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Once derided as an economically infeasible “pipe dream,” the Baku-Tbilisi-Ceyhan (BTC) pipeline now under construction in the Caspian region, is scheduled to bring 1-million barrels of oil per day from the Caspian Sea to international markets by the year 2005. By the end of this decade, the region could be pumping 3.7 million barrels a day, according to Department of Energy estimates —more than any OPEC country, except for Saudi Arabia, currently produces.
Yet, only 10 years ago, "anyone outside the government thought trying to build this pipeline bordered on insanity,” said Ambassador Richard Morningstar, former special advisor to President Clinton on Caspian energy issues and currently a lecturer at the Kennedy School of Government, who recently spoke at the Kennedy School about the BTC pipeline. The event was sponsored by the Caspian Studies Program, at the Kennedy School’s Belfer Center for Science and International Affairs.
Morningstar, who also served as Clinton’s special adviser on the Newly Independent States and U.S. ambassador to the European Union, was instrumental in coordinating the efforts of private and government institutions involved in the BTC project in the late 1990s. He was one of the individuals most responsible for calling attention to the role the pipeline could play in promoting the economic viability of the states of the Caspian and Caucasus, ensuring the free flow of Caspian oil and gas to world markets, and bolstering the energy security of the United States.
"The US government BTC pipeline strategy has three goals--to promote international energy security, to promote the strategic security of the region, and to ensure that energy development helped to promote civil society in Azerbaijan, Georgia, and Turkey,” he noted.
With the demise of the Soviet Union in the early 1990s, it quickly became apparent that there was a great deal of under-explored petroleum deposits in the Caspian basin. It was never a question of whether or not this oil would be a valuable resource for the newly independent countries of the Caspian — it was merely a question of how it could be brought from this land-locked region to the international market. Increasingly large deposits of oil were being discovered in Kazakhstan and Azerbaijan, but there were limited options for bringing this oil to market.
Morningstar worked along with representatives from the governments in the region and international energy companies in envisioning a bold new answer to this problem—the BTC pipeline. At first, the project seemed implausible—it would have to span across three countries (Azerbaijan, Georgia, and Turkey) and cover a distance equivalent to that from New York and Miami. What was more, there was no certainty that international energy companies would be at all interested in what appeared to be an economically risky investment.
Over the next few years, however, the BTC pipeline appears likely to become a major political and economic success story. An international consortium led by BP Amoco, sufficiently convinced of the potential profitability of this venture, has moved ahead in the construction of the pipeline. In addition, the pipeline should serve as something of an economic lifeline for the region — allowing Kazakhstan and Azerbaijan to send their oil to market, benefiting Georgia and Turkey with the promise of oil transport tariffs, and helping to alleviate congestion in the Bosporus.
“Some people argued that the United States should not deal with the countries of the Caspian until they improved their record on democracy and human rights,” Morningstar said. “While these are very serious issues, I -- and other people in the U.S. government -- believed then, and believe today, that if you stay engaged and make a good faith effort in this region from the beginning, things will continue to incrementally improve in the region over time."