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“The Spatial Politics of Central Asian Oil and Gas,” a colloquium held November 8, 2002, provided a multi-disciplinary look at many of the issues arising from the exploration and development of energy resources in the Caspian Sea region. The paper presenters were Terry Thoem, Adam Stulberg and Michelle Kinman; Kathleen Collins served as discussant. Mr. Thoem, president of the environmental consulting firm Thoem and Associates, is an environmental engineer who has served as a consultant on oil development issues for companies working in the Caspian region. Adam Stulberg is a political scientist with the Sam Nunn School of International Affairs, Georgia Institute of Technology, whose research focuses on Russia‘s efforts to control development in the region. Ms. Kinman, a natural resources program officer with the Initiative for Social Action and Renewal in Eurasia (ISAR) in D.C., works with NGOs in the Caspian region to build and encourage community involvement in environmental and health related issues. Kathleen Collins is assistant professor of political science and faculty fellow, Kellogg Institute for International Studies and Kroc Institute for Peace Studies at the University of Notre Dame.
The colloquium, sponsored by CREES, CMENAS, CSAS and the William Davidson Institute, was part of the II‘s series on Religion, Security and Violence in Global Contexts.
The Caspian region is believed to contain the world‘s fourth largest reserve of oil, but exploration and development face many obstacles, explained Terry Thoem, the first speaker, who laid the groundwork outlining, from a private sector standpoint, some of the economic and environmental issues. Large companies are risk averse but the potential payoff in this region is so great, he said, that companies continue to work there and their involvement in this region is likely to continue in both the near and far term. Among the risks for private sector companies are the lack of infrastructure in the region, the existing antiquated oil rigs that are a legacy of the Soviet Union, the high and often fluctuating development costs, the difficulty of negotiating contracts with government officials, the high cost involved in building transportation routes for export to world markets and border disputes that continue to affect pipeline construction plans
Although the environment has suffered from poor practices and from the deteriorating condition of existing oilrigs, modern technology is being introduced into the region and has the potential to provide cleaner methods of extraction and transportation
Adam Stulberg focused on the pressures that Russia has tried to bring to bear on the oil and gas markets, in an attempt to exert economic control over this region. He detailed the mixed success of Russia‘s Caspian pipeline diplomacy. Moscow‘s success, he argued, depends on its capacity to alter the expected costs and benefits associated with different pipeline options. In the gas sector—where Russia wields the most significant global market power—Moscow is well positioned to realize its preferred policies as against the interests of Caspian producers, such as Turkmenistan, and even of concentrated domestic lobbies, such as Gazprom.
In the oil sector, by contrast, where alternative markets or suppliers exist and national pricing and contracting authorities are spread among competing government agencies and private sectors, Moscow has been less effective at wrangling concessions at home and abroad. The Russian government has not been able to significantly influence the direction of Caspian oil transit. As a result, he argued, purposeful containment of Russia‘s energy influence in the region is unwarranted, since Moscow cannot effectively lock in Caspian oil and its dominance of the gas sector is not intrinsically detrimental to US interests. The future of Russia‘s shadow in the Caspian oil sector will be determined more by its success at opening up its domestic sector to international investment and delivering Russian crude directly to international markets, than by seeking to dictate Central Asian export routes.
Michelle Kinman gave an overview of some of the environmental problems resulting from natural energy (primarily oil) exploration and development in the region, and detailed the growing role of citizen participation in decision-making for the protection of the Caspian environment. Most visible among the threats posed to the environment are natural resource extraction operations. National governments are courting transnational corporations and an array of national and transnational oil companies are currently represented in the region, each trying to secure the exploration, extraction and transportation rights for onshore and offshore fields. As the region‘s air, water and soil become increasingly polluted, the health and well-being of communities near industrial facilities and along pipeline routes are being compromised.
Throughout the region, however, local activists are working to identify and resolve environmental problems in their communities. In Turkmenistan, Kazakhstan and each of the Caspian countries, parallel environmental protection efforts are underway; the regional scope of the environmental threats and assets has led NGOs around the basin to work together. In addition, inter-sectoral cooperation among NGOs, governments and energy developers in the Caspian region is serving to alleviate risks and contribute to long-term stability.
Following these three papers, Kathleen Collins offered a number of questions for the participants to address in general discussion. She began by asking them to discuss the contrast between the rather pessimistic tone of their assessments and that of a State Department panel she attended five years ago, in which everyone was seeing the situation with Central Asian oil and gas as a “win-win scenario”: local and international oil companies, the US and the former socialist countries would all come out ahead by developing these energy resources.
Instead, she suggested, the oil boom might generate the misuse of resources and increasing problems over time, as extraction produced more “ Nigerias” than “ Norways” in the former socialist bloc, increasing income inequality and contributing to civil or ethnic wars that would feed weak authoritarian regimes. Indeed, in her view, the result of energy development by Western investors might be increased instability that could contribute, ironically, to the mobilization of dissident elements. How, she asked, might these possibilities affect risk-averse oil companies‘ perception of the risks entailed in energy development?
She pointed as well to the instability inherent in the ongoing uncertainty about boundaries and in the exclusion of Iran from pipeline discussions. Given that trans-shipment routes through Iran would be the most cost-effective of all, why are Western companies not pressuring the US government to open relations with Iran? What might be the consequences of not doing so?
Finally, she invited those present to consider the consequences of US expansion in the region since 9/11, as the creation of a puppet regime in Afghanistan and new alliances with Pakistan generate a political reconfiguration in the entire region.