Astana Pipeline Anxiety

Kazakstan is to reap enormous economic benefits from the newly completed Tengiz-Black Sea pipeline, but Astana may have to pay a political price for the project.

Analysts believe Russia, through which the pipeline passes, will exploit it to extend its influence over Astana.

Kazakstan seems aware of the danger and has recently shown an eagerness to diversify its export routes, such as supporting plans for a projected Ceyhan pipeline - running through the Caucasus - notably encouraged by the United States.

Construction of the 1,580 km Kazak-Russian pipeline began in May 1999, with 10 companies from Kazakhstan, Russia, Europe and the US financing the project, the American ones providing 50 per cent of the funds. Work still has to be completed on some sections, but the main pipeline is ready.

In a solemn ceremony late last month, Prime Minister Kasymzhomart Tokaev marked the opening of the project in the town of Atyrau. Initially, 10,000 tons of oil will be pumped into the pipeline daily. This will pass through Kalmykia, Astrakhan and Krasnodar, to its final destination in the Russian Black Sea port of Novorosiisk.

By the end of this year, the pipeline should be working at full capacity, transporting 28 million tons a year, which will later be increased to 67 million. Kazakstan is expected to receive $ 8.2 billion in revenue from the project.

At the same time, Moscow will control 24 per cent of equity in the Caspian Pipeline Consortium, CPC, which manages the Tengiz field.

Kazakstan agreed to having the pipeline run through Russian territory because, at least for now, this provides the best route into the world energy markets and will quickly begin to transform the country's economy.

But Astana would prefer to diversify its export routes, as this would reduce the risk of it getting more economically and politically dependent on Russia. To this end, Kazakstan last month signed a "Memorandum of Understanding" with Turkey, Georgia and Azerbaijan, concerning the Aktau-Baku-Tbilisi-Ceyhan route.

The Ceyhan pipeline is backed by Washington. The US played an important factor in Astana's decision to agree to it, leading many to believe the rationale behind the pipeline is hence more political than commercial.

Kazak petroluem officials say several oil companies have expressed an interest in participating in the Ceyhan project, but so far no concrete agreements have been made.

Russia, unsurprisingly, was unhappy with Kazakstan's backing for the Ceyhan project, particularly since Moscow and Astana had only recently agreed on the division of the Caspian Sea energy resources.

Perhaps as a warning to Astana over the Caucasus project, Russia's special representative for Caspian issues Victor Kaliujni pointed out in a newspaper interview that only 5 million out of 36 million tons of oil produced in the region actually belong to Kazakstan.

An apparently even more serious response followed. Iranian president Seid Mohhamed Khatami met his Russian counterpart Vladimir Putin in early March, adopting a joint declaration on the status of the Caspian Sea. In it, they expressed their opposition to the construction of any pipelines, saying the area's complex geology makes them environmentally dangerous. No other Caspian state backs the declaration.

Kaliujni, however, has since attempted to smooth things over with Kazakstan, suggesting that Moscow and Tehran were merely posturing.

Russia may not be happy with the Ceyhan project but it clearly does not want to jeopardise relations with Kazakstan just as oil begins to flow through the Tengiz-Black Sea pipeline - this is in neither country's interests.

But Turkey, it seems, is still convinced that Russia will pressure Astana into backing away from the proposed Caucasus pipeline.

Shortly after the Atirau ceremony last month, Ankara warned that the export of Kazak oil could double the number of tankers passing through the Turkish straits each day, posing a serious threat to Istanbul in the event of an accident.

The Caucasian media last week suggested that the Turkish warning may have been an attempt to pressure Astana into making a firm commitment to export its oil along the Ceyhan route.

Muslim Galimjanov is a pseudonym for an Almaty-based commentator.