The oil first pumped from Baku on 10 May 2005 reached Ceyhan on May 28, 2006. The Caspian Sea lies above one of the world’s largest groups of oil and gas fields. As the Caspian Sea is landlocked, transporting oil to western markets is complicated. During the Soviet era, all PPLs transportation routes from the Caspian went through Russia. The collapse of the USSR initiated a search for new routes. Route as above proposed by Turkey, and accepted by Georgia and Azerbaijan, was found to be a viable one bypassing the dominating influence of Russia in the North and Iran in the South. It even bypassed Armenia which was a shorter route. Armenia and Azerbaijan have strained relations.
- The Politics. The south Caucasus – a Russian backyard is being exploited by the USA to leverage a control over its oil potential, and thus, implicitly encouraging the countries that form the region to break from Russian influence. Therein lies the significance of the BTC pipeline – a symbol of independence from Russia in the north and Iran in the South. The US browbeating Iran on its proposed nuclearization is albeit with an eye towards the Caucasian oil fields. The PPL independent of Russia, encouraged Georgian enclave of south Ossetia to break free of Russian control, riding as it were, a false sense of security imbibed from US interests. That Russia reacted decisively in physically quelling the rebellion signaled Russian’s correct assessment of the US interventions in this regard.
- The Economics. The US and European nations believe that the BTC will ease its dependence on the Middle East. But skeptics opine that the BTC will meet only one percent of global demand in the first phase. Be that as it may, it still is a protection of some assured supply from an alternative source, free of Middle Eastern and Russian threats of breaking off supply and its hegemony. One-third of European energy needs is met by Russia. The PPL has given a tremendous boost to Azerbaijan’s economy (its GDP hitting a record of 35%). Substantial transit fees accruing to Georgia and Turkey will give a huge stimulus to their economies, too. Apart from the cost India, by choosing this PPL can steer clear of troubled waters of Pakistan and Iran.
The Kazakh–China Oil PPL
There is a massive three stage PPL project linking Kazakhstan to western China. By doing so, it became the first major export pipeline (ahead of BTC) from land locked CAR, not to transit through Russia. In 2008 China received six million tonnes of oil through this PPL which was a 26 percent increase over the previous year. Once all the stages of the project are complete, China is expected to receive 20 million tonnes, i.e. 2020.
China’s booming economy stands to get a great stimulus from this pipeline. Another pipeline will link this with the one from Caspian sea transiting through west Kazakhstan. Development in Xinjiang province of west China is set to see a dramatic change. The significance of the Kazakhstan strides in its oil pipeline is lost on no one, particularly Russia, as it sees its hand grip over the oil tap and its interest loosen considerably. Kazakhstan is also in talks to tap the BTC PPL for a Mediterranean route. If India latches on to this PPL, or the one through Kazakhstan–Western China it will be a great boon. However, it has to contend with US seeing its leverage over India vis-a-vis China and Russia, loosen.
A disruption of supplies anywhere would translate into higher prices everywhere. Therefore, every consuming state is equally vulnerable to the effect of such shocks.
Strategic Course for India for the Energy Great Game
Building strategic relations with the Central Asian countries and the Caucasus along with the West Asian states to include Iran, Iraq, Kazakhstan and Turkmenistan is of critical importance. Myanmar, too, will be a key energy ally of the country. While focus has also been in obtaining oil rights in Syria (50 : 50) partnership between ONGC and Chinese company, Sudan, Sakhalin and Vietnam, these will require greater naval strategic reach and ability to secure these sea routes. Thus, the SAARC and Central Asian regions (along with support from Iran and Afghanistan) are of great importance to the country for oil security, and should dictate our strategic and diplomatic focus.