Multiple Caspian pipeline routes reduces risks

Oct 12, 1998 02:00 AM

Multiple pipeline routes should be developed to ensure political stability and cut costs as international companies tap the vast oil and gas riches of the Caspian Sea.
"I think multiple routes are necessary for the Caspian, both for political stability and to maximise economic value of the oil in the Caspian," said Peter Riches, senior vice president of Texaco International Petroleum Co..
"I think the issues in the Caspian are often focused on the size of the reserves and the real issues are the ability to transport it to open markets," he said.
"If you have options, then you have the ability to negotiate on transit fees and to reduce the risk, should there be any disturbance on one route," he said.

With estimated reserves of up to 15 bn tonnes of oil equivalent, the Caspian has emerged as a tantalising target for major Western oil companies seeking big profits and a new source of oil and gas to reduce reliance on the Middle East.
But they face a maze of political, legal and economic issues and the players are locked in a battle of opinions over transport routes in the potentially politically unstable area.

Washington is opposed to building a pipeline to Iran, which it accuses of sponsoring international terrorism.
The US imposed a blanket trade and investment ban on Iran in 1995, stopping all American investment in its energy sector. A 1996 law passed by Congress imposes sanctions on non-US companies that invest $ 20 mm or more a year in either Iran or Libya's oil and natural gas sectors.

Development of the Caspian is also hampered by deadlock over the legal status of the sea -- bordered by Russia, Azerbaijan, Kazakhstan, Turkmenistan and Iran.
Riches said a pipeline route through Iran would make economic sense because it would mean only 1 country as a transit site, but he added the fact that American companies could not get involved would be a problem.

Source: not available
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