U.S. Energy Secretary Bill Richardson was in Kazakstan during the last week of August for a little house cleaning. The press releases said he made the trip to renew some old science and technology agreements and to attend the signing ceremony for Chevron Corp.’s purchase of an additional 5 percent of Tengizchevroil.
But the real purpose underlying his visit was to see what he could do about re-warming U.S.-Kazak relations. Lately, Russia and Iran have been courting Kazak President Nursultan Nazarbayev a little too hard for Washington’s comfort.
There were a couple of specific worries on Richardson’s mind. One was the Caspian Sea’s legal status. It’s raised its ugly head again, with Russia and Iran apparently nearing a common position.
Russian President Vladimir Putin’s Caspian Sea envoy Viktor Kalyuzhny visited Tehran on July 25th, followed immediately afterwards with a trip to Ashgabat to discuss a proposed meeting of Caspian littoral states -- Azerbaijan, Kazakstan, Russia, Turkmenistan, and Iran -- to be held in Astrakhan.
Less than a week later, on August 1st, Iran called for an equal division of Caspian Sea resources, asking for a straight 20 percent cut. This is a turn around for Tehran and, with a couple of compromises here and there, Azerbaijan, Kazakstan, and Turkmenistan are about to face some serious pressure.
Whether Russia and Iran can carry it off -- bully their Caspian neighbors into signing a Caspian Sea agreement -- is yet to be determined. But they are getting close enough to worry Washington.
And, on top of it, Moscow is making noises about taking by force what it cannot take by law. An agreement signed between Gazprom, LUKoil and Yukos to jointly explore new Caspian Sea reserves is what has Washington concerned.
Using the vehicle they created in July, the Caspian Oil Company, the three will begin exploring a 5,150 square-mile area ( about 8,240 skm ) north of LUKoil’s Severny Block. The problem is that part of the block is disputed with Kazakstan, leading Nazarbayev to worry that Moscow intends to use this block to strong arm it on other issues -- like Caspian Sea legal status.
Richardson has no illusions that the U.S. can do anything about a predatory Russia in the Caspian, but he thought it would help for Nazarbayev to have a shoulder to cry on.
Then there was the curious case of Jim Giffen. On June 12th, the U.S. Department of Justice sent a request to Swiss federal authorities to investigate the questionable payment of $56 million into the private accounts of Nazarbayev, Prime Minister Nurlan Balgimbaev, and former Prime Minister Akezhan Kazhegeldin.
The sources of the money were BPAmoco, Exxon Mobil Corp. and Phillips Petroleum Co. Giffen was connected to all of the payments. For the moment, the scandal appears contained, but Nazarbayev knows enough about the U.S. and its quirky justice system that an independent-minded prosecutor might just try to break open this case.
The chances of U.S. prosecutors finding something will go up astronomically if the crusading Swiss prosecutor Daniel Devaud takes a real interest in it. So, Nazarbayev was looking for some reassurance from Richardson that the Giffen scandal will not get out of control.
Unfortunately, the Giffen scandal has already done a good deal of damage -- mainly to U.S. oil interests. Since the scandal broke, the Russians have been quietly whispering that Washington bought off Nazarbayev. And in return, they say, Nazarbayev sold Kazakstan’s natural inheritance for next to nothing.
The fact that Giffen was close to the Clinton administration and has reported contacts with U.S. intelligence has only strengthened Moscow’s campaign. The Russian conclusion, of course, is that if Kazakstan had been doing business with Moscow and Russian companies, this would never have happened.
At the end of the day, Richardson came to Kazakstan for just plain, simple oil. On July 24th, the Offshore Kazakstan International Operating Co. issued its first press statement on the Kashagan discovery, intimating that Kashagan holds reserves beyond anyone’s wildest imagination.
Exxon Mobil described it as “a world-class discovery.” Earlier this year, the company’s chief geologist stated that Kashagan might hold at least 40 billion barrels of oil. In comparison, Kazakstan’s other mega-size field, Tengiz, holds about 24 billion barrels. Kazakstan, naturally more optimistic than anyone, announced that Kashagan will put the country into the number five position of all the world’s oil producers. Richardson wants that oil for the U.S.
Source: OilNavigator.com
