A good review of Chinese developments
Posted by Heading Out on December 22, 2005 - 6:07pm
Grin, officially I am hiding out for a couple of weeks on vacation, so my input is not going to be that profound, but I did read the Asian Times article that Reed posted, and I think it is worth taking the time to look at it in a little detail. It deals with the Chinese installation of pipelines and their connection out to the Caspian Sea.
I was particularly struck by the paragraphs
This has major strategic implications for the future of the Washington-backed BTC oil pipeline. That pipeline was built by the Caspian Oil Consortium headed by British Petroleum, and was backed by both Clinton and George W Bush, despite the fact that it was the most costly and least viable oil route out of the Caspian.. Following recent Chinese activity a lot of that oil will be heading East not West. The production through the pipeline had been delayed, but this is obviously reason for even greater concern, something we have written about before.Former US national security advisor Zbigniew Brzezinski had been the chief Washington lobbyist advocating the BTC route to circumvent Russia. Its construction was undertaken on the assumption that it would carry not only Baku oil, but also a major share of Kazakh oil from Tengiz and offshore Kashagan oil fields. Oops!
And, apropos the views of experts, I am up in Maine, where we were told it was going to be an extra-cold winter, only to find that it is the other way around. So now they tell me, just after I bought that heavy duty parka.
“Considering the many productive uses of petroleum, burning it for fuel is like burning a Picasso for heat.”
—Big Oil Executive
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It's a good investment regardless what the weatherman predicts.
Hope you have a great vacation!!!
Now, I find the Iran/China connection most interesting because this is a case where China is really thumbing their nose at the US. The US had adamantly opposed all deals that had connected Iran to Kazakhstan via new pipelines. So, the US had been shut out on all counts. So, to all those Neoconservatives in Washington and at the World Bank, welcome to the Brave New World of oil supply & demand.
==AC
I'm serious.
The U.S. played its "Caspian Chess" with the simple-minded objective of "pipelines through anywhere but Iran and Russia." Now that we are analyzing the end-game, it's interesting to review some of the forced moves along the way.
1. Brought the Taliban to power in Afghanistan. The U.S. let its allies Pakistan and Saudi Arabia help the Taliban consolidate power in the late 1990's because it needed a unified Afghan government for the Afghan-Pakistani pipeline scheme. (The U.S. support for the Taliban, in part because of Unocal's lobbying, is explained in Ahmed Rashid's Taliban and to a lesser extent in the movie Fahrenheit 911.)
2. Weakened the reformist Khatami government in Iran. In 1997 the Iranians offered an innovative way of bringing Caspian oil to the market. The idea was to swap up to 500 kB/d of Kazakh & Azeri oil (sent to Tabriz, Reyy and Isfahan refineries) for an equivalent amount from Iranian oil from the Persian Gulf. This would have required minimal pipeline construction, since most of the Caspian crude transport would be via barges across the sea. American companies active in Azerbaijan and Kazakhstan were enthused because it offered a way around the trade sanctions (swaping via Iran would be a way of getting Iranian crude while paying the recently independent Soviet republics). But the U.S. government did not allow American companies (who were major partners in all the major Caspian consortia) to participate in the scheme. The conservative Islamic Republicans still refer to America's undermining of this initiative as an example of the U.S. hostility to Iran.
3. Brought Russia and Iran closer together. Iran and Russia clearly did not see eye to eye after the independence of the Muslim republics of the Soviet Union. All that changed after the two old powers realized they shared the same interest in stopping U.S. meddling in a region of the world which was historically part of the Iranian (Persian) or Russian empires. The consequences of a stronger Iran-Russia alliance are still being shaped.
4. May have been a reason for invasion of Iraq. Returning to the Chess analogy, the U.S. assets in the Caspian region (e.g. Azerbaijan) were isolated pawns. There was no way for the U.S., as a naval power, to defend these in case of an attack. Also, the Caspian Sea policy was authored by the Clinton administration. Cheney, as a self-proclaimed military strategist and an oil-man, knew that the real prize was not Azerbaijan but Iraq and Iran.
So if Cheney has screwed up, and gets neither Iraq nor Iran, where does that leave the U.S. in the grand chess game?
Hoping oil shale works?
And after that the Moscow Oil Exchange wil open. How can that leave everything as before!?!?
The 386 km the Asia Times article talks about is to to tap these northern Iranian refineries (which are connected to the southern producing fields) to the Kazakhstan-China pipeline, thus enabling Iran to sell to China via pipeline instead of via sea.
The website Rigzone.com has maps of the Iranian/Caspian pipeline system (and many other regions as well). But they are difficult to read since they are meant to be ordered.
I completely agree with the potential impact of the opening of the Tehran (Euro-based) oil exchange in March '06 on the U.S. dollar. Yet another consequence of the way we chose to play the Caspian pipeline game.
(I wonder what history books will write about the Baku-Tiblisi-Ceyhan pipeline, and whether it was worth all this.)
What appears to be happening is that the major powers are choosing up sides in what could easily become a hot war (real hot if it goes nuclear) over who controls which oil and gas reserves. I fear there will never be international cooperation in solving the world's energy problem, only increasingly dangerous competition. We will spend several orders of magnitude more in trying to militarily intimidate each other than we will on developing alternative sources of energy. No better than a pack of dogs fighting over the last bone.
Man, I'm getting depressed!
I've been pointing out for some time that Iraq was a target not just because of their own oil, but because those 12 or 14 permanent bases the US is building there are ever so conveniently close to the Caspian Sea.
I wouldn't extrapolate too much from current circumstances, though. The political pendulum is just starting its return swing in the US, so hopefully there will be a major opportunity after 1/20/2009 to reverse course on some or all of these insane foreign policy debacles.
That's the hope that lets me sleep at night. Most nights, that is...
"Iraq is disintegrating. The first results from the parliamentary election last week show the country is dividing between Shia, Sunni and Kurdish regions.
Religious fundamentalists now have the upper hand. The secular and nationalist candidate backed by the US and Britain was humiliatingly defeated.
The Shia religious coalition has won a total victory in Baghdad and the south of Iraq. The Sunni Arab parties who openly or covertly support armed resistance to the US are likely to win large majorities in Sunni provinces. The Kurds have already achieved quasi-independence and their voting reflected that.
The election marks the final shipwreck of American and British hopes of establishing a pro-Western secular democracy in a united Iraq.
Islamic fundamentalist movements are ever more powerful in both the Sunni and Shia communities. Ghassan Attiyah, an Iraqi commentator, said: "In two and a half years Bush has succeeded in creating two new Talibans in Iraq."
There's more.
Can you imagine if there were trouble with SA? It's got to be clear to all that this would truly be the "end of the world as we know it".
Could Iran be the 21st Century version of Sarajevo 1914? Stay tuned.
In light of recent developments I don't see how anyone can still view oil as just another market commodity like corn or soybeans. Many forces other than classical market forces are at play here. Oil is the life-blood of nations, and as such, nations will fight to the death to get what they believe to be their 'fair share'. And we believe that our fair share is roughly 25% of the world's oil production. Unfortunately, others think differently.
Though one can talk intelligently about post-peak scenarios and population die-offs, etc., to me it seems that the biggest threat facing our species is an out-of-control global war over oil. In my view, all other threats pale in comparison.
All those US soldiers trained in urban warfare over their in Iraq will someday have an important domestic role to play as social unrest unfolds domestically as a result of dislocations that result from the economic upheaval of increased energy costs.