Result of war on terrorism could be more stable energy sources for West

Pipeline politics now in play

Posted: Thursday, December 27, 2001

WASHINGTON -- A game of oil politics is being played on the sidelines of the U.S.-led war against international terror. The result could be new, more stable energy sources for the West and perhaps even warmer relations with an old foe, Iran.

In the international realignments after the Sept. 11 attacks, the Bush administration has been exploring the possibility of new energy investments in former Soviet republics of Central Asia.

Both Secretary of State Colin Powell and Defense Secretary Donald Rumsfeld have visited the region in recent days.

Not only have these countries become important allies in the anti-terrorism campaign. Those surrounding the Caspian Sea have more than 6 percent of the world's proven oil reserves and almost 40 percent of its gas reserves. Those countries clearly are warming up to the notion of U.S. investments.

One proposed route for bringing Caspian Sea oil to world markets would run through Iran, to a port on the Arabian Sea.

The United States formally opposes such a route, favoring one through Turkey to the Mediterranean Sea. But there's no doubt that relations with Iran, icy since the seizure of U.S. Embassy hostages in 1979, have warmed slightly in the months since the terror attacks.

Future U.S. investment in the region was on the agenda of Kazakstan's president, Nursultan Nazarbayev, in meetings this weekend in Washington and Texas.

Nazarbayev told Powell this month in Astana, the Kazak capital, that his country is interested in multiple pipelines, including one through Iran. He noted such a route was favored by ''several companies, including American ones,'' and teased Powell for the U.S. position.

''I see nothing in the post-Sept. 11 period that would suggest we should rethink that,'' Powell said. Later, he said except for the pipeline question, ''I am open to explore opportunities'' for improved relations with Tehran.

Russia favors a pipeline that takes Caspian Sea oil to a Russian port on the Black Sea.

The United States, preferring to skirt Russia entirely, has thrown its support behind a pipeline that will route oil from Baku, Azerbaijan, through NATO member Turkey to the Mediterranean port of Ceyhan. A natural gas pipeline through Turkey also is being contemplated.

The U.S. government has listed Iran as a terrorist-supporting state since the U.S. Embassy hostage crisis in 1979 and accuses it of secretly developing nuclear weapons.

But since Sept. 11, Iran shared intelligence information with the United States about Afghanistan, participated in talks about the post-Taliban government and sent in humanitarian aid. It also offered to conduct search-and-rescue missions, if necessary, for any American pilots lost near the Iranian-Afghan border.

The rise of a relatively moderate leader, President Mohammad Khatami, has generated new interest in closer U.S.-Iran ties.

Furthermore, some American hard-liners on Iraq suggest that cultivating closer ties with Iran might be important if, in fact, Iraq becomes the next phase of President Bush's anti-terror campaign.

John Lichtblau, chairman of the New-York based Petroleum Industry Research Foundation, said he sees no immediate sign that the Bush administration is about to drop its opposition to a pipeline through Iran. Still, he said, ''This is a dynamic situation, and it could change.''

The Caspian Sea region is important for oil-supply diversification because ''it's politically different from the Middle East,'' Lichtblau said. He said the pipeline through Turkey appears to be the leading contender.

Willard Workman, a vice president of the U.S. Chamber of Commerce, argues that the Turkey route ''is uneconomical, from a business point of view.'' For one thing, he said, the Iran route would be shorter.

''I think our whole approach to that region, especially Iran, needs to be reconsidered,'' Workman said. ''We can't go on for another 50 years ignoring a country the size of Iran. ... Half the population of Iran wasn't born or doesn't remember the hostage-taking in 1979.''

U.S. oil and business leaders who met with Powell when he was in Kazakstan told him they were prepared to invest up to $200 billion in the country over then next five to 10 years because of its energy-producing potential.

''Some think it could be the largest oil discovery in the world in the past 25 or 30 years,'' said Bob Ebel, an expert on energy security at the Center for Strategic and International Studies.

''But we need to do more drilling.''

If the region's energy potential plays out, there will be need for more pipeline routes later in the decade, regardless of whether a route through Iran proves feasible. ''You never want to put all your oil in one pipeline,'' Ebel said.

Tom Raum has covered Washington for The Associated Press since 1973, covering five presidencies.

On the Net: Library of Congress country study for Kazakstan:

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