-Caveat Lector-
-------- Original Message --------
Subject: How it's done: " Why we fight."
Date: Tue, 03 Oct 2001 00:33:59 -0400
Organization: Nurev Independent Research
10-03-01
Hello,
Remember when I posted all that information about the Council on Foreign
Relations? It was to help understand how things really work.
Well here's where it pays off.
See the links at the bottom of the Foreign Relations Committee testimony.
Nurev
===================================================================
SUBCOMMITTEE ON ASIA AND THE PACIFIC: UNOCAL CORPORATION
TESTIMONY
BY
JOHN J. MARESCA
VICE PRESIDENT, INTERNATIONAL RELATIONS
UNOCAL CORPORATION
TO
HOUSE COMMITTEE ON INTERNATIONAL RELATIONS
SUBCOMMITTEE ON ASIA AND THE PACIFIC
FEBRUARY 12, 1998
WASHINGTON, D.C.
Mr. Chairman, I am John Maresca, Vice President, International Relations,
of Unocal Corporation. Unocal is one of the world's leading
energy resource and project development companies. Our activities are
focused on three major regions -- Asia, Latin America and the
U.S. Gulf of Mexico. In Asia and the U.S. Gulf of Mexico, we are a
major oil and gas producer. I appreciate your invitation to speak
here today. I believe these hearings are important and timely, and I
congratulate you for focusing on Central Asia oil and gas reserves
and the role they play in shaping U.S. policy.
Today we would like to focus on three issues concerning this region,
its resources and U.S. policy:
The need for multiple pipeline routes for Central Asian oil and gas.
The need for U.S. support for international and regional efforts to
achieve balanced and lasting political settlements within Russia,
other newly independent states and in Afghanistan.
The need for structured assistance to encourage economic reforms
and the development of appropriate investment climates in the
region. In this regard, we specifically support repeal or removal
of Section 907 of the Freedom Support Act.
For more than 2,000 years, Central Asia has been a meeting ground
between Europe and Asia, the site of ancient east-west trade
routes collectively called the Silk Road and, at various points in
history, a cradle of scholarship, culture and power. It is also a region
of truly enormous natural resources, which are revitalizing
cross-border trade, creating positive political interaction and stimulating
regional cooperation. These resources have the potential to
recharge the economies of neighboring countries and put entire regions on
the road to prosperity.
About 100 years ago, the international oil industry was born
in the Caspian/Central Asian region with the discovery of oil. In the
intervening years, under Soviet rule, the existence
of the region's oil and gas resources was generally known, but
only partially or poorly developed.
As we near the end of the 20th century, history brings us full
circle. With political barriers falling, Central Asia and the Caspian are
once again attracting people from around the globe who are
seeking ways to develop and deliver its bountiful energy resources to the
markets of the world.
The Caspian region contains tremendous untapped hydrocarbon
reserves, much of them located in the Caspian Sea basin itself. Proven
natural gas reserves within Azerbaijan, Uzbekistan, Turkmenistan
and Kazakhstan equal more than 236 trillion cubic feet. The region's
total oil reserves may reach more than 60 billion barrels of oil
-- enough to service Europe's oil needs for 11 years. Some estimates are
as high as 200 billion barrels. In 1995, the region was producing
only 870,000 barrels per day (44 million tons per year [Mt/y]).
By 2010, Western companies could increase production to about 4.5
million barrels a day (Mb/d) -- an increase of more than 500
percent in only 15 years. If this occurs, the region would
represent about five percent of the world's total oil production,
and almost 20 percent of oil produced among non-OPEC countries.
One major problem has yet to be resolved: how to get the region's
vast energy resources to the markets where they are needed. There
are few, if any, other areas of the world where there can be
such a dramatic increase in the supply of oil and gas to the world market.
The solution seems simple: build a "new" Silk Road. Implementing
this solution, however, is far from simple. The risks are high, but
so are the rewards.
Finding and Building Routes to World Markets
One of the main problems is that Central Asia is isolated.
The region is bounded on the north by the Arctic Circle, on
the east and west
by vast land distances, and on the south by a series of natural
obstacles -- mountains and seas -- as well as political obstacles, such as
conflict zones or sanctioned countries.
This means that the area's natural resources are landlocked,
both geographically and politically. Each of the countries in the Caucasus
and Central Asia faces difficult political challenges. Some
have unsettled wars or latent conflicts. Others have evolving systems where
the laws -- and even the courts -- are dynamic and changing.
Business commitments can be rescinded without warning, or they can
be displaced by new geopolitical realities.
In addition, a chief technical obstacle we face in transporting
oil is the region's existing pipeline infrastructure. Because the region's
pipelines were constructed during the Moscow-centered Soviet
period, they tend to head north and west toward Russia. There are no
connections to the south and east.
Depending wholly on this infrastructure to export Central Asia
oil is not practical. Russia currently is unlikely to absorb large new
quantities of "foreign" oil, is unlikely to be a significant
market for energy in the next decade, and lacks the capacity to
deliver it to other markets.
Certainly there is no easy way out of Central Asia. If there
are to be other routes, in other directions, they must be built.
Two major energy infrastructure projects are seeking to meet
this challenge. One, under the aegis of the Caspian Pipeline Consortium,
or CPC, plans to build a pipeline west from the Northern Caspian
to the Russian Black Sea port of Novorossisk. From Novorossisk, oil
from this line would be transported by tanker through the Bosphorus
to the Mediterranean and world markets.
The other project is sponsored by the Azerbaijan International
Operating Company (AIOC), a consortium of 11 foreign oil companies
including four American companies -- Unocal, Amoco, Exxon and Pennzoil.
It will follow one or both of two routes west from Baku.
One line will angle north and cross the North Caucasus to Novorossisk.
The other route would cross Georgia and extend to a shipping
terminal on the Black Sea port of Supsa. This second route may be
extended west and south across Turkey to the Mediterranean port
of Ceyhan.
But even if both pipelines were built, they would not have enough
total capacity to transport all the oil expected to flow from the region
in the future; nor would they have the capability to move it to
the right markets. Other export pipelines must be built.
Unocal believes that the central factor in planning these
pipelines should be the location of the future energy markets that are most
likely to need these new supplies. Just as Central Asia was
the meeting ground between Europe and Asia in centuries past, it is again in
a unique position to potentially service markets in both of
these regions -- if export routes to these markets can be built. Let's take a
look at some of the potential markets.
Western Europe
Western Europe is a tough market. It is characterized by high
prices for oil products, an aging population, and increasing competition
from natural gas. Between 1995 and 2010, we estimate that
demand for oil will increase from 14.1 Mb/d (705 Mt/y) to 15.0 Mb/d
(750 Mt/y), an average growth rate of only 0.5 percent annually.
Furthermore, the region is already amply supplied from fields in the
Middle East, North Sea, Scandinavia and Russia. Although there
is perhaps room for some of Central Asia's oil, the Western European
market is unlikely to be able to absorb all of the production
from the Caspian region.
Central and Eastern Europe
Central and Eastern Europe markets do not look any better.
Although there is increased demand for oil in the region's transport sector,
natural gas is gaining strength as a competitor. Between 1995
and 2010, demand for oil is expected to increase by only half a million
barrels per day, from 1.3 Mb/d (67 Mt/y) to 1.8 Mb/d (91.5 Mt/y).
Like Western Europe, this market is also very competitive. In
addition to supplies of oil from the North Sea, Africa and the
Middle East, Russia supplies the majority of the oil to this region.
The Domestic NIS Market
The growth in demand for oil also will be weak in the Newly
Independent States (NIS). We expect Russian and other NIS markets to
increase demand by only 1.2 percent annually between 1997 and 2010.
Asia/Pacific
In stark contrast to the other three markets, the Asia/Pacific
region has a rapidly increasing demand for oil and an expected significant
increase in population. Prior to the recent turbulence in the
various Asian/Pacific economies, we anticipated that this region's demand
for oil would almost double by 2010. Although the short-term
increase in demand will probably not meet these expectations, Unocal
stands behind its long-term estimates.
Energy demand growth will remain strong for one key reason:
the region's population is expected to grow by 700 million people by
2010.
It is in everyone's interests that there be adequate
supplies for Asia's increasing energy requirements. If Asia's
energy needs are not
satisfied, they will simply put pressure on all world markets,
driving prices upwards everywhere.
The key question is how the energy resources of Central Asia
can be made available to satisfy the energy needs of nearby Asian
markets. There are two possible solutions -- with several variations.
Export Routes
East to China: Prohibitively Long?
One option is to go east across China. But this would mean
constructing a pipeline of more than 3,000 kilometers to central China -- as
well as a 2,000-kilometer connection to reach the main
population centers along the coast. Even with these formidable challenges,
China National Petroleum Corporation is considering building
a pipeline east from Kazakhstan to Chinese markets.
Unocal had a team in Beijing just last week for consultations
with the Chinese. Given China's long-range outlook and its ability to
concentrate resources to meet its own needs, China is almost
certain to build such a line. The question is what will the costs of
transporting oil through this pipeline be and what netback
will the producers receive.
[ *********************************************************** ]
South to the Indian Ocean: A Shorter Distance to Growing Markets
A second option is to build a pipeline south from Central
Asia to the Indian Ocean.
One obvious potential route south would be across Iran.
However, this option is foreclosed for American companies because of U.S.
sanctions legislation. The only other possible route
option is across Afghanistan, which has its own unique challenges.
The country has been involved in bitter warfare for almost
two decades. The territory across which the pipeline would extend is
controlled by the Taliban, an Islamic movement that is not
recognized as a government by most other nations. From the outset, we
have made it clear that construction of our proposed pipeline
cannot begin until a recognized government is in place that has the
confidence of governments, lenders and our company.
In spite of this, a route through Afghanistan appears to be
the best option with the fewest technical obstacles. It is
the shortest route to
the sea and has relatively favorable terrain for a pipeline.
The route through Afghanistan is the one that would bring
Central Asian oil
closest to Asian markets and thus would be the cheapest in
terms of transporting the oil.
Unocal envisions the creation of a Central Asian Oil Pipeline
Consortium. The pipeline would become an integral part of a regional oil
pipeline system that will utilize and gather oil from existing
pipeline infrastructure in Turkmenistan, Uzbekistan, Kazakhstan and Russia.
The 1,040-mile-long oil pipeline would begin near the town
of Chardzhou, in northern Turkmenistan, and extend southeasterly through
Afghanistan to an export terminal that would be constructed
on the Pakistan coast on the Arabian Sea. Only about 440 miles of the
pipeline would be in Afghanistan.
[ *************** highlights are mine - Nurev ****************** ]
This 42-inch-diameter pipeline will have a shipping capacity
of one million barrels of oil per day. Estimated cost of the
project -- which
is similar in scope to the Trans Alaska Pipeline --
is about US$2.5 billion.
There is considerable international and regional political
interest in this pipeline. Asian crude oil importers,
particularly from Japan, are
looking to Central Asia and the Caspian as a new strategic
source of supply to satisfy their desire for resource diversity.
The pipeline benefits Central Asian countries because it would
allow them to sell their oil in expanding and highly prospective hard currency
markets. The pipeline would benefit Afghanistan, which would
receive revenues from transport tariffs, and would promote stability
and encourage trade and economic development. Although
Unocal has not negotiated with any one group, and does not favor any
group, we have had contacts with and briefings for all of them.
We know that the different factions in Afghanistan understand the
importance of the pipeline project for their country,
and have expressed their support of it.
A recent study for the World Bank states that the
proposed pipeline from Central Asia across Afghanistan
and Pakistan to the Arabian
Sea would provide more favorable netbacks to oil
producers through access to higher value markets than those currently being
accessed through the traditional Baltic and Black
Sea export routes.
This is evidenced by the netback values producers will
receive as determined by the World Bank study. For West Siberian crude, the
netback value will increase by nearly $2.00 per barrel
by going south to Asia. For a producer in western Kazakhstan, the netback value
will increase by more than $1 per barrel by going south
to Asia as compared to west to the Mediterranean via the Black Sea.
Natural Gas Export
Given the plentiful natural gas supplies of Central Asia,
our aim is to link a specific natural resource with
the nearest viable market.
This is basic for the commercial viability of any gas project.
As with all projects being considered in this region, the
following projects face geo-political challenges,
as well as market issues.
Unocal and the Turkish company, Koc Holding A.S., are
interested in bringing competitive gas supplies to the
Turkey market. The
proposed Eurasia Natural Gas Pipeline would transport
gas from Turkmenistan directly across the Caspian Sea through Azerbaijan and
Georgia to Turkey. Sixty percent of this proposed gas
pipeline would follow the same route as the oil pipeline proposed to run from
Baku to Ceyhan. Of course, the demarcation of the Caspian remains an issue.
Last October, the Central Asia Pipeline, Ltd. (CentGas)
consortium, in which Unocal holds an interest, was formed
to develop a gas
pipeline that will link Turkmenistan's vast natural gas
reserves in the Dauletabad Field with markets in Pakistan
and possibly India. An
independent evaluation shows that the field's resources
are adequate for the project's needs, assuming production
rates rising over time
to 2 billion cubic feet of gas per day for 30 years or more.
In production since 1983, the Dauletabad Field's natural
gas has been delivered north via Uzbekistan, Kazakhstan
and Russia to markets in the Caspian and Black Sea areas.
The proposed 790-mile pipeline will open up new markets
for this gas, travelling from Turkmenistan through Afghanistan
to Multan, Pakistan. A proposed extension would link with
the existing Sui pipeline system, moving
gas to near New Delhi, where it would connect with the
existing HBJ pipeline. By serving these additional volumes,
the extension
would enhance the economics of the project, leading to
overall reductions in delivered natural gas costs for
all users and better
margins. As currently planned, the CentGas pipeline would
cost approximately $2 billion. A 400-mile extension into India could add
$600 million to the overall project cost.
As with the proposed Central Asia Oil Pipeline, CentGas
cannot begin construction until an internationally
recognized Afghanistan
government is in place. For the project to advance,
it must have international financing, government-to-
government agreements and
government-to-consortium agreements.
Conclusion
The Central Asia and Caspian region is blessed with
abundant oil and gas that can enhance the lives of the
region's residents and provide energy for growth for Europe and Asia.
The impact of these resources on U.S. commercial interests
and U.S. foreign policy is also significant and intertwined. Without
peaceful settlement of conflicts within the region, cross-border
oil and gas pipelines are not likely to be built. We urge the
Administration and the Congress to give strong support to the
United Nations-led peace process in Afghanistan.
U.S. assistance in developing these new economies will be
crucial to business' success. We encourage strong technical assistance
programs throughout the region. We also urge repeal or
removal of Section 907 of the Freedom Support Act. This
section unfairly
restricts U.S. government assistance to the government of
Azerbaijan and limits U.S. influence in the region.
Developing cost-effective, profitable and efficient
export routes for Central Asia resources is a formidable,
but not impossible, task. It
has been accomplished before. A commercial corridor,
a "new" Silk Road, can link the Central Asia supply with the demand -- once
again making Central Asia the crossroads between Europe and Asia.
Thank you.
PLUS:
http://www.treemedia.com/cfrlibrary/Library/background/olcottmaps.html
http://www.treemedia.com/cfrlibrary/Library/policy/bremmermap.html
http://www.treemedia.com/cfrlibrary/Library/indexmaps/indexmaps.html
http://www.treemedia.com/cfrlibrary
/Library/library.html
http://prorev.com/indexa.htm
===========================================================================
----------
It's the Oil Never mind the pundits, the root cause remains the
same
by Johnny Angel http://www.laweekly.com/ink/01/44/cover-angel.shtml
In the orgy of examination of who and what is to blame for the
events of September 11, we must have heard every conceivable
explanation. The American right, as exemplified by President Bush,
Fox News and the opinion page of the The Wall Street Journal, blames
envy of American values and success. The extreme right blames
secular humanism, gay rights and the other bogeymen they love to
flog. The center faults lax airport security and a general lack of
preparedness, while the left, all but ignored by the corporate
media, blames American imperialism and in some cases our unconditional
support for Israel.
Yet for all the noise generated by partisans and centrists alike,
no one is willing to accept the blatantly obvious, the real underlying
factor behind America's involvement in the byzantine labyrinth of
Middle East politics. What could possibly motivate the propping up
of repressive non-democracies like the Saudi and Kuwaiti royal
families, or murderous regimes like that of Reza Pahlavi, Shah of
Iran? Or pouring billions into the coffers of Saddam Hussein in
the '80s, or even creating the monster that is possibly the mastermind
of these attacks, Osama bin Laden, beneficiary of CIA lucre and
training?
It's the oil, stupid.
Once again, America's twin addictions, that of its people to cheap
gasoline and its corporations to billions of petro-dollars, has
led us right into the proverbial pit. Having learned very little
or forgotten a lot in the wake of the oil embargoes of the 1970s,
America is as strung out on the fossil-fuel jones as any Bonnie
Brae Street junkie is on Mexican tar heroin. Even though American
dependency on oil from the Middle East has fallen to about 17
percent of national consumption, Saudi Arabia remains the cornerstone,
producing 50 percent of the whole world's supply. So in order to
keep this economic balm flowing, to keep the status quo static and
the balance sheets of the major oil companies brimming, we've
installed our military as a kind of mega police force in the region.
Our official reason for being there is to ensure "stability," one
of the great buzzwords in the history of business, but this is
nothing more than spin -- the military is in the Middle East to
guarantee that whatever comes out of the ground is exploitable and
controlled by American multinationals.
And it is the simple fact of the presence of American soldiers on
the holy soil of Islam that has so enraged our new nemesis, bin
Laden.
Speaking to British journalist Robert Fisk in 1996 Afghanistan,
bin Laden made clear his agenda. "When the American troops entered
Saudia Arabia [after Iraq's invasion of Kuwait], the land of the
two holy places [Mecca and Medina], there was strong protest from
the ulema [religious authorities] and from students of the Shariah
law all over the country against the interference of American
troops," bin Laden told Fisk, who published the comments in The
Nation in 1998. The Saudi leaders made a "big mistake," bin Laden
said, when they responded by suppressing the protests and cementing
ties to the U.S. "After it had insulted and jailed the ulema . .
. the Saudi regime lost its legitimacy,"
bin Laden said. And so began his deadly fatwa against the United
States.
Oil has been the prime mover behind any and every political decision
in that region since the First World War, when trucks, tanks and
planes replaced horses and camels. Once the internal-combustion
engine became the technological centerpiece of the century, keeping
it going by any means necessary became a most profitable business
venture. And despite the myth that has been rammed down America's
psyche for eons, American business loathes competition and aims
for monopoly. Sure, they'll partner with the Saudi royal family
(because the government that they dominate owns all of its oil),
but in exchange, anyone in the region who actually believes in the
rights of the people of that country to share in the wealth of
their homeland is shut out. And forcefully, with the aid of the
American military and CIA, as we saw in Iran and during the Gulf
War.
This dusty, empty part of the world was basically nothing more than
a bedouin crossroads for 1,300 years, between the end of the Crusades
and the early 1900s. During the period when America endured revolution
and a civil war, and Europe tore itself apart, the Middle East was
downright peaceful. Tell me why the United States and Great Britain
reflexively back the state of Israel in its battles with its
neighbors. Were it not sitting strategically close to vast pools
of viscous crude, no one would give a rat's ass about either side.
It's the meddling in the internal affairs of the indigenous people
of the region to ensure that said oil stays in the hands of the
privileged few that has led to an enraged underground movement of
terrorists in these lands. And oil is all we're there for -- what
else of value comes from that part of the world, what strategic
value does it have otherwise?
That may seem as obvious as the nose on our collective face, but
it's something no one wants to acknowledge. Especially given the
ties between the media and the oil companies: ABC is tied to Texaco,
NBC to British Petroleum, Time Warner to Mobil Oil, as revealed in
the marvelous media-watchdog flier Censored Alert in the summer of
2000. And now the oil industry is entrenched as America's No. 1
player with Bush and Cheney, two oil men (one failed, one successful)
in command.
Eliminate the oil, and the American presence ends in the area; the
resentment aimed at our land and our people also ends. Out of sight,
out of mind, remember? Never mind the bollocks about how the Arabs
envy our wealth: I don't see them terrorizing Monaco or flying jets
into the side of the Big Ben. The simple fact is, our armies piss
them off as colonial enforcers. Much in the same way that our
forefathers loathed Hessians in the American Revolution.
If anything, the leaders of the Middle East are terrified of our
abandonment. Like savvy survivors, they play both sides at the same
time. Just as an American corporation will donate money to Republicans
and Democrats both, so these strongmen pay lip service to America
while nodding, winking and (in the case of Yemen and allegedly some
Saudi businessmen) donating money to terrorist cells on the side,
just to be safe.
It's our own greed and need for control that has led us into this
petroleum quagmire. Ross Perot, hardly the voice of progressive
politics, made the canny observation in the first presidential
debate of 1992 that the Gulf War was fought solely for control of
oil and nothing more. He made the further point that American blood
wasn't worth shedding over a product that Saddam would have been
glad to sell us himself.
Too late for that sort of pragmatism. The war we're about to wage
will surely be protracted and costly, with profound repercussions,
and all because we decided that dealing with our enslavement to
gasoline via conservation, alternative energy sources and the like
was just too incon-f***ing-venient. Feel that way now?
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