Shutdown of Baku-Novorossiysk shows Russia has a lot of work to do on pipeline security

by Jennifer DeLay

If Russian government officials had any hope at all left of persuading Azerbaijan to export most of its oil via the Baku-Novorossiysk pipeline, that hoped died recently.
On June 14, an explosion blew a hole in the pipeline just east of the Chechen-Dagestani boundary line. As a result, oil flows through the pipeline were shut off -- again.
That incident shows just how useless the Baku-Novorossiysk pipeline has become. The pipe has been closed off countless times since the beginning of the year. It was out of commission for fully 27 days in May, and the State Oil Company of Azerbaijan (SOCAR) said recently that it had been shut down for a total of 69 days between January 1 and June 16. The Russian state oil pipeline operator Transneft has usually had to close down the pipeline for "technical reasons" -- i.e., the need to repair punctures made by oil thieves in Chechnya. However, there are rumours that the Chechen government engineered the incidents.

Whatever the reason, theall-too-frequent shutdowns have led the Azerbaijan International Operating Company (AIOC) to spurn the Baku-Novorossiysk pipeline in favour of Baku-Supsa pipeline, which runs through Georgia. Baku-Novorossiysk was until the spring of this year the AIOC's only existing export outlet, but the consortium shipped less than half as much as expected to the Russian port in the first five months of the year.
And now it looks as if the AIOC may not be the only one to give up on Baku-Novorossiysk.
Russia's Fuel and Energy Minister Viktor Kalyuzhny said recently he saw no alternative but to close the pipeline down and establish another oil transit route. However, the minister and his colleagues hastened to point out that this did not necessarily mean putting a permanent stop to Azerbaijani oil transports. Transneft is still looking into plans to build a bypass pipeline from the Azerbaijani border through Dagestan, they said, and in the meantime is mulling a rail option.
Russia's Railways Ministry has already given clearance for rail shipments of Azerbaijani oil from Makhachkala to Tikhoretsk, but Transneft said this route could not be up and running before July. In any case, it is far from certain that the AIOC or SOCAR will be willing to make use of this option. SOCAR's President Natik Aliyev said on June 16 that Baku would not be interested in any alternative route that carried a transit tariff higher than $ 15.67 per metric ton of oil, the current rate for shipments to Novorossiysk.
Meanwhile, the search for alternatives does not seem to have impeded the search for scapegoats in Moscow. Indeed, the Kremlin quickly singled out the culprits: the Chechens. (And not just Chechen oil thieves, but the Chechens in general.) Representatives of Transneft and the cabinet complained that Grozny had created the situation by not providing enough men to guard the pipeline and by failing to load the pipeline with enough extra oil to make up for the volumes stolen out of it. The issue of how -- and whether -- the Chechen government could have prevented the June 14 explosion, which after all took place in Dagestan, has not been addressed.
And it should be addressed, especially if Russia hopes to continue with its campaign to make Caspian-basin producers export their oil across Russian territory. Chechens, though they have an unsavoury reputation, are hardly the only oil thieves in Russia, and Chechnya is not the only place where accidents happen. On June 3, for example, a police officer sent to patrol a stretch of oil pipeline in Northern Ossetia was killed after colleagues accidentally triggered a mine. Tatyana Zlotnikova, the head of the Duma's environmental committee, said two weeks ago that the second most common reason for pipeline ruptures was mechanical damage inflicted by humans; in 1998, pilfering led to eight accidents in which oil spilled onto the ground, she said. That kind of track record should concern parties such as the Caspian Pipeline Consortium (CPC), which is planning to build a long stretch of high-capacity pipeline across southern Russia.
Russia has virtually no hope left of winning a leading role in Azerbaijani oil exports. The Baku-Novorossiysk oil pipeline has never been as reliable as it ought to be, and the Azerbaijanis now have less reason than ever to trust Moscow. And blaming Chechens won't make the problem go away. The Kremlin will have to decide how to confront assaults on pipelines everywhere they occur rather than just upbraiding Grozny.