Caspian transit routes
What is BTC?
BTC is a huge project with approximately 10 billion $ investment to connect the Middle-east to the Turkey with a pipeline the projects have the potential to bring substantial economic, environmental and developmental benefits to Azerbaijan and Georgia. These benefits will derive not only from the revenues generated for the host countries but also through additional development activities undertaken by the Sponsors and the Bank, as well as through the high level of transparency and consultation undertaken for this Project. The BTC Project will provide the additional crude oil transportation capacity required for oil export development of hydrocarbons in the Caspian Sea. BTC consists of a 1,768 km underground pipeline with a design capacity of one million barrels per day. It will run from the Sangachal terminal (near Baku, Azerbaijan) and across Georgia to a terminal on the Mediterranean coast at Ceyhan in Turkey, avoiding the crowded Turkish Straits. At full capacity BTC will be delivering volumes equivalent to 10% of European oil imports (at today's rate). We know that Caspian region has the potential to become one of the major oil and gas producing areas in the world. These projects represent the largest single foreign direct investment in Azerbaijan and Georgia and we can see from that picture Azerbaijan has a border with Caspian Sea (or lake) and this country has a developing relations with the U.S and Europe because Azerbaijan don't feel too much pressure from Russia. Basically it's a bypass project for Russia and his monopolistic power in the region because Europe dependent on the energy which comes from Russia and Russia is taking these energy resources such as Oil, Gas mostly from the Caspian sea and Russia using this energy as a political power and threat to the Europe and it is the single largest supplier of oil and gas to the European Union. A full 25% of Europe's natural gas comes from Russia. Its leaders well understand that Europe's continued prosperity-and that of many Western states-depends on the uninterrupted flow of liquid fuel and/or the lucrative energy contracts they bring.
Other countries that rely on Russia for energy include Belarus, Poland, Turkey, the Baltics, Estonia, Lithuania, Latvia and Ukraine. Ukraine, a former Soviet state, is the channel for 85 percent of the natural gas that Russia delivers to Western Europe. The International Energy Agency predicts that by 2030 Europe's gas imports will have doubled with much of it coming from Russia. That's why Europe and U.S are together trying to avoid the Russia in the Caspian region to explore and gather resources without Russian control, if we look at the statistics Caspian sea has 200 billion barrels of oil and 6.6 trillion cubic meters of natural gas and this means there are a lot of natural resources and with a good investment they can bypass the Russia and they can break the monopoly of the Russia and they weaken the Russia's power and influence on the energy as a weapon in the politics.
We know that U.S and other European countries supporting projects like BTC but let's look who exactly supporting these projects.
As we can see most of the huge oil companies in the Europe and U.S are supporting and making huge investments to the Caspian to get these resources without a Russian control and influence because when they bypass or avoid the Russia in the Caspian region they can get oil more cheaper from these countries because Russia is kind of dealer between the resource and the market. Related to these pipelines BTC is not the only projects of Europe, there are several additional projects to the BTC, one of the most popular and well-know project is Nabucco project.
Nabucco Gas Pipeline project: new gas transmission possibility
As we look to the Picture 1 we can see this project also aiming to get oil, gas from the Caspian it starts with Azerbaijan and Georgia and ends in Vienna passing thorough Turkey, Hungary, Bulgaria, Romania and Austria. The pipeline length is approximately 3,300 km, starting at the Georgian/Turkish and/or Iranian/Turkish border respectively, leading to Baumgarten in Austria. In this respect it has to be taken into account that a reasonable amount of the gas volumes, reaching Baumgarten, have to be further transported through Austria to the Central and Western European Countries. According to market studies the pipeline has been designed to transport a maximum amount of 31 bcm/y. estimated investment costs including financing costs for a complete new pipeline system amount to approximately7.9 billion Euro. In these energy resource strategies to weaken the other sides power on the control of this huge amount of resources between the Europe, U.S and Russia had led the Turkey become more important player in the game because Turkey is also a regional powerful country if we compare with his neighbors.
Turkey: the Evident Beneficiary in the Caspian Pipeline Diplomacy
The reasons for Turkey's emergence as a country supportive of Washington's pipeline-focused policies should be assessed on several levels: geo-strategic, economic and cultural. Turkey not only enjoys tremendous geographic significance, straddling Europe, Asia and the Middle East, but it is also the region's commercial locomotive, with Istanbul serving as the financial and commercial hub of the entire Caspian Basin. Since the 1980s, Turkey has swapped goods and services for natural gas from Azerbaijan. Additionally becoming aware of Turkey's importance as a transit point for Azeri oil to the West and of the fast-growing Turkish economy, which depends on energy imports for 85 percent of its needs, 25 Azerbaijan tried to promote further relations with Turkey rather than with Iran. The question is not whether the route is commercially viable. The idea is to make it an east-west transport corridor, which in the future might expand to include rail lines, communication networks and highways, so as to unobtrusively connect the economies of the southern former Soviet Republics with the markets of the world. This is because the Baku-Ceyhan pipeline is not simply an economic project but also an issue of political convenience for the Trans-Caucasian and Central Asian states, which view their reliance on foreign aid and investment as crucial for their economic survival.
Because the Baku-Ceyhan project is essentially, from Washington's perspective, a matter of paramount geo-strategic and political significance rather than an economic one, Turkey, despite the fact that Iran offers the shortest and cheapest route to global markets for oil from the Caspian republics, succeeded in drawing the United States to its way of strategic thinking. Ankara benefited enormously from Washington's determination to push ahead with this project although it struggled with many obstacles to the Baku-Tblisi-Ceyhan pipeline.
The results of these projects are not perfect as the Europe expected nowadays Nabucco project is failed because of the financial problems between the companies and member states. Member states could not agree on who pays how much and in return what they get for their investments and where to take all these money (approximately 7-9 $ billion) and project is becoming more expensive and out budget because price of materials are increasing and these conflicts between member states decreasing the importance of Nabucco.
However the European Investment Bank has already committed itself to financing nearly one-third of the $6.2 billion project, while the Nabucco Consortium is in negotiation with EBRD on additional funding. As with the Baku-Ceyhan pipeline, 70% of the financing for the project is expected to come from bank loans and I guess Nabucco couldn't get the money from Bank loans as BTC did and that's the main problem of Nabucco project and that's why Nabucco project is fail.
BTC is working but often encounters with too many problems which influences this project with political and geo-political actions or events even caused the pipeline stop pumping oil because of the Russian pressure on BTC and supporters of BTC (U.S) is currently busy with their own domestic issues like Presidential Elections and most of the European countries are 20-90% dependent on Russia for energy resources.
Russia is not defending himself but also tries to regain control of pipeline project with his own pipeline projects such as "Blue Stream" (Picture 3) which runs under the Black Sea, and the Northern European gas pipeline running under the Baltic. Both will compete with Europe's Nabucco pipeline project, which it is hoped will connect the EU with Caspian and Iranian gas reserves by 2012. In November 2005, the Blue Stream pipeline transports Russian gas from Novorossiysk through the Black Sea to the Turkish port of Samsun, thus bypassing the former Soviet republics. Its capacity is to be increased to 16 billion cubic meters of gas per year by 2010.
Current situation in the Caspian region was calm but in Georgia which 2nd step of BTC is in complicated conflict because of Georgian Invasion to the South Ossetia and Russia's harsh answer to that started a mini war in the region and some conspiracy theories says that one of the main aim of the Russia's invasion into the Georgia was to harm the BTC pipeline to influence the Georgia and Ariel Cohen says " The Russian bear is trying to choke the vital east-west energy arteries in the Caucasus, specifically the BTC oil pipeline and the gas pipeline,". Europe also reflected to this situation with re-opening the Nabucco project to complete it with the delayed schedule starts in 2009 and plans to finish in 2012. But Russian's are planning to make agreements and treaties with Caspian countries to hold the 40-50% of the resources in the Caspian region with that action Europe's bypass operations is going to be failed. We will see what's going to be happen in the Caspian region and how these strategic games will continue.