil (now ExxonMobil),
Texaco, (now Chevron / Condoleezza [Rice] / Texaco), Amoco, (now BP Amoco) and
Phillips Petroleum (from the same place former neocon CIA
Director James Woolsey is from), have all been implicated in a sweeping bribery
scandal in Kazakhstan, regarding oil and gas rights in that
nation. Apparently those bribes started during the period of time that Mr. Dick was
sitting on that Kazakhstan
Oil Advisory Board, and that
advisory board was deciding who was 'favored' to get those oil and gas deals. I can smell
this one all the way from Kazakhstan. A Mr. James H. Giffen has been
indicted in the U.S. District Court, Southern District (Manhattan) and is now facing a
64-count criminal indictment. He is a U.S. citizen and merchant banker and that our major
media has hushed up this story is something to behold. Darn, they went to Mr. Dick to keep
things quiet. Quote: 'Nazarbayev himself has gone personally to Vice President Dick
Cheney and other top U.S. officials to try to quash the investigation.'" "Ukraine's Prime Minister Viktor Yushchenko met in Astana on 10-11 March with his
Kazakh counterpart, "Mr. Yushchenko began his meetings
with senior [Bush] administration officials on February 5 with Vice-President Richard Cheney and concluded
them on February 7 with Deputy Secretary of State Richard
Armitage..... The visiting Our Ukraine deputies were the guests of honor at two evening receptions. One was
hosted by three organizations involved in democracy-building efforts in Ukraine - the National Endowment for
Democracy, the National Democratic Institute and the International
Republican Institute [IRI], which assisted in setting up the group's Washington visit
schedule." "Next week,
the world will have the answer to a fascinating geopolitical question: whether the pivotal
post-Soviet state of Ukraine will choose to return eastward, toward
Russia, or to move westward, toward Europe......
Yanukovych, the current prime minister, has shown
his colors, and they are all shades of red. Russian intervention in the campaign has been
intense, public and utterly clear. For his part, Yanukovych vowed ... to give Moscow special rights to the oil
pipeline in the south near Odessa." Crisis In Ukraine - Bulletin
Overview 1. Instability And The Battle Of The Oligarchs - Putin's Boys V Dick Cheney's "Next
week, the world will have the answer to a fascinating geopolitical question: whether the
pivotal post-Soviet state of Ukraine will choose to return eastward, toward Russia, or to
move westward, toward Europe...... Yanukovych, the current prime minister, has shown his colors,
and they are all shades of red. Russian intervention in the campaign has been intense,
public and utterly clear. For his part, Yanukovych vowed ... to give Moscow special rights to the oil pipeline in the south
near Odessa." "Viktor Yushchenko isn't just a
presidential candidate these days in the Ukraine. He's a legend..... 'He is all things
to all people,' said Zoryana Ilenko, a western Ukrainian journalist who has covered the
election. 'As to what he would actually do once he becomes president, I do not think many
people have considered this yet. They are happy, for now, with a myth.'... Some Ukrainians
question whether Yushchenko's image is greater than reality. 'The truth is that the best
thing about him, to millions of people, is that he isn't the other guy,' said Evgen Rybka,
editor of Tviy Vybir, a national political newspaper. 'We have to take him for what he is,
not what we want him to be.'" "Yet, even for many Ukrainians, Mr.
Yushchenko himself remains something of an unknown quantity. His supporters may call him
'the Messiah', but his background and nature are more that of a moneychanger than a
charismatic radical...... His wife Kateryna Chumachenko, with whom he has three children,
has also been dragged into the fray. A US citizen of Ukrainian descent, she worked in the
White House during the Reagan presidency, a fact that deeply irks Mr. Yushchenko's
political rivals. Although he is portrayed as the people's president, Mr. Yushchenko has
powerful wealthy friends. One close associate is Petro Poroshenko, the owner of car and
confectionery factories and a shipbuilding yard. Other supporters include David Zhvania, a
Georgian businessman, and Wolodymyr Martynenko, an oil and gas magnate who is one of
Ukraine's 10 richest people. " "Mr Yushchenko's flamboyant aide [Julia Timoshenko] is adored by the crowds that seem to have
forgotten that she used to be an oligarch herself." "There is,
however, one thing which separates the two main candidates, and which explains the
West’s determination to shoo in Yushchenko: Nato. Yanukovych has said he is against Ukraine joining; Yushchenko is in favour. The West wants Ukraine in Nato to weaken Russia geopolitically..... " "We are obsessed with ordering the
world to our will — and complaining bitterly when it declines to be so odder. Mr
Yushchenko may be 'our sort' of oligarch, as opposed to
Russia’s....... [but] by its vociferous partisanship the
West plays a dangerous game. It may drive eastern Ukraine into separation, dismembering a potential
buffer state on the borders of Russia. And all this assumes that Mr Putin will eat humble
pie with good humour." "Ukraine's embattled government is ready to stage faked terrorist attacks to
destabilise the country and discredit the opposition ahead of a rerun of the presidential
vote, a senior government source has told The Independent. The official, who works for the
government of the Moscow-backed candidate and current Prime Minister Viktor Yanukovych,
said: 'One of the plans is to blow up a pipeline and blame it on opposition supporters. Ukraine is the key transit country for
Russian gas supplies to the West.'" "Russian special forces have
reportedly been deployed in the Ukrainian capital Kiev as thousands of demonstrators
besieged government buildings to protest the results of the presidential election. A
1,000-strong contingent of Russian special forces have put on Ukraine uniforms upon their
arrival in Ukraine, said Boris
Tarasyuk, chairman of Ukraine's parliamentary European integration commission and an envoy
of the Ukrainian opposition's presidential candidate Viktor Yushchenko. In an interview
for Bulgarian private bTV channel Tarasyuk said the soldiers arrived in Kiev by plane and were
armed with machine guns, which spoke of their 'serious intentions'". "When President Bill Clinton -- in a
desperate search for votes from the East European diaspora in the Midwest -- set in motion
the extension of NATO right up to the borders of Russia, it provided all the ammunition
that was needed to those in the Russian establishment who had never been happy about a too
close relationship with the West. George Kennan, the grand old man of Russian diplomacy,
described it as 'the most fateful error of the entire post-Cold War era.' The Europeans
compounded the error by refusing to engage in what Gorbachev termed the construction of 'a
European house' and President Vladimir Putin's musings on the same theme. It was never in
the cards that the eastern part of Ukraine would
slip its moorings and go West. This could happen only if Russia itself decided
unequivocally to become part of Europe, but the European Union countries, both by going
along happily with NATO expansion and by their coolness to Russia, have made that
impossible. The West's post-Cold War Russia policy now reaches a denouement of sorts, one
that astute observers have seen coming for a decade. While few in the West will excuse the
rigging of Ukraine's election, using it as a reason to go to eye-to-eye with Moscow would be
counterproductive. Ukrainians must work it out for themselves, which means finding a way
of resolving this crisis in a way that Russia can accept. The West for its part needs to
rethink its whole post-Cold War policy toward Russia. The United States should put a stop
to its aggressive geopolitical strategy of challenging Russian interests in the 'near
abroad,' and Europe must use the lure of European membership for both countries to keep
Russian and Ukrainian democracy and behavior on the straight and narrow. Otherwise a
return to the hostilities of the Cold War cannot be ruled out, and it will be as much the
West's fault as Russia's." "On Dec. 3, Russian President Vladimir
L. Putin replied to Bush's Hallifax speech by declaring Bush's policy 'dictatorial and
hypocritical.' Russia's leader warned that policies 'based on the barrack-room principles
of a unipolar world appear to be extremely dangerous.' Russian Air Force commander Gen.
Vladimir Mikhailov announced that Russia, too, can engage in pre-emptive attacks. Russia
has informed neighboring Georgia
that Russia might use cruise missiles and strategic bombers in preventive strikes against
Chechen terrorists sheltering on Georgian territory. Bush's insane doctrine of
pre-emptive war promises a 21st century more bloody than the 20th." "The latest recipient of Washington's
'regime change' was not some miscreant Muslim state but the the mainly Christian mountain
nation of Georgia. Eduard Shevardnadze, the 75-year-old strongman who has ruled
post-Soviet Georgia's 5.1
million citizens since 1991, was overthrown by a bloodless coup that appears to have been
organized and financed by the Bush administration. Shevardnadze's sin, in Washington's
eyes, was being too chummy with Moscow and obstructing a major U.S. oil pipeline, due to
open in 2005, from Central Asia, via Georgia, to Turkey. Georgia occupies the heart of the wild, unruly, and strategic
Caucasus region, which I call the Mideast North. In recent months, Shevardnadze had
given new drilling and pipeline concessions to Russian firms.....Washington sent
high-level emissaries to warn Shevardnadze not to do anything that threatened the proposed
oil corridor. When he went ahead with Russian oil deals, Washington denounced the Nov. 2
Georgian elections as rigged, which they were, although it also turns a blind eye to
rigged elections in useful allies like oil-rich Azerbaijan, Armenia, Russia, Egypt,
Pakistan, etc. Cash and anti-Shevardnadze political operatives from the U.S. poured into
Tbilisi to back up the president's American-educated principal rival, Mikhail
Saakashvili.... Washington will shore up its man in Tbilisi, Saakashvili, and may send
Special Forces troops under the pretext of the faux war on
terrorism. The entire Caucasus is near a boil. The sharply increasing rivalry between the U.S. and Russia for political
and economic influence over this vital land bridge between Europe and the oil-rich Caspian
Basin promises a lot more intrigue, skullduggery and drama." "The energy crisis we are in today is
entirely different from the temporary problems we experienced in 1973-74, 1979-86, 1990-91
and 2000..... There was always sufficient worldwide geological capacity to produce
additional barrels of crude oil to meet the world's needs. No longer. In the next major
energy crisis, that capacity will likely be eroded. So the crisis should have a severe
impact, be global in scope, and be difficult to solve. Plainly, it will be
unprecedented.... Over the next 25 years, a new world energy economy will arrive in three
waves. We are near the top of the first and smallest one, a warning wave. A second more
powerful wave likely will hit in the 2009-2010 period when the non-OPEC world may reach
its all-time highest output of crude oil, subsequently declining to become ever more
dependent on OPEC for incremental barrels of production. The final wave should break
around 2020, or earlier, as even OPEC's vast reserves are tapped at a maximum rate of
production. After that, oil volume should head down and keep falling, never to revive..... An international economic disturbance of
this magnitude will create potential conflicts between
nations and civil competition within societies. These could
be a trial for us and for our children, made worse in the early years by our lack of
preparation and our failure to understand what is already
happening to us."
"The United States has
said that the Caspian region, and the development of its energy resources, is a key
national security interest. It has also made clear its commitment to the independence of Ukraine. But current options for Caspian oil
transport are beset with political and logistical problems and, therefore, fall far short
of guaranteeing the safe, secure export of Caspian oil in the short or long term. At the
same time, Russia's increasing stranglehold on Ukraine's energy imports does not bode well for the smaller country's ability to
maintain its hard-won sovereignty, and it increases the risk that Ukraine will call on the United States and
its NATO allies to stand behind it against Russia. The development of an export route for
Caspian oil through Ukraine is a
cheap and effective means of ameliorating both problems, and thus an approach that
Washington should support.... The potential for energy wealth has already led Clinton
administration officials to class Central Asia and the Caucasus as a region 'vital' to the
United States. Washington hopes that the development of
natural gas and oil there will lead to reduced reliance on Middle Eastern suppliers for
both the United States and its European allies..... For years, Ukraine has advocated a route through Azerbaijan and Georgia,
over the Black Sea, and through Ukraine to Poland..... The
Caspian states, particularly Azerbaijan, are ideal partners. These states need non-Russian
routes for their oil for the same reasons that Ukraine needs non-Russian sources of energy: to break the cycles of dependence
with Russia. Furthermore, Ukraine's
involvement with Azerbaijan and Georgia (with Moldova and Uzbekistan) in the GUUAM
grouping has paved the way for excellent relations.... In the short term, however, Ukraine is in desperate need of a way to
diminish Russia's increasing leverage. If no cure is forthcoming for the disease, Ukraine will almost certainly seek to treat
the symptoms, asking the United States and its other Western friends for increased and
more concrete security commitments. In order to avoid the
painful and potentially dangerous decisions that would force, the United States should
move now to help Ukraine diversify away from Russian energy. Because it could also enable
Washington to help to provide a more secure and reliable route for Caspian oil, this
policy is particularly advantageous." "In one of the generally less
remarked-upon recent political earthquakes, the reform-oriented government of Prime
Minister Viktor Yushchenko of Ukraine has lost a no-confidence vote in the Ukrainian Rada (parliament) but will
stay on at the head of a caretaker government for up to 60 days. The column analyses the
significance of the political crisis in Ukraine for energy questions in Europe and Eurasia..... Yushchenko's efforts to promote the establishment of an oil transit
corridor between Azerbaijan and Poland, to be developed under the European Union's TRACECA
project, probably did not help improve his stature in Moscow's eyes. Such a corridor would
circumvent the route to Novorossiisk on Russia's Black Sea coast..... Even Yushchenko's announcement that the Ukrainian section of this Odessa-Brody oil pipeline and the Yuzhny oil
terminal near Odessa were 90 % complete was insufficient to cause EU leaders to take
notice of Ukraine's plight at their latest summit." "... on December 19, the Odessa-Brody pipeline in Ukraine is scheduled
to become operational. A strategic bonus is the easy hook-up of the Odessa-Brody route to
the refinery in Plotsk, Poland, and a further link to the Baltic port of Gdansk, from where oil be transported to Western markets. The primary advantage of the 673-kilometer long Odessa-Brody route is
that allows exporters to avoid major transit bottlenecks. As Michael Bleyzer, President of
the Houston-based SigmaBleyzer Fund and an advisor to the Ukrainian state pipeline
company said, 'getting the Caspian oil through Ukraine to
Europe is strategically important for the United States
… With the increased supply of oil, and all other bypasses being several years from
completion, this is too good of an opportunity to pass up.' The new pipelines
demonstrate that the Caspian Basin is emerging as a viable source of energy, creating an
attractive alternate to the Middle East and other traditional oil provinces.... Government
officials and oil executives have long wrestled with the dilemma of finding ways to bring
Caspian Basin resources to market. The flow of oil from the Caspian is constrained by the
bottleneck of the Bosphorus and the Dardanelles (the Turkish Straits), a narrow water
artery which connects the Black Sea with the Sea of Marmara and the Mediterranean." "Two weeks
before, on May 12, the European Commission passed an official document, the Message on the
Development of the Energy Policy of the Enlarged European Union, Its Neighbors and
Partners. One of the priorities was stated as cooperation with neighbor-countries in
ensuring safe transportation of oil by sea, including the extension of the Odessa-Brody
pipeline to Poland’s Plotsk to be later connected either to the Druzhba or the
existing pipeline, which runs to the Polish Baltic port of Gdansk..... Ukraine is becoming
'a key nation for the transit and diversification of energy supplies to Europe,' stated
Hages Mingarelli, Chief of the EC Directorate for Eastern Europe, Caucasus and Central
Asia.... Malcolm Rifkind, the former British defense and
foreign minister, now a senior consultant with
PriceWaterhouseCoopers, who presented his business plan concept first in Kyiv and now in
Brussels, stressed several times that this project is advantageous to all. So why all this
praise? Why was the European presentation of the project so successful? As was noted at the conference, the situation in the European market of
oil supplies and services has changed. On the one hand, the
consumption of carbohydrate fuels is growing steadily, and on the other, there are
objective obstacles to increasing oil supplies to the EU market, primarily the limited transit capacity of the Bosporus straits. Also, there is not a sufficient infrastructure in existence for
delivering light Caspian oil to potential markets. Authoritative experts maintain that
Ukraine has the strategic possibility to make the Eurasian Oil Transportation Corridor a
bypass alternative to the Bosporus. ....... The Europeans are
also worried by shrinking extraction in the North Sea.
According to the forecasts made at the Brussels conference, by
2015 it will have decreased by 87% (!), while the extraction
from Caspian deposits will have increased by 44%...... The project is wholeheartedly
supported by the United States..... The most promising and feasible route that can help
the Bosporus problem is Odessa-Brody-Plotsk. 'A project very seldom appears so positive
and profitable for so many participants. And this underscores our opinion about the
importance of this project, because it attains a strategic
goal, it is commercially realistic and it meets the interests
of different nations,' US Ambassador to Ukraine Carlos Pascual stated when the business
plan concept for the Odessa-Brody project was presented in Kyiv. .So what is going on? In
our opinion, Moscow’s stubborn insistence on operating the Odessa-Brody pipeline in
the reverse mode is of the same kind as its attempts to drag Ukraine into a customs or
even an economic union in the framework of the so-called Integral Economic Zone..... In
other words, these are all attempts to deprive Ukraine of European prospects, which have
become more visible lately, and to put Kyiv back into Moscow’s orbit. The Kremlin
certainly doesn’t want Ukraine to become a key supplier of Caspian oil to the
European market and, consequently, to become more independent economically.". "Kazakhstan is ready to cofinance
Brody-Plotsk [Ukraine to Poland]
oil pipeline construction and transport up to 8mn tons of oil via the Ukrainian transport
system to Black Sea, Ukrtransnafta company’s press service informed. The share and
terms of Kazakhstan’s participation in the project will be finalized after the
feasibility report is ready. The governments of Ukraine and Poland have also given the
political support to the project. As informed, earlier, Ukraine and Kazakhstan will draft
an intergovernmental agreement for Kazakh oil transit via Ukraine in Q3. Oil extraction in
Kazakhstan is forecast at 52mn tons this year, out of which 8.5mn tons will be used
domestically and 44mn tons of oil will be exported. It is planned that the national oil and gas monopoly KazMunaiGas will be
an operator for Kazakh gas transportations to Ukraine and Neftegas Ukraine will represent
the Ukrainian side." "Ukraine's geographic location makes it an ideal corridor for oil and natural gas
to transit from Russia and the Caspian Sea region to European markets. Most of the oil
transited via Ukraine is Russian oil, and is sent through the 1.2-million-bbl/d Druzhba
pipeline, the southern fork of which runs through Ukraine (see map). In July
2003, the Ukrainian government approved a new agreement with Russia calling for the
transit of Russian oil through Ukraine to increase by 60%, to 1.6 million bbl/d, for 15
years. However, the Russian side, in a surprise negotiating tactic, has refused to sign the agreement, owing to a
dispute over Ukraine's newest oil pipeline, Odessa-Brody (see below)..... Ukraine also hopes to become a transit center for oil from the Caspian Sea
region, which is expected to increase significantly over the decade. The leading potential
conduit for this oil in Ukraine
is the Odessa-Brody pipeline, which was completed in 2001 and extends from Ukraine's Black Sea port of Odessa northward
to the city of Brody (see
map) ..... However, for roughly two years the pipeline has been mostly dormant. Russia
has suggested that the pipeline be used in reverse, to move oil from Russia southwards to
tankers in the Black Sea and shipped onwards to world markets. Since January 2003, the
last 32-mile leg of the pipeline has been used (in reverse) by Russian oil companies for
these purposes. Faced with the possibility of losing direct
access to Caspian Sea region oil, European governments have voiced their opposition to the
reversal project in newspaper articles and public statements..... " "Kazakhstan national oil and gas
company KazMunaiGaz reconfirms its interest in using the oil pipeline Odessa-Brody to
supply Kazakh oil to European markets....Earlier, KazMunaiGaz has showed interest in
taking part in the construction of the Brody-Plotsk pipeline (Poland).... Russian and
Caspian suppliers had been pressuring Ukraine's cash-strapped government to decide the
pipeline's direction for months, in a bid to boost exports to Europe while oil prices are
high. Analysts said whoever gets their oil into the pipeline first will enjoy greater
influence over the decision on permanent use." "The
Ukrainians built the Odessa-Brody oil pipeline without international investors or
commitments by petroleum producers to use the pipeline. After the line opened for
business, a struggle emerged over the pipeline's direction flow, whether it would run
east-west for Caspian exports or if Russia would use it to flow west-east to ship Siberian
oil via Odessa. As of this date, it still has yet to be decided..... The [east-west] policy seemed to dovetail well with
Washington's increasing interest in the region's energy resources. In the aftermath of the September 11th
attacks, the US attempted to shift its energy policy by lessening US dependence on OPEC
through deepening ties with Kazakhstan, Azerbaijan, and Turkmenistan. .........
ChevronTexaco -- operator of the giant onshore Tengiz field and one of the largest
investors in Kazakhstan -- wanted to sign on in October 2003 with Ukrtransnafta on the
Odessa-Brody oil pipeline by using it to ship 9 mm tons of Kazakh oil annually. It also
wanted to store petroleum in the Pivdennyy oil terminal for six months. Because of Ukraine's uncertainty about the project and Russian lobbyists seeking to hinder project
efforts, the plan never materialized....... Russian pressure also influenced Azerbaijan's decisions not
to invest in Odessa-Brody. Threat to Russian monopoly Baku-Novorossiisk (Azerbaijan), CPC
(Kazakhstan) -- exorbitant transit fees Russia, in the meantime, does not want to see extension plans fulfilled
but instead have Siberian oil shipped to world markets out of the Odessa port via the
Black Sea. With the Azeri
option now gone, the Ukraine was again considering Russia's plan for
the short-term because Ukraine could profit from Russian oil transit while the extension
to the Polish border was being built but the plan never materialized. Supporters of the
extension argued that even a short-term reversal of the pipeline could jeopardize
potential future investment because international investors might see the pipeline as too
controlled by Russia. Washington
has supported Kiev's plans for a westward-flowing line, but not to the extent of providing financial support. The US fears that an eastward flow could
increase Ukraine's dependence on Moscow and could increase the possibility of a major oil spill in the
Turkish straits because of the intensified oil traffic. The lack of progress clearly
frustrated Ukrainian President Leonid Kuchma; last month he admonished his Cabinet, the
European Union, and the Polish government for not financially supporting the Odessa-Brody
project. Kuchma was also
angered that his own government did not support reversing the pipeline to an eastward flow
to export Russian petroleum. .....
On May 28 Polish Deputy Treasury Minister Tadeusz Soroko [said]...'It was visible in talks
that part of the Ukrainian government supports the project, while the other part is less
excited about it. Now it seems that the Ukrainian side is walking away from the project,
and the information we
already have -- that the Ukrainians intend to shift power over the currently existing
pipeline to the Russians --
makes this project difficult to accomplish." "To be sure, Ukraine's return to Russia's embrace won't be alarming to those
in the Bush administration -- and there do seem to be a few around -- who see President
Putin as a force for good. But for those with a few doubts about the purity of the KGB
careerist's soul, here is a short list of how Ukraine's
lockstep with Russia, precipitated by a stolen election this Sunday, might harm U.S.
interests on the Eurasian land mass ....... Russia will have trumped an energy strategy in which U.S.-financed Caspian
oil was to have flowed through Ukraine to Poland and Western Europe. If the ruling party holds on to power in Ukraine, a new cross-Ukraine
pipeline designed to feed U.S.-financed, Kazakhstani
oil from the Black Sea north to European markets will likely see a peculiar reversal
of roles. It's likely the
Odessa-Brody pipeline would literally reverse its flow and instead be used to ship Russian
oil south through the Mediterranean, strengthening Russia's export position, undermining
U.S. energy and investment interests in Kazakhstan, and preventing any European
diversification away from Russian energy." "The current hot spots for major oil companies are the oil reserves in the
Caspian Sea region. Former Soviet states Azerbaijan, Kazakhstan and Turkmenistan all are
seeking to quickly develop their oil reserves, which languished during the years of
Russian domination, says Halliburton Co. Chief Executive Officer Dick Cheney. Cheney was in Amarillo
during May for the Panhandle Producers and Royalty Owners Association annual meeting..... The potential for this region turning as volatile as the Persian Gulf
does not concern Cheney. 'You've
got to go where the oil is,' he said. 'I don't worry about it a lot.' Cheney's ties to the region grow out of his
international connections when he was part of first the President Ford administration,
then the Reagan administration and his term as secretary of defense under President Bush. Now he is on the 12-member Kazakhstan Oil Advisory Board.... Various forecasts indicate that the growth in petroleum demand will
average about 2 percent a year, while the depletion of oil reserves is averaging about 3
percent a year, he said. That means within the next 12 years the oil industry will need to
produce 48 million barrels of oil per day more than the current amount of about 73 million
to 74 million barrels per day, Cheney said."
"This is about America's energy security. It's also about preventing strategic
inroads by those who don't share our values. We're trying to move these newly independent
countries toward the west. We would like to see them reliant on western commercial and
political interests rather than going another way. We've made a substantial political
investment in the Caspian, and it's very important to us that both the pipeline map and the politics come out right." 3. The White House And The 'Spontaneous' Ukrainian Revolution "...the gains of the orange-bedecked
'chestnut revolution' are Ukraine's,
the campaign is an American creation, a sophisticated and brilliantly conceived exercise
in western branding and mass marketing that, in four countries in four years, has been
used to try to salvage rigged elections and topple unsavoury regimes. Funded and organised
by the US government, deploying US consultancies, pollsters, diplomats, the two big
American parties and US non-government organisations, the campaign was first used in
Europe in Belgrade in 2000 to beat Slobodan Milosevic at the ballot box. Richard Miles,
the US ambassador in Belgrade, played a key role. And by last year, as US ambassador in
Tbilisi, he repeated the trick in Georgia, coaching Mikhail Saakashvili in how to bring
down Eduard Shevardnadze. Ten months after the success in Belgrade, the US ambassador in
Minsk, Michael Kozak, a veteran of similar operations in central America, notably in
Nicaragua, organised a near identical campaign to try to defeat the Belarus hardman,
Alexander Lukashenko. That one failed. 'There will be no Kostunica in Belarus,' the
Belarus president declared, referring to the victory in Belgrade. But experience gained in
Serbia, Georgia and Belarus has been invaluable in plotting to beat the regime of Leonid
Kuchma in Kiev. The operation - engineering democracy through the ballot box and civil
disobedience - is now so slick that the methods have matured into a template for winning
other people's elections.... Officially, the US government spent $41m (£21.7m) organising
and funding the year-long operation to get rid of Milosevic from October 1999. In Ukraine, the figure is said to be around
$14m."
"... 300 out of the 450 Ukrainian MPs are dollar millionaires, and we'll hear more about Yushchenko's other wealthy backers later on...
both the present election candidates have much in common. At the beginning of the campaign
one businessman in Kiev compared the Yushchenko and Yanukovich teams to the difference
between Coca Cola and Pepsi. After all both men have served as Kuchma's prime
minister. During his time Yushchenko, a former central bank chairman, pushed for
market reforms and greater financial transparency. That doesn't mean to say he was a great
champion of democracy..... His right hand woman, once his deputy prime minister, has also
been busy reinventing herself as a new Joan of Arc. The most radical voice of the last
fortnight belongs to Julia Timoshenko a former brunette, who now wears blond plaits around her head like a
young Carpathian folk dancer. This demure peasant look hides a woman once know as
Ukraine's iron lady, a ruthless operator in the gas supply market who succeeded in turning
her government connections into enormous personal
wealth...." "Tymoshenko, who heads the opposition parliamentary faction, has regularly won media
beauty polls, while her charisma took her into office as a deputy prime minister in the
government under Yushchenko in 2000. But she faced criticism and was fired by outgoing
President Leonid Kuchma after being charged with forgery and smuggling gas while heading a
private gas trading firm in the mid-1990s." "In December of 1998, Lazarenko was
arrested in Switzerland on charges of money laundering. He fled to the United States,
where he was again arrested and charged with the laundering of $ 114 mm received as bribe
money during his time in office. This June, while still being held in the United States,
Lazarenko was sentenced for money laundering in Switzerland. Yuliya
Tymoshenko, who was president of UESU when Lazarenko was
prime minister, has so far avoided criminal prosecution. In 1997, she left the company and
went into politics. In December of 1999, she became a deputy prime minister with special
responsibility for energy matters. Her husband, who still is a member of the board of
UESU, was arrested last month on charges of embezzlement of state property." "These were heady times for the hungry
young tycoon. According to Matthew Brzezinski's 2001 book Casino
Moscow, which devotes a chapter to Tymoshenko entitled The Eleven Billion Dollar
Woman, she was guarded by an entire platoon of ex-Soviet special forces bodyguards....
According to Brzezinski, as a result of Lazarenko's [Ukraine's prime minister in 1996-97]
patronage, 'Tymoshenko gained
control over nearly 20% of Ukraine's gross national product, an enviable position that
probably no other private company in the world could boast.' Her rapid rise, and her
friendship with Lazarenko, would later return to haunt her. Lazarenko fell from favour,
was sacked amid accusations of corruption in 1997, and fled Ukraine. In June this year, he
was convicted of money-laundering and extortion in California. At first, Tymoshenko was able to distance herself from
the scandal - in the short-lived premiership of Yushchenko, she became deputy prime
minister - but as her relationship with Kuchma cooled, she became drawn into the scandal.
She was accused of having given Lazarenko kickbacks in exchange for her company's
stranglehold on the country's gas supplies. It is an accusation she has always denied,
although Brzezinski maintains it is true. 'The US government has evidence of wire
transfers from her to Lazarenko personally while he was PM,' he told me yesterday." "Yushchenko, for his part, was Central Bank chief throughout
the destructive years of the 1990s. When he became Prime Minister, in 2000-01,
privatization accelerated, as did the amassing of criminal fortunes. Speaking at a
Carnegie Endowment forum on Ukraine in 2001 (where he shared the dais with
Freedom House President Adrian Karatnycky), radical free-trader Anders Aslund hailed the
acceleration of privatization in Ukraine in
1998-2001, asserting that 'dirty privatization is better than no privatization.'
Yushchenko brought energy executive Yulia Tymoshenko, who today is his ally and the most aggressive opposition leader,
into the government as Deputy Prime Minister. Responsible for Ukraine's energy sector, Tymoshenko oversaw the sale of several power
plants to the U.S.-based AES company, an energy shark and asset-stripper par excellence.
She protests that her subsequent imprisonment on bribery charges was a political frame-up
by the Kuchma regime, but even Matthew Brzezinski (son of Zbigniew) reports in his 2001
book, Casino
Moscow, that Tymoshenko made billions of dollars from the
patronage of Pavlo Lazarenko, the mid-1990s Ukrainian Prime Minister, who has been
convicted of money-laundering in Swiss and U.S. courts, and is currently serving time in
the United States." “The file on her was maddeningly thin,
consisting of a few rumpled Ukrainian press clippings of dubious veracity and a number,
underlined twice and adorned with large question marks. The number was $11,000,000,000,
the gross revenue of Timoshenko’s
virtually unknown Ukrainian company. Not even Coca-Cola earned that much from its
combined international sales....... Timoshenko’s big break, however, came on the day of my mugging, when Lazarenko
was appointed prime minister of Ukraine. One of his first moves in office was to wrest
half a dozen lucrative energy concessions from several big private groups and give Timoshenko a nationwide monopoly on the
import and distribution of Russian natural gas.“ "Starting in 2001,
Ukrainian prosecutors opened several investigations into her business activities. She was
jailed for 42 days that year on charges of bribery, money laundering, corruption and abuse
of power while working for UES. The charges were subsequently dropped, but her husband,
Oleksander, still lives abroad, fearing prosecution in Ukraine. Last summer, Tymoshenko's father-in-law, Hennadiy Tymoshenko, a former UES president, and
former UES accountant Antonya Boliura were charged with illegally acquiring $2.25 billion
through sales of Russian natural gas in Ukraine. They have been released pending trial. Tymoshenko claims all the charges are
politically motivated. As the presidential campaign got under way in September, Russian
prosecutors dusted off an old case and demanded her extradition on charges of bribing
Russian Defense Ministry officials in 1996. Again, Tymoshenko said the charges were politically motivated, part of a Kremlin effort to
discredit the opposition." "Interpol has reportedly asked Russian
prosecutors for additional information on the fraud case against senior Ukrainian
opposition politician Yuliya Tymoshenko even as that international police organization has removed a warrant for
her arrest from its official website, Russian and international media reported today....
ITAR-TASS and dpa reported that Interpol temporarily removed the warrant for Yuliya
Tymoshenko's arrest from its official website (http://www.interpol.org) pending further
information. A warrant for her husband, Oleksandr Tymoshenko, remains in force, according
to the Interpol website." "Yulia
Timoshenko, one of the leaders of Ukrainian opposition, has
been put on the Interpol international wanted list. This police organisation has placed
all information about Timoshenko on its Internet site. The electronic file also says that
Timoshenko is searched for on charges of fraud and that a warrant for her arrest was
issued in Moscow. But the parliamentary deputy Yulia Timoshenko on the Interpol wanted
list cannot be detained on the territory of Ukraine, according to Sergey Rudenko,
press-secretary of the Ukrainian Prosecutor-General's Office. He says the search for
Timoshenko was not launched by Ukraine's law-enforcement agencies. It is Russia that is
eager to put questions to Timoshenko and that has submitted documents at the Interpol with
the request to put her on the international wanted list. Yulia Timoshenko, Ukraine's
former boss of the United Energy Systems, ex-Vice Premier and parliamentary deputy, is
charged with bribing five senior officers of the Russian defence ministry's central
materiel board. The indictment says that in 1999 when Mrs.Timoshenko headed the United
Energy Systems of Ukraine (UESU) she gave the officers bribes worth $500 to $5,000 for
them to over-rate prices on UESU sales to the Russian defence ministry. As a result, the
value of the contract made $300 million, which, claims the prosecution, is $90 million
more than the real cost." "Yulia
Timoshenko, prominent on the Ukrainian political opposition,
has vanished from the Interpol 'wanted' website. The goings-on round her search stay very
vague. Our correspondent called the Interpol HQ in Lyons for explanations. The officer on
duty said the international police organisation was never offering information by
telephone, and asked a written inquiry. An e-mail message was urgently sent. No reply has
come by now. The Interpol was offering Yulia Timoshenko's file on its website 'Wanted' rubric-two photographs accompanied by
several standard verbal lines: surname, Christian name, sex, age, birth date and place,
nationality, and details of her appearance, in particular, dark hair. The file said
Timoshenko was suspected of swindles, and Moscow had warranted her arrest." "But not all the interference in
Ukraine has come from the Russian side. It's no coincidence that the country is the fourth
largest recipient of US aid. And nobody disputes that hundreds of Ukrainian
organisations behind the orange revolution are funded by western governments ...." "Mr. Yushchenko began his meetings
with senior [Bush] administration officials on February 5 with Vice-President Richard Cheney and concluded
them on February 7 with Deputy Secretary of State Richard
Armitage..... Their tight schedule also included meetings with members of the U.S.
Congress - Sens. John McCain, Charles Hagel and Carl Levin, and members of the
Congressional Ukrainian Caucus - with former Secretary of State Madeleine K. Albright; two
former U.S. ambassadors to Ukraine, Steven Pifer, who now serves as deputy assistant secretary of state for
European and Eurasian affairs, and his predecessor, William Green Miller; as well as with
Zbigniew Brzezinski, who was national security advisor to President Jimmy Carter..... The
visiting Our Ukraine deputies
were the guests of honor at two evening receptions. One was hosted by three organizations
involved in democracy-building efforts in Ukraine - the National Endowment for Democracy, the National Democratic Institute
and the International Republican Institute [IRI], which
assisted in setting up the group's Washington visit schedule." "In April 2002, a group of military
officers launched a coup against [Venezuelan President] Chavez, and leaders of several
parties trained by IRI [International Republican Institute] joined the junta. When news of the coup emerged, democracy-promotion
groups in Venezuela were holding a meeting to discuss ways of working together to avoid
political violence; IRI representatives
didn’t attend, saying that they were drafting a statement on Chavez’s overthrow.....
Yet IRI’s singular
focus on groups seeking to overthrow leaders seen as hostile to the United States can
sometimes harm American diplomatic efforts. In Cambodia, notes one official with
considerable experience in the country, 'it hurt the U.S. government’s credibility as
an honest broker in the election processes.' In Haiti, IRI has had a similar impact, experts say, by unbalancing an already volatile
situation and causing people to wonder what the United States’ true agenda was. In
2003, after being threatened by IRI’s Stanley Lucas, the departing U.S. ambassador, Brian Dean Curran,
gave a farewell speech to the Haitian chamber of commerce. 'There are many in Haiti who
prefer not to listen to me,' he said, 'but to their own friends in Washington—the
sirens of extremism.' Then he added, using the Haitian word for 'thugs': 'I call them the
chimères of Washington.'” "If the scenes of young people blowing
whistles, banging drums and handing out cough drops amid the throng of protesters in Kiev
last week looked familiar, they should: student-led mass protests also followed disputed
elections in Tbilisi last year and in Belgrade in 2000, and each time the opposition
prevailed. At least one group has played a role in all three movements. Serbia's Otpor, or
Resistance, the student organization that spearheaded the revolution that ousted Slobodan
Milosevic in 2000, sent 'trainers' to aid activists who helped unseat Georgian President
Eduard Shevardnadze in 2003. And earlier this year, the group provided training to Ukraine's Pora, the biggest opposition youth
group in Kiev. In each case, Otpor coordinator Sinisa Sikman told TIME, Otpor taught
local students organization and negotiation skills, street-protest tactics, and how to
'monitor the elections so that they could fight fraud.' News of Otpor's interest in the Ukraine vote — and the fact that the
group received funding from the U.S. government as well as dozens of other private and
non-American donors — drew alarmed speculation on Russian state TV that the group is
an American tool agitating for regime change 'on the doorstep of Russia.' Pora and Otpor
deny the charge." "In the Ukraine, citizens are in the streets protesting what they charge is a fixed
election. Secretary of State Colin Powell expresses this nation's concern about apparent
voting irregularities. The media give the dispute around-the-clock coverage. But in the
United States, massive and systemic voter irregularities go unreported and unnoticed. Ohio
is this election year's Florida. The vote in Ohio decided the presidential race, but it
was marred by intolerable, and often partisan, irregularities and discrepancies. U.S.
citizens have as much reason as those in Kiev to be concerned that the fix was in....
Democracy should not be for export only. " US v Ukrainian Exit Polls - Whose Election Results Do You Believe And Why? - 28 Nov 2004 "Russia
is not now a superpower and is unlikely to regain such status in the foreseeable future.
Nevertheless, Russia remains a potential challenge to American national interests in the
twenty-first century though the nature of its challenge is changing....Russia’s
location, military power, natural and human resources, and technology could make it a key
player in a variety of potential ad hoc regional coalitions aimed at countering
America’s international leadership. It is an extremely important US interest to head
off such a result by discouraging Russia from seeking such a role.... A threat to their
[former Soviet states] independence could destabilize the situation in Europe, damage
US-Russian relations,and create the potential for subsequent serious conflict. Moreover, as essential choices such as
those surrounding pipeline routes from the Caspian Basin are made, it is important for the
US that they be taken without undue Russian pressure." The Stakes Are High - What's The Big Deal About The Ukraine? "The United States has said that the
Caspian region, and the development of its energy resources, is a key national security
interest. It has also made clear its commitment to the independence of Ukraine. But current options for Caspian oil
transport are beset with political and logistical problems and, therefore, fall far short
of guaranteeing the safe, secure export of Caspian oil in the short or long term. At the
same time, Russia's increasing stranglehold on Ukraine's energy imports does not bode well for the smaller country's ability to
maintain its hard-won sovereignty, and it increases the risk that Ukraine will call on the United States and
its NATO allies to stand behind it against Russia. The development of an export route for
Caspian oil through Ukraine is a
cheap and effective means of ameliorating both problems, and thus an approach that
Washington should support.... The potential for energy wealth has already led Clinton
administration officials to class Central Asia and the Caucasus as a region 'vital' to the
United States. Washington hopes that the development of
natural gas and oil there will lead to reduced reliance on Middle Eastern suppliers for
both the United States and its European allies..... if the
United States truly wants to ensure a safe and secure route for Caspian oil, it cannot
look solely to Baku-Ceyhan [Azerbaijan-Georgia-Turkey] pipeline route. At the same time
the very public nature of Washington's commitment to Turkey on this matter makes a
reversal of policy impossible. What Washington really needs, then, is to put teeth into
its claim that it supports alternative routes. It can do this most effectively by backing
one or more 'complements' to Baku-Ceyhan, short-term options for getting the oil to market
while the Turkish pipeline is under construction, which would also provide a hedge against
its failure.... Happily, there is another alternative. For
years, Ukraine has advocated a route through Azerbaijan and Georgia, over the Black Sea,
and through Ukraine to Poland. Although this proposal has
been all but ignored in Washington, it has real potential. Most of the necessary pipeline
already exists. Ukraine's
ongoing improvements to its refinery and pipeline infrastructure, given some foreign
assistance to speed the process, will make it sufficient both to handle the 'early' oil,
extracted in the next few years while Baku-Ceyhan is still building, and to process even
larger quantities later. Perhaps most important, the price tag would be relatively small:
the cost of a few miles of pipeline (estimated at $400 million) and facility development
and improvements (about $600 million)..... Insofar as Kyiv can trade transit of energy
exports from those states through its territory for some fuel for itself, while still
having to purchase the balance, this could be a real opportunity to break the cycle of
dependence with Russia--and to create incentives for reform. The Caspian states,
particularly Azerbaijan, are ideal partners. These states need non-Russian routes for
their oil for the same reasons that Ukraine needs non-Russian sources of energy: to break the cycles of dependence
with Russia. Furthermore, Ukraine's
involvement with Azerbaijan and Georgia (with Moldova and Uzbekistan) in the GUUAM
grouping has paved the way for excellent relations. In fact, as already noted, both
Georgia and Azerbaijan have repeatedly spoken favorably of a Ukrainian export route
option..... To recap, the Ukrainian export route will provide
a secure and reliable complement to Baku-Ceyhan for Caspian oil export, one that does not require the United States to abrogate its commitment
to Turkey, but which nonetheless serves as an excellent hedge should Baku-Ceyhan fail. It
will also strengthen Ukraine
from a security standpoint, enabling it to better withstand Russian pressure and, thus,
significantly decrease the likelihood that it will ask the United States and NATO to
defend it from its large neighbor. Furthermore, in diversifying Ukrainian energy imports
away from Russia, this policy solution creates significant incentives for domestic energy
sector reform as well as reform of the overall investment climate, which, in turn, should
lead to development of Ukraine's
own oil and gas resources.... In the short term, however, Ukraine is in desperate need of a way to diminish Russia's increasing leverage.
If no cure is forthcoming for the disease, Ukraine will almost certainly seek to treat the symptoms, asking the United
States and its other Western friends for increased and more concrete security commitments.
In order to avoid the painful and potentially dangerous
decisions that would force, the United States should move now to help Ukraine diversify
away from Russian energy. Because it could also enable Washington to help to provide a
more secure and reliable route for Caspian oil, this policy is particularly advantageous." "Ukraine's Prime Minister Viktor
Yushchenko met in Astana on 10-11 March with his Kazakh counterpart, | ||||||||||||
