### Summary of Findings

Azerbajian, Kazakhstan, and Turkmenistan are all looking to assert their political independence and economic growth through oil and gas production. The AIOC, representing in part Azeri interests, at present is exporting relatively small quantities of oil through Russia to Novorossiysk, and is constructing a low-capacity line to Supsa for early oil, which will give it an alternative outlet independent of Russia (although Russia would have some influence and stake even in a Supsa line).

The CPC, dedicated to transporting oil from the Tengiz field in Kazakhstan, is committed to a pipeline to Novorossiysk for early oil; and this line could be expanded to carry late oil eventually as well. For the immediate future, Kazakhstan appears to have little choice but to remain heavily dependent on Russia for transport of its oil. Nevertheless, to lessen this dependence to some degree, Kazakhstan would like another option for late oil. The two most discussed are a trans-Caspian pipeline to Baku, and from there to Ceyhan, or routes to or through Iran, including the possibility of swaps with Iran.

Turkmenistan, not as closely tied to Russia as is Kazakhstan, is looking for pipeline routes to export its gas that do not depend upon Russia at all. Routes to the east, either to China or to Pakistan and India through Afghanistan, do not look politically or economically feasible at present. This leaves two main alternatives: a trans-Caspian line to Baku that would then extend into Turkey; or a pipeline into Iran and/or through Iran to Turkey.

Thus with respect to early oil, the decisions appear settled: AIOC oil to Supsa, and CPC oil to Novorossiysk. The questions still to be settled are a Main Export Pipeline (MEP) for late oil, and a way for Turkmentistan to get its gas to market. On the MEP, The U.S. and Turkey, for a variety of reasons, favor a Baku-Ceyhan line: the line avoids both Russia and Iran; and it would deflect oil from going to Black Sea ports and thence through the Bosporus Straits which much concern Turkey.

However, the Baku-Ceyhan route does not appear economically attractive at present. It is very expensive compared to other practical routes; it will be particularly expensive unless Kazakh oil could be combined with Azeri oil at Baku, which is not a likely prospect; and it is opposed by Russia which could cause trouble and raise obstacles to completion of a Ceyhan pipeline. Also, it appears that a bypass route through Thrace, Turkey to avoid the Bosporus should that be necessary would still be less expensive than the Baku-Ceyhan alternative.

In addition, decisions on a Baku-Ceyhan line, as well as any other new major pipeline, including a trans-Caspian gas and/or oil pipeline, must be made in the shadow of U.S. sanctions policies toward Iran. If U.S. sanctions are substantially eased over the next few years, oil and gas pipelines to and through Iran including various swap arrangements might become more attractive than at present, compared to other routes. On the other hand, a relaxation of the "907" constraints imposed on direct American aid to Azerbajian, which most oil companies strongly favor and which increasingly looks inevitable, would allow the U.S. to play a more active role in support of all western pipeline routes from Baku (whether to Ceyhan or to Supsa).

With respect to Turkmen gas, it is clear that Turkmentistan will support virtually any practical route that will allow it to get its gas to market. For the moment, it seems reasonable for them to hold open both near-term options: a trans-Caspian route into Turkey, and an Iranian route. However, the danger that Iran could usurp the Western gas market is something that must be considered.

Whatever pipeline routes are actually developed, it will be important for the U.S. and other western states to put pressure on the Caspian energy-producing countries, both directly and indirectly through the international oil companies active in the region, to use their oil monies wisely and humanely to strengthen social and economic infrastructures. Without such pressure, there is real danger that the oil monies could actually make the countries worse off than they are now, making the regimes of Azerbajian, Kazakhstan, and Turkmenistan still more undemocratic and repressive and further consolidating wealth in a small sector to the detriment of the average citizen in these countries.

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