Oil in Troubled Mountains

MONTREAL – The armed conflict between Russian and Georgia has further exposed the fragile position of the energy links running through the smaller country from the Caspian Sea to developed market economies.

Russian forces are placed to disrupt oil flows through the Baku-Tbilisi-Ceyhan (BTC) pipeline, which has carried Caspian Sea oil from Azerbaijan across Georgia to Turkey since 2006, and the Baku-Tbilisi-Erzerum pipeline, which opened last year and exports gas to Turkey, as well as the older Baku-Supsa “early oil” line that runs to the Georgian Black Sea coast.

The BTC carries 850,000 barrels per day, or about 1% of world oil consumption. However, as I have recently pointed out [1] it is difficult to underestimate the role of the South Caucasus and Georgia in particular as a transit country for Caspian Sea region energy resources to Europe, circumventing Russia. In that context, the ongoing Russian invasion of Georgia has little to do with South Ossetia, regardless of Moscow’s pretensions to this effect.

It was Shevardnadze, and not Saakashvili, who took the first concrete steps to extricate Georgia from Russia’s economic and hence political orbit, reanimating the enmity of the armed forces of the Russian Federation, many of whose leaders were held over from the late Soviet period and kept their animosity alive.

Most notably, Shevardnadze agreed in the 1990s with Azerbaijan’s then-president Heidar Aliev to promote construction of the Baku-Tbilisi-Ceyhan pipeline. The BTC remains the only pipeline that circumvents Russia to transport Caspian Sea energy resources to third countries. A Kazakhstan-China oil pipeline does not originate near the Caspian and the two countries share the border that it crosses.

Asia Times