The graphic below depicts the the Middle East and the eastern part of Eurasia.
The landform of eastern Eurasia varies incredibly: from cold, Arctic tundra to soaring mountains to hot, dry deserts, the scope of natural environments is simply breathtaking in its diversity. The political, social, and economic landscapes of this region of the world are no less diverse: from repressive Communist regimes to genuine democracies, and from extraordinary wealth to grinding poverty, the governments and peoples capture every manner of experiment in human social and political organization.
Vast, powerful nations abut small, weak countries, and always there exists the potential for armed conflict arising from competition for land, natural resources, and socio-political dominance. The Western Hemisphere, putatively led by the United States, strives to hold sway in the region, principally to ensure for its citizens security in both borders and in access to the wealth of nations in the Middle East and Asia; and while the resources to be had are many, access to and control of the hydrocarbon reserves are worth far more than their weight in money and blood. China, Russia, and other nations of the Orient, Europe, and the Middle East are every bit as willing as the United States to do what is necessary to secure those hydrocarbons for their own purposes.
The commercial competition for oil and natural gas from Eastern Europe, Greater Asia, and Asia Minor is fierce. With the economies of China and other countries in the Far East experiencing high current and projected growth rates, demand for fossil fuels to power these industrial boom economies is rising steeply, with energy needs of both manufacturers and emerging, vast middle classes outstripping local resources, which had been geared in the past to slow industrial growth and modest requirements by citizens. Largely because of the need to form a commercial bloc to compete with the West in general and the United States in particular, the Shanghai Coöperation Organisation (SCO) was formed in June of 2001: its members are China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Quoting from the SCO General Information Webpage, the stated purposes of the SCO are as follows:
"[S]trengthening mutual trust and good-neighborly relations among member states; promoting their effective cooperation in political affairs, economy and trade, scientific-technical, cultural, and educational spheres as well as in energy, transportation, tourism, and environment protection fields; joint safeguarding and presenting regional peace, security and stability; striving towards creation of democratic, just, reasonable new international political and economic order."Efforts by the organization to further define its non-threatening nature are distilled to the assurance that, "...SCO is not a closed block and is not directed against any states and regions." Interesting in this regard is that the SCO has granted observer status to Iran, India, Mongolia, and Pakistan, with Iranian President Mahmud Ahmadinejad making clear that Tehran will seek full membership; but the SCO recently rejected the application for observer status of the United States.
The altogether reasonable purposes stated officially by the SCO are rather less reassuring when considered in light of statements made by the advocates of the consortium. Azer Mursaliev, Deputy Editor-in-Chief of Kommersant, explains the SCO as follows: "Combined powers of countries of Shanghai Cooperation Organization, both in military and economic area, allow them to open an independent stock exchange and trade oil and gas not in US dollars, but in any other currency, including Russian Rubles."
The sentiments offered above by Mr. Mursaliev offer proof positive to some that the long-standing denomination of oil contracts in American dollars is coming to an end. This is a particularly attractive doomsday scenario for the U.S. when considered in the context of Tehran's declared interest in full member status in SCO and its much publicized claim that it is planning to open an oil bourse that would use euros rather than greenbacks. Such a threat to the dominance of the petrodollar has led some to believe the United States would use the pretext of Iran's controversial nuclear power development program to attack the Persian nation and thereby cripple its nuclear ambitions and end its financial schemes. However, as was predicted here at The Dark Wraith Forums, the planned opening on March 20, 2006, of this new oil bourse did not happen and probably will not for months if not years, despite continuing efforts by Iran and some Western media outlets to represent the opening as imminent.
Without necessarily resulting to rhetoric about the SCO being an "OPEC with bombs," the organization is clearly and with good reason concerned about security issues, strategically primary among them being commercial control of resourcesspecifically (although not exclusively), recoverable hydrocarbon reserves. While China is now and will continue to be a producer of fossil fuels, its growing economy will demand more and more oil and natural gas to power its industrial base. Current projections place China's demand for oil at five million barrels per day by 2020.
The graphic at left zooms in on the region around the Caspian Sea, bordered from the Northwest to the East by Kazakhstan and on the West by Russia and Azerbaijan. The areas in orange represent general fields of known hydrocarbon reserves. Even though these reservoirs represent no more than about 1½ percent of the world's total known reserves, they are nonetheless important for several reasons. First, the fields are relatively new, meaning they are still on the upswing in terms of realized yields; second, and crucially important, the fields are at a crossroads between the East and the West, offering opportunities for both Asian and European customers. The Atasu-Alashankou pipeline from the Caspian fields into China could alone deliver one million barrels per day at full capacity, meaning Kazakhstan has the potential to provide fully 20 percent of China's projected demand for oil in 2020. At the same time, even though Kazakhstan belongs to the SCO along with China, the West is an attractive market, as well. Furthermore, Russia has presented significant difficulties in Kazakhstan's dealings toward the East, attempting as it has to tighten its grip on hydrocarbons leaving the area by, among other things, imposing a "tax" it claims must be paid by the operators of the fields and pipelines.
The graphic below lays in some of the Eurasian pipelines in existence, under construction, or in some stage of planning.
As daunting as the tangle of pipelines may appear, others either exist or will come into existence within the next ten years. Furthermore, while some of the pipelines represent crude products moving to refineries and ports, other pipelines represent conduits for products being delivered to final-use customers: for example, the pipeline that appears to go through the middle of Iran from roughly South to North will deliver natural gas from Kargh Island up to pipelines running both East and West to end users in Asia. On the other hand, the pipelines on the northern arc of the Caspian Sea are for transporting crude extracted from the oil fields there to intermediaries in both Asia and Europe.
The tangle of pipelines around the Caspian renders evidence of the strategic importance of Kazakhstan and Azerbaijan; and even though both are members of the SCO, their own interests will to a great extent override any possibility of unwavering loyalty to their fellow members of that bloc. Specific to that point is the map at right, which depicts the area around and to the West and South of the Caspian Sea, with only one pipeline represented, the so-called Baku-Tbilisi-Ceyhan (BTC) pipeline, so named for the three major cities close to which it passes on its way from Azerbaijan clear to the Mediterranean. (Note that the pipeline shown east of the Azeri shore of the Caspian Sea is not part of the BTC pipeline but uptakes extracted Kazakh hydrocarbons moving west.) Its rather twisted path ensures, first, that it passes through only Azerbaijan, Georgia, and Turkey, and second, that it swings around regions of those three countries where rebels and other restive groups could interfere with the operations.
Financing of the BTC pipeline comprises a 30 percent equity contribution by the companies involved, with the remaining 70 percent of project cost provided through lending by the International Finance Corporation, which is the division of the World Bank that lends to private companies. The distribution of ownership interests in the BTC pipeline is graphically presented at left. While some of the names may be familiar to Americans, others likely are not. BP is, of course, British Petroleum, a London-based corporation with world-wide operations principally having to do with energy-related products and services. ExxonMobil is also a familiar name: it is U.S.-based and stands as the largest integrated hydrocarbon products company in the world. UNOCAL is an American, wholly-owned subsidiary of Chevron Corporation, having been acquired in 2005 by Chevron to stave off an undesired takeover by a Chinese oil company. DeltaHess is a joint venture between the Saudi oil company Delta Oil and the American oil company Hess Corporation. Devon Energy Corporation is based in Oklahoma City and has oil and gas operations in North and South America, Africa, the Middle East, and Asia. Itochu is a diversified Japanese company with subsidiary interests in oil and gas exploration and exploitation. TPAO is the Turkish Petroleum Corp. (Türkiye Petrolleri Anonim Ortakligi), a government corporation with oil and gas operations in Egypt, Kazakhstan, Azerbaijan, Turkmenistan, and Iraq. STATOIL is a Norwegian-based, integrated oil and gas company involved in exploration and exploitation operations along the coastal shelf of Norway, as well as in countries across the globe. LUKOIL Oil Company is a privately owned, Russian oil and gas company and is the largest company in its industry in Russia. SOCAR is the state-owned oil and gas company of Azerbaijan.
While having no material impact on either the construction or the operation of the pipeline, criticisms of the project have been wide-ranging. Environmental concerns have been expressed regarding the potential for oil spills in ecologically sensitive areas along the route, particularly in regions like northern Turkey that are prone to large earthquakes. Claims about disruptions of local economies are persistent: for example, with three supertankers docking every day at the port outlet at Ceyhan, Turkey, local commercial fishing is said to have been severely disrupted. And allegations have been made of human and civil rights abuses that include uncompensated confiscations of land and local men being more or less forced to work on the line at inadequate wages. Little has been done to address any of the potential and actual adverse impacts of the BTC pipeline; and as the matter now stands, complaints will remain nothing more than minor background noise as BTC becomes an important link between oil fields in Kazakhstan and energy-hungry markets in Europe and the United States.
Ceyhan, Turkey, is close to the massive Incirlik Air Base, arguably the nexus of U.S. airborne military operations for all of Asia Minor and the Middle East. Warplanes from Incirlik provide ample security for the port its supertanker traffic.
The final graphic, presented at left, appears at first glance to be the same as the BTC pipeline route graphic presented earlier in this article. Careful inspection may be needed to see the addition: it can be found as a pale extension of the BTC pipeline from its outlet at the southern end of Turkey, down the eastern coastal waters of the Mediterranean, and ending in Israel. Officially announced in May of this year, the projectwhich will be financed by "foreign economic backing"actually comprises four underwater pipelines that will carry fresh water, electricity, natural gas, and oil from Asia Minor to Israel, which will resell some of the oil, thereby not only securing for Israel vital resources it needs, but also putting the Jewish State on the world map as a trader in the fossil fuels so important to the growing, energy-hungry nations of the Far East, which is the market into which Israel plans to sell its oil surplus.
Astute readers of the map above will note that this pipeline complex runs down the entire Mediterranean coast not only of Lebanon, but also of Syria. As of the publication date of this article, Israel is striving to eliminate the threat posed by the relatively well-armed Lebanese militant political faction Hizballah. In view of the proposed pipeline, that threat has considerably less to do with the rockets Hizballah has been aiming at northern Israel in recent times than with the possibility that the militants could disrupt the construction and integrity of the underwater pipeline bundle. Moreover, a hostile government in Damascus arguably poses a far greater risk to the security of the pipelines than any threat presented by a menace like Hizballah, indicating that Israel must go far beyond its current campaign of destroying or otherwise crippling Hizballah. Strategically, far more important is removing the danger that Syria could disrupt construction and/or operation of the pipeline bundle. Not dealing with Syria soon would quite likely disabuse Israel's "foreign economic backing" of any interest in financing a project constructed in such a potentially hostile region of the world.
The Dark Wraith will allow readers now equipped with the information from this article to make their own predictions about the direction current Israeli military operations will take in the days and months ahead.