The diplomatic and economic balance of power in Caspian oil politics is likely to shift towards Russia in the aftermath of the U.S. suicide hijacking attacks, analysts said yesterday.
The global oil industry is still testing the waters after the September 11 attacks as its players gather for the Kazakhstan International Oil and Gas Exhibition in Almaty from October 2-5, one of the region's top conferences.
But it looks like Russia will now be able to dominate export routes for the huge oil and gas reserves in the sea, estimated at equivalent to those in the North Sea, while strengthening its pull on world oil markets.
"If Russia is cooperating with America and the other allies against the terrorists then clearly they're going to have some favours to ask," said James Henderson, oil and gas analyst at Renaissance Capital in Moscow.
"The balance must now be that it is more rather than less likely that pipelines will go through Russia," he added.
President Vladimir Putin this week offered Washington broad anti-terrorism support, including opening Russian airspace to relief missions, taking part in search-and-rescue operations and armimg forces opposed to the hard-line Islamic Taliban group that controls most of Afghanistan.
The U.S. has named Saudi-born dissident Osama bin Laden and his network of Islamic militants as the prime suspects in the attacks and says Afghanistan shelters him.
Russia, already one of the world's top three oil exporters, has already scored points in the pipeline game as the only completely new oil line from the Caspian to international markets to be built since the Soviet Union broke up runs from Kazakhstan's huge Tengiz field to Russia's Novorossiisk port.
Iran had been bidding to see oil move across its territory and a $3 billion U.S.-backed pipe from Azeri capital Baku to the Turkish port of Ceyhan, bypassing Russia altogether, had been gaining support.
"I don't believe the Baku-Ceyhan pipeline will happen, I think it'll be discreetly sidelined and we'll get new proposals being made routed through northern Russia because they're more secure," said Troika Dialog head of research Chris Weafer.
Henderson at Renaissance said a potential pipe through Iran, a pariah for Washington, now looked even more dubious than it did before the attacks.
Russia, along with Kazakhstan, which has the lion's share of the Caspian's vast resources, will also be able to underline its strengths as a secure supplier of oil to world markets.
This could be a contrast to some Middle East Opec states, potentially in the eye of the storm if the U.S. launches military action the suicide attacks. Putin this week said Russia was ready to supply more oil if regional conflicts broke out.
For now, Russia can also act independently as it is outside Opec's ranks. Opec has repeatedly made it clear it would like Russia to join, but that now looks more unlikely than ever.
"Russia has constantly flirted with Opec but has never signed up to join or expressed any real interest in joining," said Julian Lee, senior energy correspondent at London-based thinktank the Center for Global Energy Studies.
He said Russia had never shown any concrete signs of cutting back output or exports in support of Opec's policies, aimed at keeping oil prices within a $22 to $28 a barrel price corridor.
"Russia's in a much better position than Opec and it is not in their interests to join at this point," said Weafer.
Reuters
