ABSTRACT
The fall of the Soviet Union coincided with two key developments in the development of Caspian energy: negotiations with a leading US oil company on development of the Tengiz oilfield in Kazakhstan and a rundown of the oil industry in Azerbaijan just as Soviet oilmen were struggling to develop substantial proven reserves in relatively complex deepwater formations. This made it extremely important for the new governments of Kazakhstan and Azerbaijan, now deprived of Moscow’s largesse, to secure quick and effective development of these major resources in order to boost the limited stream of government revenues. At the same time they had to cope with a change of pipeline policy in Moscow. The old Soviet system had served all the republics of the Soviet Union on an integrated basis, but now the natural preference of the Russian energy companies would be to use the system for Russian energy first and, only secondarily, to carry oil and gas produced by fellow Soviet producers that could now be regarded as commercial rivals. For the next ten years, Azerbaijan and Kazakhstan would work assiduously to develop new export routes that were either independent of Russia or at least less susceptible to Russian control whilst still having to remain on good terms with Moscow to ensure that their existing oil and gas export systems were not jeopardised. So, too, would Turkmenistan, though in a somewhat more erratic fashion. A decade of effort would eventually lead to the development of two major oil export pipeline systems and the construction or upgrading of a number of lesser oil and gas lines. The two major lines, both of which were to prove complex and contentious, were the Caspian Pipeline Consortium’s 1,510-km line connecting Kazakhstan’s giant Tengiz oilfield with the Russian Black Sea port of Novorossiysk, and the 1,760-km line from Baku through Georgia to the Turkish Mediterranean port of Ceyhan. The CPC line opened for business in 2001 while the first contracts for actual physical construction of the Baku-TbilisiCeyhan line were awarded in August 2002, with completion scheduled for early 2005.
