U.S.-CASPIAN ENERGY POLICY:
PROMOTING SOVEREIGNTY AND PROSPERITY
"The opening of the Baku-Supsa line fulfills a long-sought goal - a
network of multiple pipelines to bring the Caspian region's oil and gas to world
markets. But the benefits of this pipeline go far beyond the energy sector.
The line will serve as the cornerstone of an East-West corridor that can promote
economic cooperation and growth among all the countries of the Caucasus and
April 15, 1999
The Clinton Administration actively supported the development of oil and gas
resources of the Caspian Basin. In 1995, the United States declared support
for the establishment of multiple energy export pipelines from the region. Today
that policy is reality, with multiple pipelines in operation, and the Caspian
states are starting to reap the rewards. Support for multiple export pipelines
is central in U.S. policy for two simple reasons - the need for new export capacity
and the logic of the marketplace. Caspian energy resources could be a significant
addition to global energy supplies, but major new fields require new pipeline
infrastructure. In addition, the existence of alternate routings minimizes the
ability of any transit state to exact commercial leverage by restricting or
obstructing pipeline operations. U.S. policy on Caspian energy is facilitating
the export of Caspian oil and gas to world markets; creating incentives to resolve
regional conflicts; and fostering greater prosperity in the Caspian region.
The Clinton Administration has supported the positive role that Russian institutions
can play in the development of Caspian energy resources. The Clinton Administration
has supported the construction of transport corridors through Russia, the participation
of Russian companies in several Caspian basin energy consortia, and the use
where appropriate of Russian technical expertise, manufacturers, and other capabilities
in Caspian energy projects.
A RECORD OF ACCOMPLISHMENT
- Supported the development of an East-West pipeline from Baku to Tbilisi
to Ceyhan. Witnessed the signing, on November 18, 1999, of an Inter-Governmental
Agreement among the Governments of Turkey, Georgia and Azerbaijan that will
provide the framework for the Baku-Tbilisi-Ceyhan oil pipeline to support
multiple pipeline routes connecting Caspian sea resources with world markets.
In November 2000, a variety of interested companies formed a Sponsors Group
for the project and initiated engineering studies for the one-million-barrels-per-day
pipeline. This main export pipeline is intended to bring to international
markets oil that is being produced in Azerbaijan, Kazakhstan and possibly
elsewhere around the Caspian Basin. The United States provided technical support,
legal advisors and other assistance to support the brokering of this agreement
which defines the commercial framework for the pipeline. The pipeline will
supply refineries largely in the Mediterranean and Western Europe, but the
line will also have broader positive impacts on international oil markets
by increasing global supplies and incrementally reducing dependence on supplies
from the Persian Gulf.
- Reached an agreement in 1996 (between Vice President Gore and Russian Prime
Minister Chernomyrdin) that broke a longstanding logjam that had hampered
progress on the Caspian Pipeline Consortium line, which is to run from northwestern
Kazakhstan to the Black Sea port of Novorossysk across southern Russia and
onward. Construction of the line itself is now complete, with only testing,
commissioning, and line-fill work ahead. The project is already bringing far-reaching
benefits to Russia and Kazakhstan in terms of expanded employment, manufacturing,
and governmental revenues. The line will principally serve the Tengizchevroil
project, and the first shipment of oil from the line is scheduled to depart
from Novorossysk in mid-2001.
- Persuaded international energy companies in 1995 to build both a western
"early oil" pipeline from Baku, Azerbaijan to Supsa, on the Black
Sea coast of Georgia, as well as a northern "early oil" pipeline
from Baku, Azerbaijan to Novorossiysk, Russia. The western line opened in
April 1999 and is operating at its capacity of 115 thousand barrels per day.
It principally serves the Azerbaijan International Operating Company's (AIOC's)
fields in the western Caspian. The northern line opened in November 1997,
with a capacity of 130 thousand barrels per day, although it was periodically
out of service due to the instability in Dagestan and Chechnya. It serves
SOCAR, AIOC and other fields in Azerbaijan.
- Played a facilitating role intended to ensure that these interests accommodate
each other and maximize opportunities for U.S. companies in all elements related
to Caspian energy development - exploration and production activities, service
providers and transportation companies. The development of Caspian energy
resources requires the marshalling of diverse capabilities - both public and
private - and the aligning of commercial, financial, political and technical
interests. As a result of the United States government's support, U.S. companies
are prominently represented in the Caspian energy scene.
- Appointed Ambassador Richard Morningstar in July 1998 to the newly-created
position of Special Advisor to the President and the Secretary of State for
Caspian Basin Energy Diplomacy. This new position reflects the strategic importance
of both energy development and geopolitical pluralism in the Caspian region.
In July 1999, Morningstar was succeeded by Ambassador John Wolf, and in November
2000, Elizabeth Jones succeeded Wolf.
- Announced in May 1998 the establishment by the U.S. Trade and Development
Agency, the U.S. Export-Import Bank and the Overseas Private Investment Corporation
of the Caspian Finance Center, in Ankara. The Center's mission is to facilitate
the development of energy and other infrastructure projects in the Caspian
region by combining the forces of the U.S. Government's three export credit
- Issued numerous technical grants from the U.S. Trade and Development Agency
(TDA) for Caspian energy projects. TDA's cost-shared grants fund feasibility
studies and other strategic analyses that pave the way for the export of U.S.
goods and services. TDA grants have helped U.S. oil and gas companies and
service providers to assess individual projects; have ensured that governments
in the Caspian region had proper legal and financial expertise at their disposal
for commercial negotiations; and have allowed countries to undertake strategic
assessments of energy production, consumption and exports in order to clarify
their own objectives and help U.S. companies to meet those objectives.
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