Pipe Dreams

By Lubin, Nancy | Harvard International Review, Spring 2000 | Go to article overview

Pipe Dreams


Lubin, Nancy, Harvard International Review


Abstract:

Hopes for development in Central Asia have relied heavily on the enormous untapped energy wealth that rests beneath these deserts and the Caspian Sea. Although original estimates of the region's oil reserves, which ran as high as 200 billion barrels, are now considered unrealistic, the amount of energy reserves is considerable. But the difficulties in extracting and transporting these resources may limit the potential revenue. While energy remains the mainstay of some of Central Asia's economies, revenue has been inconsistent, and it is unclear whether energy resources will live up to their promise of future prosperity for these countries. With so much of economic development banked on energy, these countries have increasingly declined into economic hardship.

Text:

Locals say the extravagant hotels that emerge from nowhere in the desert outside Turkmenistan's capital city, Ashgabat, were built to attract Western investment for the country's rich energy sector. But today, these small mansions are often devoid of energy executives and are reportedly havens for money launderers, smugglers, and other criminal elements. Meanwhile, a maze of rusting oil rigs, steel pipes, and other equipment, broken or in disrepair, leak large quantities of oil directly into the already polluted Caspian Sea while extracting oil.

These images reflect Central Asian hopes for the "black gold" that represents the economic lifeline of the regions. But they also reflect the more sinister realities of waste, crime, economic hardship, environmental devastation, and potential instability that may engulf these countries well before energy revenues begin to flow in. What kind of wealth are the Central Asian states likely to see from the vast energy resources of the region? What are the key sources of instability today, and to what extent are energy profits likely to ameliorate or exacerbate them? Finally, what are the key challenges for the United States as it balances competing commercial, foreign-policy, and security goals in this part of the world?

Politicized Pipeline

Hopes for development in Central Asia have relied heavily on the enormous untapped energy wealth that rests beneath these deserts and the Caspian Sea. Although original estimates of the region's oil reserves, which ran as high as 200 billion barrels, are now considered unrealistic, the amount of energy reserves is considerable. Kazakhstan's Tengiz oil field on the northeast shore of the Caspian is one of the world's ten largest, and new seismic studies suggest that Tengiz may contain up to 50 percent more recoverable reserves than previously thought, or as much as 9 to 13.5 billion barrels. In addition, Kazakhstan boasts large oil reserves inland, as well as in the field of Kashagan, now being explored in the Caspian, which may be as much as three times larger than Tengiz. Azerbaijan, one of the world's largest oil producers at the turn of the 20th century, still has significant oil resources at the turn of the 21st; Turkmenistan, which is relatively poor in oil, is home to roughly 102 trillion cubic feet in gas reserves, ranking it third in the world behind only Russia and Iran.

But the difficulties in extracting and transporting these resources may limit the potential revenue. All Sovietera pipelines from the Central Asian--Caspian region cross Russia before reaching markets in the West; since independence, these countries have continued to rely on Moscow to get their energy resources to market. This dependency has worked largely to their disadvantage. The volume of oil Kazakhstan is permitted to ship was limited in the mid-1990s by Russian pipeline capacity and by politics in Moscow. Export of Turkmenistan's gas through the single gas pipeline that crosses Russia has likewise remained under Moscow's control; since the mid--1990s, Russia has refused to export Turkmen gas to markets outside of the former Soviet Union (FSU) and has kept prices low. …

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