POLITICAL PIPELINE

POLITICAL PIPELINE

September 18, 1997

NEWSHOUR TRANSCRIPT

Richard Tamraz, a Lebanese-American businessman, testified before the Senate Governmental Affairs Committee that he donated $300,000 dollars to the Democratic National Committee to change U.S. policy towards plans to build a pipeline in Central Asia, but he is not the only one interested in bringing the oil out of the Caspian Sea region. Margaret Warner discusses the how geopolitics and oil money intersect with two experts.

A RealAudio version of this segment is available.
NEWSHOUR LINKS:
September 24, 1996:
Former Turkish Prime Minister Tansu Ciller discussed pipeline policies in a Newsmaker interview on Turkey.
September 5, 1996:
The NewsHour explores the world's dependence on Middle Eastern oil.
August 21, 1996:
One of the major oil outlets from the Caspian Sea is Chechnya, which is just emerging from a bloody war with Russia.
September 9, 1997:
Former DNC Chair Don Fowler defends the actions of the Democrats during the last election.
July 24, 1997:
Former RNC Chair Haley Barbour testifies before the committee about the fund-raising done by the GOP in 1996.
March 18, 1997:
National Security chief Tony Lake cites the Roger Tamraz scandal as one of the issues that made him drop his nomination as CIA director.
Browse the NewsHour's coverage of the Middle East and the former Soviet Union.
OUTSIDE LINKS
The Eurasia Foundation homepage

MARGARET WARNER: It was the lure of big oil in the Caspian Sea region of Central Asia that led Roger Tamraz to try to cultivate the Clinton White House. For more on why we turn to Julia Nanay, director of the Petroleum Finance Company, an oil and gas consulting firm with clients investing in the Caspian Sea. Roger Tamraz once pitched his project to the firm. And William Maynes, president of the Eurasia Foundation, a non-profit group promoting free markets and democracy in the region.
Another Saudi Arabia?
Julia Nanay, why are there so many western oil companies suddenly interested in this region?
JULIA NANAY, Petroleum Finance Company: Well, if you look at the oil industry and you look at the history of the oil industry, basically big and small oil companies, the last big oil producing province that was discovered through exploration was discovered over 25 years ago, and that was the North Sea. So essentially if companies are looking at investment opportunities, they really have very few places to go that offer the size and scale of an area like the Caspian Basin.
MARGARET WARNER: And what is the size and scale? What kind of reserves are we talking about?
JULIA NANAY: Well, essentially, if you look at the Caspian today, it’s hard to tell exactly what is there, but if you look at estimates that the Department of Energy has come out with, they’re saying that potentially there’s about a hundred to two hundred billion barrels of oil in the Caspian Basin. And if you look at Russia, there’s about 49 billion barrels of oil there. And if you combine the two, the entire former Soviet Union probably represents another Saudi Arabia.
Multiple plans to bring the oil out.
MARGARET WARNER: And in trying to develop this, I assume there’s some getting out already. What--how is some oil being piped out of there already? We might have a map, I think, to show this.
JULIA NANAY: Essentially there’s very small oil production that’s getting out, particularly, I think what I’d like to focus on is the Western Oil & Gas Company. There are companies that since--
MARGARET WARNER: If we could just stay with right now, there’s one--that goes mostly through territory controlled by Russia, is that right?
JULIA NANAY: Yes. Basically the big project and the big story so far has been Chevron and Mobil’s project Tangee Field in Kazakhstan. And there’s about 160,000 barrels a day of oil being produced there. And it’s going out through existing pipelines in Russia. And Chevron has also resorted to basically trying to get the oil out by rail, through the Baltics, and then it tankers it down to Baku and then rail through Georgia. So essentially they’ve had to piece together a system to get the production that they already have out of the region.
"The next cockpit of international politics?"
MARGARET WARNER: All right. Give us a political snapshot of this region. Most of the countries there used to be part of the old Soviet Union, right?
CHARLES WILLIAM MAYNES, Eurasia Foundation: Yes. And several new countries have been created. And now this region threatens to become the next cockpit of international politics involving Russia, China, the United States, Iran, and neighboring countries like Turkey.
MARGARET WARNER: So you mean all these major powers vying for influence with these new countries?
CHARLES WILLIAM MAYNES: With these new countries.
MARGARET WARNER: We have another map to show that. Why do these countries not just--in getting Azerbaijan and Turkmenistan, in getting their oil out, why don’t they just use the pipeline that’s existing now?
CHARLES WILLIAM MAYNES: Because that pipeline goes through Chechnya. And that is jeopardized by security reasons. And most of the other--
MARGARET WARNER: Explaining, that’s that breakaway region of Russia, where they’ve had a big war.
CHARLES WILLIAM MAYNES: That’s right. Where they have had a big war. And most of the other pipelines they’re talking about go through areas that either are currently the site of conflict, or could become the site of conflict.
MARGARET WARNER: Are they also looking for a way not to be dominated by Russia?
CHARLES WILLIAM MAYNES: Well, certainly, those--some of the countries are close to Russia. Others are not. But certainly many of the countries hope to use this oil to get a genuine source of independence. And the money would permit them to consolidate their national independence and become countries that are truly independent.
MARGARET WARNER: And how does Russia regard this?
CHARLES WILLIAM MAYNES: Well, Russia, I think that there are probably different factions in Russia that look at this region. I think there are certainly some that hope to get a predominant role. There are others that are determined that Russia have a share. And there are also people outside of the region who look at it differently. Some see this as a way to keep Russia out, others should come in and keep Russia out, and some believe that the only way to solve this is to get--let everybody have a piece of the pie.
Why are western oil companies needed?
MARGARET WARNER: All right. This may be obvious, but Julia Nanay, why do these countries need the western oil companies to develop these alternative non-Russian routes?
JULIA NANAY: Well, I think that they need the western oil companies for many reasons. Western oil--western capital for the oil and gas developments is essential, I think. It’s essential for the upstream developments, the oil and gas production. It’s essential for the pipelines. They need the western companies primarily for the capital and also for the technology, I think. You know, more probably in the deep drilling offshore in the pipeline side, they need them for the financing and essentially that the companies that are involved in production want to be involved in the pipelines as well.
MARGARET WARNER: All right. Give us--describe briefly, if you could, the alternative routes. And we’re going to put up a map, or several maps again, and this gets a little confusing. But I think it’ll give us an idea of the variations as they try to skirt around Russia. What are some of the other options?
JULIA NANAY: Basically, the options are either you go and build a new pipeline that’s going to provide you greater access to Kazakhstan in Russia, or from Azerbaijan you can go up North. Again, it’s Chechnya, and Russia is looking at other options that bypass Chechnya, and then go up North again and hook into the Black Sea. Or you can go out West from Azerbaijan, and you’d be going out through Georgia or Armenia. Right now, the favored route is Georgia. You can either go to the Coast of Georgia and then down South to Turkey, or you can go to Tbilisi and then down South to Turkey. One of the--
MARGARET WARNER: This is the so-called Azerbaijan to Turkey route--
JULIA NANAY: Yes.
MARGARET WARNER: --that has different--
JULIA NANAY: Variations.
MARGARET WARNER: --ways of doing it. Yes.
JULIA NANAY: And then the other route that the U.S. would very much like to see is a route out of Turkmenistan that carries gas first and then oil through Afghanistan to Pakistan and then on to India.
MARGARET WARNER: I don’t think we have a map of that.
JULIA NANAY: Yes.
MARGARET WARNER: And then is there also an option to go down through Iran?
JULIA NANAY: Well, the option to go down through Iran is something that has been studied and essentially I think what is happening now is that as these countries realize that Russia controls the access routes to their oil and gas they’re beginning to look at Iran as a favored option, and Kazakhstan, in particular, is now taking companies and from Asia that are willing to invest in their upstream oil and gas producing projects because they’re going to drive pipelines to Iran. But this is being studied, yes.
U.S. role: ensuring the peace.
MARGARET WARNER: All right. So what are the U.S. national interests here?
CHARLES WILLIAM MAYNES: Well, I think that they’re basically to get the oil out in order to increase the world supply. I think that’s the basic interest. There are some people who look at this as an opportunity to try to wall off Russia. I think that--I think it’s--one would have to be honest and say that some people see that as a possible reason for the United States to get involved. But I think the primary U.S. interest is to get the oil secured for the world market.
MARGARET WARNER: And what is it that both Roger Tamraz--but also all these other oil companies have a lot of other people lobbying in Washington for them, do they not, a lot of former U.S. officials--who are they and what are they looking for from the U.S. Government?
CHARLES WILLIAM MAYNES: The U.S. Government is a very important player in this because, as your other guest was pointing out, you have to have capital in order to develop this. And American oil companies are a major source of capital here, although, you know, China has just signed a big agreement with Kazakhstan, and they’re going to be putting in money. But you have to have the capital. And the U.S. Government is going to have to bless this and give it political support if it’s to work. Also, the United States is going to have to play a very important role in trying to solve the security issues there. The United States right now with Russia is trying to solve the Nagornyy-Karabakh problem between Azerbaijan and Armenia.
MARGARET WARNER: This disputed region that they went to war over--
CHARLES WILLIAM MAYNES: That’s right.
MARGARET WARNER: --and there’s a--some sort of sanctions, are there not, U.S. sanctions against Azerbaijan?
CHARLES WILLIAM MAYNES: The U.S. Congress in 1992 prohibited the United States from providing assistance to the humanitarian or developmental assistance to Azerbaijan.
MARGARET WARNER: And I understand that Secretary--former Secretary of State Baker and many other senior former U.S. officials have--are working on behalf of these, trying to get this lifted.
CHARLES WILLIAM MAYNES: Well, they are consultants to some of the oil companies that would like to see this restriction lifted in order to improve the U.S. relationship with Azerbaijan.
MARGARET WARNER: Have they made any progress, do you know?
JULIA NANAY: On Section 907?
MARGARET WARNER: That’s the section--
JULIA NANAY: Yes.
MARGARET WARNER: --the U.S.--sanctions.
JULIA NANAY: I think that it’s unlikely that the section will be lifted this year, but there is some effort to at least restore [Export-Import] Bank financing and let OPIC operate in Azerbaijan.
MARGARET WARNER: OPIC being Overseas Private Investment Corporation.
JULIA NANAY: Private Investment Corporation. And there may be--
MARGARET WARNER: Which backs loans--
JULIA NANAY: That’s right.
MARGARET WARNER: --for development.
JULIA NANAY: And the Senate has basically--is supporting such action. The House is not for it right now, but there’s a Conference Committee--I guess there’s a foreign operations bill that’s coming up for a conference next weekend, and there may be some agreement to at least allow some form of aid to Azerbaijan. I think there is a big effort and a recognition that this is something that should be done.
MARGARET WARNER: Are you--do you see progress being made on this front by these interests also?
CHARLES WILLIAM MAYNES: Well, in 1994, there was a cease-fire that was declared. And that has opened up the region a little. For example, my organization, the Eurasia Foundation, has an office both in Baku and in Yerevan. So they operate--
MARGARET WARNER: Two cities in Azerbaijan and--
CHARLES WILLIAM MAYNES: We operate in both countries, and it’s because of the cease-fire that some progress has been made. But in order for companies to spend billions of dollars building these pipelines, they’re going to have to be assured that security will exist. And so the problem has to be solved.
MARGARET WARNER: All right. Well, thank you both very much.
JULIA NANAY: Thank you.
CHARLES WILLIAM MAYNES: Thank you.