Why Georgia? Cui Bono?
Last update - 11:49 17/01/2008
Israel proposes crude pipeline from Georgia to Eastern Asia
By Avi Bar-Eli
Tags: Israel, crude oil, Far East
Israel may be on its way to becoming a crude oil transport bridge to the Far East. The Eilat-Ashkelon Pipeline Company (EAPC) is leading an international initiative to channel crude oil from Jihan in southeast Turkey to eastern Asia, using its infrastructure in Israel. A consortium of energy firms and international shipping companies will manage the initiative, and a memorandum of understanding is expected to be signed within three months.
The oil would be pumped in Georgia and Azerbaijan, and be brought to Turkey by pipeline. From Turkey it will be shipped by tanker to Ashkelon, whence it would be transported by pipeline to Eilat. In Eilat, the oil wilbe be loaded onto a new set of tankers for transportation to eastern Asia.
The Ashkelon-Eilat Pipeline Company is a privately owned firm, owned jointly by Israel and the government of Iran. Tehran is currently not an active partner, and it and Israel are involved in international arbitration.
EAPC recently completed a trial run. A Turkish tanker of crude oil came to Ashkelon, and EAPC transported the oil to Eilat. A tanker owned by an international trading company awaited the shipment at the petroleum distillates port in Eilat, loaded the oil, and took it to an east Asian port. Loading of the tanker in Turkey, shipment to Israel and subsequent piping to Eilat was completed in about five days.
The project's entrepreneurs calculate that the savings to East Asian oil importers in time and costs generated by a regular transport line between Turkey and Israel could amount to $4 per ton, when compared with the cost of using the Suez Canal. Such a savings justifies investment in the project, as the cost of oil soars and growth rates in the developing nations of East Asia, and China and India in particular, continue to rise.
The EAPC aims to reach a final agreement on establishment of a regular transport line with leased 250,000-ton tankers ("shuttles") moving the oil between Turkey and Israel, and 280,000 to 320,000-ton tanker shuttles used to transport through the Red Sea to the east. Shipment through the Suez Canal is limited to tankers with a maximum capacity of 130,000 tons.
The initiative includes construction of a reservoir farm for storage of oil in Jihan, and infrastructure at Jihan port, in southern Turkey, for loading oil into tankers. The cost is expected to reach an estimated $200-$300 million, and the company is already in final stages of partnership negotiations with Turkish firms and an Indian energy company, for financing of the project. Simultaneously, the EAPC's board of directors has approved expansion of its reservoir farm on the Ashkelon coastline by 20%, at the cost of an estimated at $60-$80 million, to be self-financed by the company.
The company is currently able to pipe about 20 million tons of oil to Eilat annually. According to its business plan, construction of another pumping station, at a cost of $10 million, will double its capacity to 40 million tons of oil, thus generating tens of millions of dollars in additional revenues each year. The initiative was conceived with the completion of the BIC project, the 1,760-kilometer pipeline connecting Baku, Azerbaijan, on the Caspian Sea, to the Jihan port. The pipeline is now used to transport some 30 million tons of top quality "Azeri Light" crude oil annually, an amount scheduled to increase to about 50 million tons annually within the next few years.
Establishment of the pipeline will bring an increase of 20% in the amount of oil moving in the Mediterranean area, and is expected to result in lower prices, and attract the interest of Far Eastern countries eager to expand their sources.
Turkey also intends to lay another pipeline, between Samsun, on the Black Sea coast, and Jihan. According to the plan, the line will be set to transport an annual 60 million tons of crude oil to Jihan within two years, making the project even more lucrative. The Pipeline Company is currently considering participation in this $1.5-billion project as well, together with other international energy firms.
"This initiative will constitute a breakthrough for the global energy market and the fabric of international relations, which will place Israel as an intermediate country connecting Eurasia and the East, and make a strategic contribution to reducing dependence of the entire world and particularly Eastern Asian countries, on oil from the Persian Gulf," the chair of the Ashkelon-Eilat Pipeline Company, Oren Shachor, told TheMarker early this week. Shachor will present the initiative at the eighth annual Herzliya Conference of the Institute for Policy and Strategy. The conference, which takes place January 20-23, will deal with the balance of Israel's national security.
New York: It has been reported in Europe, and in Israel, that the Israel Defense Forces was intimately involved with Georgia's invasion of South Ossetia. U.S. newspapers have refused to report any of this. Is the whole Russia-Georgian conflict another sorry farce scripted by the guys you support?
Eric Margolis: Israel indeed was involved deeply in Georgia. Israeli arms dealers, Mossad agents, businessmen and technical experts came in after Saakashvili took power. Some reports in the Israeli media say Israel sold millions worth of military equipment to Georgia. You will see photos of Georgian troops wearing Israeli body army, webbing, gear and helmets, with Israeli assault rifles.
Israeli military advisors (and U.S. ones) may have been involved in planning the invasion of South Ossetia.
Many of the Israelis in Georgia are leaving. There was concern in Israel that its prominent role in Georgia would jeopardize future Israeli military sales to Russia.
Israelis also were involved in the oil pipeline across Georgia.
Israel backs Georgia in Caspian Oil Pipeline Battle with Russia
DEBKAfile Exclusive Report
August 8, 2008, 4:26 PM (GMT+02:00)
Georgian tanks and infantry, aided by Israeli military advisers, captured the capital of breakaway South Ossetia, Tskhinvali, early Friday, Aug. 8, bringing the Georgian-Russian conflict over the province to a military climax.
Russian prime minister Vladimir Putin threatened a "military response."
Former Soviet Georgia called up its military reserves after Russian warplanes bombed its new positions in the renegade province.
In Moscow's first response to the fall of Tskhinvali, president Dimitry Medvedev ordered the Russian army to prepare for a national emergency after calling the UN Security Council into emergency session early Friday.
Reinforcements were rushed to the Russian "peacekeeping force" present in the region to support the separatists.
Georgian tanks entered the capital after heavy overnight heavy aerial strikes, in which dozens of people were killed.
Lado Gurgenidze, Georgia's prime minister, said on Friday that Georgia will continue its military operation in South Ossetia until a "durable peace" is reached. "As soon as a durable peace takes hold we need to move forward with dialogue and peaceful negotiations."
DEBKAfile's geopolitical experts note that on the surface level, the Russians are backing the separatists of S. Ossetia and neighboring Abkhazia as payback for the strengthening of American influence in tiny Georgia and its 4.5 million inhabitants. However, more immediately, the conflict has been sparked by the race for control over the pipelines carrying oil and gas out of the Caspian region.
The Russians may just bear with the pro-US Georgian president Mikhail Saakashvili's ambition to bring his country into NATO. But they draw a heavy line against his plans and those of Western oil companies, including Israeli firms, to route the oil routes from Azerbaijan and the gas lines from Turkmenistan, which transit Georgia, through Turkey instead of hooking them up to Russian pipelines.
Saakashvili need only back away from this plan for Moscow to ditch the two provinces' revolt against Tbilisi. As long as he sticks to his guns, South Ossetia and Abkhazia will wage separatist wars.
DEBKAfile discloses Israel's interest in the conflict from its exclusive military sources:
Jerusalem owns a strong interest in Caspian oil and gas pipelines reach the Turkish terminal port of Ceyhan, rather than the Russian network. Intense negotiations are afoot between Israel Turkey, Georgia, Turkmenistan and Azarbaijan for pipelines to reach Turkey and thence to Israel's oil terminal at Ashkelon and on to its Red Sea port of Eilat. From there, supertankers can carry the gas and oil to the Far East through the Indian Ocean.
Aware of Moscow's sensitivity on the oil question, Israel offered Russia a stake in the project but was rejected.
Last year, the Georgian president commissioned from private Israeli security firms several hundred military advisers, estimated at up to 1,000, to train the Georgian armed forces in commando, air, sea, armored and artillery combat tactics. They also offer instruction on military intelligence and security for the central regime. Tbilisi also purchased weapons, intelligence and electronic warfare systems from Israel.
These advisers were undoubtedly deeply involved in the Georgian army's preparations to conquer the South Ossetian capital Friday.
In recent weeks, Moscow has repeatedly demanded that Jerusalem halt its military assistance to Georgia, finally threatening a crisis in bilateral relations. Israel responded by saying that the only assistance rendered Tbilisi was "defensive."
This has not gone down well in the Kremlin. Therefore, as the military crisis intensifies in South Ossetia, Moscow may be expected to punish Israel for its intervention.
Saturday, August 16, 2008 05:04
Turkey faces tough task in energy as political map of Caucasus redrawn
Turkey faces a big dilemma amid the changing political landscape of the Caucasus, as it looks to strengthen its position as a transit country for energy routes, and the mounting pressure to balance its relations with Russia and the United States.
Russia's message in the five-day clashes in the Caucasus was clear: The region is still the backyard of Moscow, which is the main actor that would ensure the energy supply security for Europe.
In other words the sudden spark in the conflict that brought Georgia to its heels, reasserted Russia's claim as the dominant force in the region, and dealt a blow to the U.S. prestige.
This conflict came at a time when Turkey started sending signals that it wants to boost cooperation with its top gas supplier Russia.
It is almost certain that this incident would change the balance of power and the political landscape of the region. This change, on the other hand, has significant importance for Turkey as the officials intensified their efforts to take part in this wind of change.
KEY ENERGY TRANSIT COUNTRY
Turkey had sped up its efforts to host crucial energy routes that feed the West with pushing for new pipeline deals and inaugurating the planned ones, a policy seen by Ankara as key to promote the country's EU membership bid.
The country is seen as an alternative for Russian natural resources and a gateway of the Caspian energy sources to Europe. As Turkey does not possess rich hydrocarbon reserves of its own, almost all of these routes come from unstable countries such as Iran and Iraq. Georgian President Mikhail Saakashvili's ill fated offensive on South Ossetia added Georgia into this list.
The lack of relations between Armenia and Turkey forced Ankara to push for routing the flow of oil and natural gas from Azerbaijan, through Georgia and into Anatolia.
The result has been the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which runs from the Caspian to the eastern Mediterranean and the Baku-Tbilisi-Erzurum (BTE) natural gas pipeline, which runs parallel to BTC as far as eastern Anatolia.
Turkey backed four European countries on the 7.9-billion-euro Nabucco pipeline project planned to carry gas from the Caspian and Iran to Europe from 2013 to lessen Europe's dependence on Russia.
Also on the table is a project called the "Mediterranean Line", which envisages carrying fiber optic cables, water, electricity and Russian gas and oil through a multi-purpose pipeline from Turkey to Israel under a 2-5 billion euro deal.
TURKEY-RUSSIA RELATIONS IMPROVE
During the recent clashes the BP-led consortium halted the gas flow through BTE pipeline. BTC seems to have survived from the conflict as it was already closed due to an explosion that took place along its Turkish section early August.
Russia is once more within striking distance to control all the export routes for the oil and gas of the Caspian basin. In fact it was this monopoly that paved the way for the Georgia-Turkey pipeline, carrying Azeri oil from Baku to Ceyhan in Turkey.
The ability of the Georgians to protect and secure that pipeline is now clearly in question, and proposals to extend and increase the capacity of the pipeline will now have to be reconsidered.
This conflict came at a time when Turkey started signaling that it wants to boost cooperation with its top gas supplier Russia, ending a frosty period marked by differences over the Nabucco pipeline, an ambitious project aiming to bring gas from the Caspian to Europe.
Turkey gets most of its gas, 68 percent of 2008 demand of 38 billion cubic meters (bcm), from Russia's Gazprom under three long-term deals.
Turkey and Russia had a decade-long lull in economic relations after Ankara blamed Moscow for selling gas to Ankara at more expensive rates than to other buyers.
They were also at loggerheads on the Nabucco project. Russia had said any pipeline project without its gas was doomed to fail and challenged Nabucco by broaching the South Stream project, which plans a pipeline to Bulgaria and Italy from Russia via the Black Sea.
The two countries agreed to set up a joint company to run Turkey's urban gas grids as well as to build an underground gas storage facility in central Turkey and have held talks to renew a gas contract expiring in 2011.
Also Russia, Turkey and Israel agreed to work on the "Mediterranean Line" project, which could later be extended as far as India.
As Turkey plays its card to increase its role as an energy transit country, the stakes are higher. Ankara now has to define a new balance for its relations with its traditional allies in the West and its emerging energy partner, Russia.
The task is becoming far more difficult given the recent international row with another regional energy player, Iran, over its nuclear program. Turkey and Iran had failed to agree on the deal to build a new pipeline as some speculate the failure was to avoid further unease with the U.S.
Turkey should develop a new strategy in the new grand chess board with longer term planning if it is to maintain the balance and not jeopardize its aim of becoming a key energy transit country.