Central Asia eyes Iran as route to export oil

Feb 18, 1997 01:00 AM

Oil-rich but landlocked, Central Asian republics desperate to get their crude to market see an export route through Iran blocked by Tehran's ice-cold ties with the West, diplomats said. Iran is well-placed to form a bridge for Central Asian energy exports, but its politics scare off the billions of dollars in investment needed to back its dreams of being a player on a new Silk Road.
US sanctions against Iran have precluded any American companies from developing an export route. US sanctions and cool political ties with Europe have limited many European oil companies' room for manoeuvre. "Sanctions have kept the multinationals guessing," an analyst said. "Swaps offer some flexibility but not for the large volumes of oil people are talking about from Central Asia and Azerbaijan."
"We do not need the United States and are not prepared to have any dialogue unless the behaviour of the United States changes," Iran's Deputy Foreign Minister Mahmoud Vaezi said. Iran, which lies between the remote deserts and steppes of Central Asia and the Gulf, is pushing its geographical position hard to strengthen its ties with its former Soviet neighbours.

In their turn, countries like Kazakhstan -- with oil reserves estimated at 24 bnt -- look to Iran to break their dependency on Russian pipelines. That Russia has maintained its monopoly over export routes is proving the main obstacle to real independence for the Central Asian republics.
Kazakhstan has agreed an oil swap deal with Iran whereby Iran provides Kazakhstan with 2 mmt of Iranian oil in the Gulf for supplies of Kazakh crude to the Tehran and Tabriz refineries in northern Iran. But plans to build a gas pipeline through war-wracked Afghanistan and an oil pipeline through Georgia to the Black Sea are mired in complex political and security concerns. Turkey's state oil company Botas estimates oil production around the Caspian basin -- from Azerbaijan, Kazakhstan, Turkmenistan and Russia -- could reach 120 mmtpy by the year 2010.Bijan Sepasy, head of the US-Kazakhstan council said: "The US is imperilling the economic security of the region by its refusal to change its stance on Iran.''

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