Turmoil in Georgia is linked to oil

Nov 24, 2003 01:00 AM

The dramatic political events that have shaken Georgia in recent days were played out against a background of a wider struggle for influence in the region's multi-billion dollar oil and gas projects, analysts said. Georgia is of huge strategic importance to international oil companies including US, British and Russian giants because it straddles the oil route that begins in crude-rich Azerbaijan and ends in Turkey and its outlets to Western markets.
"The United States has a twin objective in this region: to prevent Russia by every means from getting back a foothold in the Caucasus and to find a way of freeing oil in the Caspian without it passing through Russia," said Anita Tiraspolsky, a regional specialist based in Paris.

Plans for a controversial pipeline to transport Caspian Sea oil have been backed by no less than the World Bank, the European Bank for Reconstruction and Development as well as commercial banks such as ABN Amro and Citigroup. Now the Baku-Tbilisi-Ceyhan (BTC) pipeline is being built by a consortium led by British oil giant BP at an estimated cost of $ 3.6 bn.
The 1,760 km pipeline is to be the longest of its kind and will run from Azerbaijan's capital Baku through Tbilisi, Georgia, to Turkey's Mediterranean port of Ceyhan -- without passing through Russia.

It will have a capacity of 1 mm bpd of crude and is due to be completed by 2005. A gas pipeline is scheduled to be built alongside the oil pipeline by 2007, connecting the Shah Deniz gas field in Azerbaijan, via Georgia, with Erzurum in Turkey.
"This ... energy corridor is the cornerstone of US policy in the region. Through it, Washington can tie Azerbaijan and Georgia -- which only recently were so close to Moscow -- to Turkey, which has NATO's second biggest army," a report said recently. "Georgia is a hub which makes it possible to export Caspian resources without" going through Russia, said London-based Thomas Gomar, who works for the French foreign affairs institute, IFRI.

From the mid-1990s onwards Georgia began drifting away from the Russian zone of influence, and the BTC project is an illustration of that policy. Efforts to get closer to NATO to escape the Russian security umbrella is another. But Gomar said the Russians too were beginning to acquire a leading role in the oil market and had managed to re-position themselves at the heart of the industry.
"With the arrival of Vladimir Putin in power in Moscow there has been a new firmness in Russian resolve. Also the Americans do not know much about the region and after the September 11 attacks, Russian experience in fighting terrorism is precious to them," he said.

Source: The Dawn Group of Newspapers
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