Week 7: May 13. THE GREAT GAME: AFRICA AND CENTRAL ASIA.

Comparative assessment of U.S./Western, Chinese, and Russian pursuit of natural resources in Africa and Central Asia.

Caspian

Background

• Iran and Russia has extended border on the Caspian, and the former Soviet countries surround it
• Baku was the dominant oil producer in 1890 and still produces today
• Major fields in the north Caspian are Kashagan, Karachagnak, and Tengiz
• The Caspian was a dream that never came true. It wasn’t developed during the Soviet reign because they didn’t have much money and much technical capacity.
• It was thought at one point to contain 200 billion barrels, and now they are talking about from 20 to 40 billion barrels.
• Azerbaijan has a large oil field as does Grozny in Chechnya
• Nazis knew about the oil in the Caspian and part of the strategic plan was to take over Baku and the Caspian oil fields.
• In 1991 when the Soviet Union broke up, the Americans (Chevron) established an agreement in Tengiz on the eastern side of the Caspian with the Kazhastan government and created the joint company KazMuniaGaz.
• Other companies started going into this region as well
• Azerbaijan and Kazhastan have both oil and gas. Tukmenistan and Ubekistan have only gas.
• After we invaded Iraq, the U.S. had a lot of trouble in the Caspian. Russia and China started to aggressively go into the Caspian.
• Inda, Japan, South Korea, Turkey, other European countries are all involved in the Caspian.

US Pipeline

• The problem with gas is that it needs to be transported by pipeline
• For U.S. interests it needs to avoid both Russia, Iran, and China. Afghanistan is dangerous and also a very rugged country.
• Pipeline needs to be underground
• Eventually pipeline went through Azerbaijan through Turkey and into Georgia. Went through Baku-Tablis-Cayhan
• Construction started in late 90s under Clinton administration and pipeline has been operational for about 18 months

Russian

• Russia has a very long shoreline on the Caspian
• They had some good fortune and struck a couple of big fields in the north.
• The U.S. tried to go into this area but Putin prevented it
• Putin was in the process of putting the natural resource back into the control of the state
• Original agreement regarding oil development was from 1921 between the USSR and Iran
• In 1991 agreement reached where each of surrounding country had their own development but offshore was developed jointly.
• Then it changed so each country had control over all resources extending out to a middle point separating the countries. This gave Russia control over all the northern oilfields.
• Russia was able to purchase the Turkemenstan gas company in 2006
• In 2007 they established a plan for pipeline from the Karachagnak field
• They are building another pipeline

China

• Chinas move was sudden: they had the advantage because the Kazahstan border is the only country that separates them from the Caspain.
• The won them over Kazhastan by wineing-and-dining them and including them in the Shanghai five: China, Russia, Kurdestan, Tajekastan, Kazahstan.
• Pipeline should be completed by next year
• Russia is partnering with China through the Shangahai 5, we are partnering with them through various trade agreements, but neither of us trust China much
• This is causing a 3-way competition, same as we already had in the 70s, 80s and 90s, but without the ideology.

Summary

• The Caspian countries are super corrupt due to the rentier state effects
• There are growing numbers of dissidents and that is likely to lead to extremism, in particular Muslim extremists
• The governments don’t have a lot of legitimacy
• So when they run out of gas and petroleum in the next 5 to 40 years, things will likely fall apart
• If the superpowers back different regimes, this could lead to the superpowers fighting

Africa

Background

• Barry’s short-lived hope was that Africa would be strategic to providing oil so we could get out of the Middle East.
• Three actors in Africa:
  • European
  • U.S
  • China
• Russia not a player in Africa yet
• Why do we go to Africa for oil?
  • The oil is very good quality
  • They consume very little themselves
  • There is a lot of oil there

China

• Have real needs for oil and are working hard in Africa
• China is to Africa as he U.S. is to the Caspian Basin: Atlantic is an American lake, so importing oil to the US from Africa is safe, Gas from Kahahstan is easy for China to get too
• Problem with China shipping oil is that it needs to go through the Straights of Malloco
• China has a long relation with Africa supporting some of the separation movements, so they have a diplomatic background that the U.S. doesn’t
• China doesn’t have the European colonialism and the American imperialism history
• China is overlooking many human rights issues and has shipped arms, but doesn’t have a military presence there
• They are not aiming to go to war, but just get more oil so there people can drive cars
• China is in the early days of working in Africa and is learning how to operate there

Nigeria

• Oil discovered in the mid to late 50s, wasn’t seriously extracted until the lat 60s, but didn’t make any impact on the country until 90s because of the civil war.
• The civil war is still going on and has spread over the delta, and the oil companies are involved
• Nigeria is the most established oil area
• The people in the delta, which used to be a beautiful area, have suffered a lot because of the pollution
• MEND is their guerrilla organization and are trying to force both the federal and state Nigerian government, as well as the oil companies, Shell, Chevron and Exxon, to clean up their act
• This has changed the oil companies mode of operation to operate offshore
• Oil companies suffer because Nigerian labor is unskilled and can’t be trusted, so they bring in foreign, skilled labor and do everything offshore
• MEND has also disrupted the FOSPs operating offshore
• MEND is also concerned about unemployment
• There is a lot of corruption in Nigeria

North Africa

• Major oil producers are Algeria and Libya
• Algeria has been historically close to France but are moving away
• In Sudan, Chevron found a lot of oil and was trying to build a pipeline but then political upheaval caused them to leave.
• Chinese have now gone in the Sudan because no-one else was there.
• This was a point of contention because the U.S. was trying to crack down on Sudan because of Al Qaeda concerns and others
• Sudan is producing 1 mbpd but Angola is producing 2.5 mpbpd.