trade route to and from central asain independent states?

Question

central asian independent states (cis) are oil rich but they are land locked.therefore trade to and from them is difficult.what trade route is expected to work in near future to open trade with rest of the world

Answer 1

The obvious answer is creation of oil pipelines - guaranteed by bilateral or multilateral treaties.

With deals to develop the oilfields in Azerbaijan and Kazakhstan already signed, the biggest problem facing foreign investors is how to transport the oil to foreign markets. Unlike other big oil producers, Azerbaijan and Kazakhstan are landlocked. The issue of pipeline selection has therefore acquired enormous geopolitical significance for the future of the region. The existing pipeline routes for oil from Azerbaijan and Kazakhstan ran through Russia to the port of Novorossisk on the Black Sea, giving Moscow a considerable advantage in the process of pipeline selection

Following the agreement between Chevron and Kazakhstan, Moscow initially refused to allow crude oil through its pipeline system. It later placed restrictions on the amount of oil which could be transported through its pipelines and imposed a series of high tariffs. All these manoeuvres resulted in a deal which allowed Russia to become member of the Caspian Pipeline Consortium, which will build a $2 billion pipeline from Kazakhstan to Novorossisk.

The Azerbaijan International Operating CompanyÅs Ãearly oilÅ is being transported along two routes which for the most part use existing pipelines: a northern route through Dagestan and Chechnya to Novorossisk, and a second western route to the Georgian port of Supsa. Oil is already flowing along the northern route, and so far, the Chechens have been bought off with substantial transit fees.

These pipeline arrangements are temporary solutions dealing only with the transport of the early oil. The final decision regarding the selection of the pipelines which will carry the main oil is expected sometime in 1998. In theory, new pipelines could go in almost any direction. Northern routes could enhance the existing network and serve RussiaÅs needs. Western routes could serve Europe, while southern or eastern routes could serve the Asian markets.

The main options are the following:

1. The northern route favoured by Russia. According to this option, Kazakhstan would expand its existing pipelines to link them to the Russian network and Azerbaijan would build a pipeline from Baku to Novorossisk. The shortcomings of this option have to do with fears of establishing excessive Russian control over the pipeline and also the issue of security, since the pipeline would go through Chechnya.

2. The western route favoured by Azerbaijan, Turkey, Georgia and the United States. This pipeline route would bring the oil to the Georgian port of Supsa and then ship it through the Black Sea and the Bosporus to Europe. Turkey insists that the straits cannot cope with increased tanker traffic and has proposed, instead, to construct a pipeline from Baku to the port of Ceyhan on the Turkish Mediterranean coast. However, excessive costs (around $2.9 billion) and serious security concerns (this route would pass through unstable Kurdish territory) make this option difficult to implement. Instead, the Bosporus could be by-passed by a pipeline linking the Bulgarian port of Burgas with the Greek port of Alexandroupolis.

3. The southern route. Economically, this is the most viable option, since Iran already has an extensive pipeline system, and the Gulf is a good exit to the Asian markets. The United States, however, has practically vetoed this option.

4. Eastern route. This pipeline would transport oil from Kazakhstan to China. It will be the costliest pipeline (covering 2,000 km in Kazakhstan alone) but the Chinese consider it as a strategic decision and are willing to implement it.

5. South-eastern route. The American oil company Unocal has proposed the construction of oil and gas pipelines from Turkmenistan through Afghanistan to Pakistan and later to India. This route makes sense geographically but not politically, since it will have to go through unstable Afghanistan.

The final decision about the pipeline or the pipelines which will transport the Caspian oil will be taken sometime in 1998 and is hard to predict in view of the multiplicity of options and competing interests. Given the strength of the Russian and American support for the northern and the western routes respectively, these pipelines seem to have an advantage over the others