The Chechen government Wednesday announced an ambitious $3 billion plan to revitalize Chechnya's oil industry by constructing a pipeline network to transport oil from the Caspian region and Central Asia to Black Sea and Mediterranean ports.
The proposed pipeline would run from the Chechen capital, Grozny, to Tbilisi in Georgia. The offices of two major figures, cited as part of an impressive international consortium behind the project, confirmed their interest Wednesday, as well as the pipeline's feasibility.
Acting Chechen president Zelimkhan Yandarbiyev's chief foreign policy adviser, Mansour Jachimczyk, announced the plan in Moscow just days before Monday's presidential elections in the republic, in which Yandarbiyev is a candidate.
At the same news conference, Russian human rights campaigner Sergei Kovalyov was presented an award for his work protesting human rights violations during the 21-month Chechen war.
The international financier Adnan Khashoggi told The Moscow Times in an phone interview from Paris that he is helping put together a financing package for the plan that would allow the export of oil from the vast Tengiz oil field of western Kazakhstan, as well as from the western Urals, to the Mediterranean via Georgia and Turkey.
This route would be considerably cheaper than exporting Caspian oil via the "northern route" to the Russian Black Sea port of Novorossiisk, favored by the Russian government, the Saudi Arabian financier said.
The project envisioned by Yandarbiyev would involve construction of a 240 kilometer pipeline between Grozny and Tbilisi to connect an existing pipeline from Kazakhstan's Tengiz oilfield with a planned pipeline from Baku to the Georgian Black Sea coast.
The eventual construction of a new pipeline through Turkey, connecting the Baku-Black Sea pipeline with the Turkish Mediterranean port of Ceyhan, would complete the export route.
Proven oil reserves in the Azerbaijani, Kazakh and Turkmen sectors of the Caspian Sea "will make that region the Persian Gulf of Central Asia in the
21st century," said Jachimczyk.
Jachimczyk says that exporting oil directly to the Mediterranean via Ceyhan would allow oil to reach European markets 20 percent more cheaply than if exported through Novorossiisk. The Novorossiisk export route will require large investment to upgrade the port there, as well as the construction of port facilities and new pipelines to carry the oil onward from the Black Sea to the Mediterranean."In the long term it would be better for oil to be exported through Turkey, economically speaking," said Khashoggi. "Maybe now Russia, from a nationalistic point of view, says it wants to keep the oil route in Russia, but in the end they must look at the figures."
"We are trying to convince people to accept that the Turkish pipeline is the most suitable alternative," he continued, adding that he was confident that financing could be found. "If they go through Turkey the financing is there, but if they go in the other direction, it is not." In the case of a Turkish pipeline, "we have already put together a mechanism," he said.
The Chechen ambassador to the European Union, Charles Tchokotchua, has said that he arranged for French pipeline engineers to examine the Chechens' proposed pipeline route, which was a dream of the late Chechen separatist leader, Dzhokhar Dudayev.
A second element of the Chechen government's plan is the creation of a
"Caucasus Common Market," modelled on the European Common Market, said Jachimczyk. This would be a supranational organization open to all states, regions and cities of the Caucasus with the aim of developing and integrating the regional economy.
The Transcaucasus pipeline complex would serve as a foundation for the common market. Khashoggi said that it was good to discuss such ideas, but that it could only happen if there were common projects such as the pipeline to provide a basis for economic cooperation.
Major corporate investors have expressed interest in participating in the Chechen government project, Jachimczyk said. Among them are Japan's largest oil company, Itochu; Mitsubishi of Japan; and Hyundai of South Korea. Japan, with huge energy needs, has shown interest in the development of Caspian oil reserves.
A team of business and financial specialists under the leadership of Jacques Attali, former head of the European Bank for Reconstruction and Development, at the Chechen government's request, has put together a team of financial and business experts to work out guidelines for the legal and financial aspects of Chechen reconstruction, as well as for the Transcaucasus pipeline and the Caucasus Common Market, said Jachimczyk.
A source in Attali's office in Paris confirmed that the team had been assembled to consider methods of financing reconstruction and the Chechen government's ambitious plans, with their initial ideas to be presented in three months' time.
Western, Russian and other oil companies are already considering various plans to enlarge the pipeline network in the Caucasus to deliver the expected bonanza of Caspian oil to world markets. It is unclear how the Chechen government's plans will mesh will other pipeline projects currently under discussion by the multinational oil companies involved in oil projects in Azerbaijan, Kazakhstan and Turkmenistan.
Chechen president Zelimkhan Yandarbiyev, the pipeline project's initiator, saw it as "the source of economic salvation in the Caucasus," said Jachimczyk.
President Yandarbiyev's supporters no doubt hope that his bid for re-election in presidential and parliamentary elections Sunday will be given a boost by the unveiling of these projects.
The ambitious development projects are also undoubtedly a bid to demonstrate Chechnya's ability to take charge of its own economic future.
"Lasting peace demands from us the formation of a strong, self-sufficient state," said a statement of Yandarbiyev's plans for Chechnya's future, that was read out at the press conference in Moscow.
The statement underlined that the Chechen government was already taking steps to win recognition for "our status as an independent state," through the work of its representatives in London, Washington, Tokyo, Paris, The Hague, Istanbul and other capitals.
Jachimczyk said that the Chechen government proposal would compete with other schemes on the basis of its merits. The most cost-effective scheme should win in the in end, he said.
Kovalyov's recognition at the press conference was for his work in publicizing human rights abuses in Chechnya. Though initially awarded the honor more than a year ago, he refused to accept it until there was peace in Chechnya.
Kovalyov however expressed his doubts about the coming election. He said it could not be considered fully democratic, as refugees from Chechnya living far from the republic would be unable to vote. Only those who return to the republic will be able to vote.
The proposed pipeline would run from the Chechen capital, Grozny, to Tbilisi in Georgia. The offices of two major figures, cited as part of an impressive international consortium behind the project, confirmed their interest Wednesday, as well as the pipeline's feasibility.
Acting Chechen president Zelimkhan Yandarbiyev's chief foreign policy adviser, Mansour Jachimczyk, announced the plan in Moscow just days before Monday's presidential elections in the republic, in which Yandarbiyev is a candidate.
At the same news conference, Russian human rights campaigner Sergei Kovalyov was presented an award for his work protesting human rights violations during the 21-month Chechen war.
The international financier Adnan Khashoggi told The Moscow Times in an phone interview from Paris that he is helping put together a financing package for the plan that would allow the export of oil from the vast Tengiz oil field of western Kazakhstan, as well as from the western Urals, to the Mediterranean via Georgia and Turkey.
This route would be considerably cheaper than exporting Caspian oil via the "northern route" to the Russian Black Sea port of Novorossiisk, favored by the Russian government, the Saudi Arabian financier said.
The project envisioned by Yandarbiyev would involve construction of a 240 kilometer pipeline between Grozny and Tbilisi to connect an existing pipeline from Kazakhstan's Tengiz oilfield with a planned pipeline from Baku to the Georgian Black Sea coast.
The eventual construction of a new pipeline through Turkey, connecting the Baku-Black Sea pipeline with the Turkish Mediterranean port of Ceyhan, would complete the export route.
Proven oil reserves in the Azerbaijani, Kazakh and Turkmen sectors of the Caspian Sea "will make that region the Persian Gulf of Central Asia in the
21st century," said Jachimczyk.
Jachimczyk says that exporting oil directly to the Mediterranean via Ceyhan would allow oil to reach European markets 20 percent more cheaply than if exported through Novorossiisk. The Novorossiisk export route will require large investment to upgrade the port there, as well as the construction of port facilities and new pipelines to carry the oil onward from the Black Sea to the Mediterranean."In the long term it would be better for oil to be exported through Turkey, economically speaking," said Khashoggi. "Maybe now Russia, from a nationalistic point of view, says it wants to keep the oil route in Russia, but in the end they must look at the figures."
"We are trying to convince people to accept that the Turkish pipeline is the most suitable alternative," he continued, adding that he was confident that financing could be found. "If they go through Turkey the financing is there, but if they go in the other direction, it is not." In the case of a Turkish pipeline, "we have already put together a mechanism," he said.
The Chechen ambassador to the European Union, Charles Tchokotchua, has said that he arranged for French pipeline engineers to examine the Chechens' proposed pipeline route, which was a dream of the late Chechen separatist leader, Dzhokhar Dudayev.
A second element of the Chechen government's plan is the creation of a
"Caucasus Common Market," modelled on the European Common Market, said Jachimczyk. This would be a supranational organization open to all states, regions and cities of the Caucasus with the aim of developing and integrating the regional economy.
The Transcaucasus pipeline complex would serve as a foundation for the common market. Khashoggi said that it was good to discuss such ideas, but that it could only happen if there were common projects such as the pipeline to provide a basis for economic cooperation.
Major corporate investors have expressed interest in participating in the Chechen government project, Jachimczyk said. Among them are Japan's largest oil company, Itochu; Mitsubishi of Japan; and Hyundai of South Korea. Japan, with huge energy needs, has shown interest in the development of Caspian oil reserves.
A team of business and financial specialists under the leadership of Jacques Attali, former head of the European Bank for Reconstruction and Development, at the Chechen government's request, has put together a team of financial and business experts to work out guidelines for the legal and financial aspects of Chechen reconstruction, as well as for the Transcaucasus pipeline and the Caucasus Common Market, said Jachimczyk.
A source in Attali's office in Paris confirmed that the team had been assembled to consider methods of financing reconstruction and the Chechen government's ambitious plans, with their initial ideas to be presented in three months' time.
Western, Russian and other oil companies are already considering various plans to enlarge the pipeline network in the Caucasus to deliver the expected bonanza of Caspian oil to world markets. It is unclear how the Chechen government's plans will mesh will other pipeline projects currently under discussion by the multinational oil companies involved in oil projects in Azerbaijan, Kazakhstan and Turkmenistan.
Chechen president Zelimkhan Yandarbiyev, the pipeline project's initiator, saw it as "the source of economic salvation in the Caucasus," said Jachimczyk.
President Yandarbiyev's supporters no doubt hope that his bid for re-election in presidential and parliamentary elections Sunday will be given a boost by the unveiling of these projects.
The ambitious development projects are also undoubtedly a bid to demonstrate Chechnya's ability to take charge of its own economic future.
"Lasting peace demands from us the formation of a strong, self-sufficient state," said a statement of Yandarbiyev's plans for Chechnya's future, that was read out at the press conference in Moscow.
The statement underlined that the Chechen government was already taking steps to win recognition for "our status as an independent state," through the work of its representatives in London, Washington, Tokyo, Paris, The Hague, Istanbul and other capitals.
Jachimczyk said that the Chechen government proposal would compete with other schemes on the basis of its merits. The most cost-effective scheme should win in the in end, he said.
Kovalyov's recognition at the press conference was for his work in publicizing human rights abuses in Chechnya. Though initially awarded the honor more than a year ago, he refused to accept it until there was peace in Chechnya.
Kovalyov however expressed his doubts about the coming election. He said it could not be considered fully democratic, as refugees from Chechnya living far from the republic would be unable to vote. Only those who return to the republic will be able to vote.