John BONJOVI (Jr.)
ANTWERP-ALMATY
(Special for Energy of Kazakhstan)
We are continueing to publish short extracts from February issue of �Kazakstan energy� magazine intended for business people. In its next issues THE GLOBE will acquaintance you with other articles from the new issue of �Kazakstan energy�. We as well will introduce to you the world�s great businessmen, about whom the world�s bestseller �Greatest business stories of all time� by Forbes which was published recently in Russian.
Oil has always been a political matter. Moguls of the industry compensated for their political (in countries of strange regimes) and geological (exploration and so on) risks by low extraction expenses and selling oil at high price.
At first sight, it was the full-scale opposition of the Arab countries and Israel with the West that accounted for the energy crisis in 70s. The hand of Moscow as a global factor of the then bipolar world was one of the two hands pulling strings of a puppet- like universe that jerked like a person writhing in pains. One hand was unaware of the actions of the other one and in most cases undertook counter measures.
The situation changed dramatically when Communism and the Iron Curtain fell and the hand of Moscow withered.
By force of tradition, oil remained a political matter after the collapse of Communism. The price per oil barrel was influenced by the world�s expectations and hopes for the future. In summer 1997, the world felt ulcer pains of the Asian crisis through the fall of oil prices. By the end of 1997, they dropped from $22 to $10-12 per barrel. During all 1998, prices were very low, falling occasionally below the $10 level. The oil prices behaved like shares of an unsuccessful company.
Politicians, economists, analysts and journalists all over the world ask the same burning question: �How long will these low prices last? A year? Two? More?� For some countries including, to our regret, Kazakhstan it is a matter of life and death.
Oil prices may stay low forever. Oil will never be a simple product whose price is made up of expenses, rate of surplus value and taxes. It is the basis of power engineering, the basis of economy. The expectations in markets will always predetermine oil prices. But! They will no longer be determined by the global opposition of the two worlds Moscow and Washington.
The current low price of oil is the result of the world�s long relaxation after the Cold War. It means the move of the global economy to a more predictable world. The Asian crisis may be considered as a local event which has the same tendency to lower prices for mineral resources.
The Arab countries may change the tactics of survival. Instead of maintaining the output rate to peg oil prices they may choose to push competitors away by lowering prices and vigorously expanding their market share. It will dope up the world to think of new ideas of development (See Energy, October 1997).
A long-term oil price fall may turn out a complete crisis of the idea of living on oil for Kazakhstan. The exploration of many Kazakhstan�s oil fields, especially on Buzachi peninsula, was a matter of politics in Soviet times. These fields, containing heavy oil of rather low quality, are difficult to explore. They were competitive in former times because they were rather developed and the state of the market was favorable. At present the extraction of Buzachi oil is more a matter of politics than of business. To stop the development of those oil fields means losing them forever.
And most important, Kazakhstan risks to lose the opportunity to enter global network of oil business. The structure of the oil market will eventually become two-scaled. The global scale will be determined by the consumption of oil from the Gulf, local extraction and consumption will provide the rest of the market. Azerbajan delivers oil to Turkey, Russia provides for its own needs and sells some oil to Europe and so on. One can not expect any development and radical restructuring of the market during the next hundred years. Nobody would lay a pipeline from the Great Steppe to the West, East, South or northwest. The Great steppe will remain just a steppe.
Such development of events is quite possible.
With the fall of the Iron Curtain, new people with new mentality entered the Western well-established market. This is an interesting phenomenon we are looking into below.
(to be continued)
BAKU, March 17 (AFP)
Construction of a major US-backed oil pipeline to carry Caspian crude to western markets could be delayed for years, a top foreign oil official said Wednesday.
David Woodward, president of Azerbaijan�s flagship international oil consortium, said that a main export pipeline (MEP) may not be needed until 2005 or beyond, when the consortium begins its second stage of production and other oil fields in the Caspian could possibly come on-line.
�I think that the original projections of production from Azerbaijan and the timing of a MEP were unrealistic,� said Woodward, who heads the 10-member Azerbaijan International Operating Company (AIOC).
�I think we will see a slower pace of production build up than was previously envisaged,� he added. �My personal view is that an MEP is unlikely to be operational by 2003.�
Woodward said that the future of the project depended on a number of variables, such as the discovery of further reserves in the Caspian and commitments from Kazakhstan and Turkmenistan to transport oil across Azerbaijan.
According to Woodward, the MEP will need 50 percent additional volumes, beyond the AIOC�s top production of 4.5 to five billion barrels per year, in order to convince investors that the project is viable.
Three options for a major pipeline are currently being considered: to Russia�s Black Sea port of Novorossiisk, Georgia�s Black Sea port of Supsa, or Ceyhan on the Turkish Mediterranean.
The US government is pushing hard for the more expensive pipeline through Georgia and Turkey, hoping the project will help integrate the region and avoid the wildcard option of a route through Iran to the south.
But the timetable for a final decision has been slipping recently, as questions have arisen over the project�s potentially high cost while world oil prices remain in the doldrums.
by Marina Lapenkova
MOSCOW, March 17
(AFP)
The Russian upper house of parliament Wednesday overwhelmingly backed the top law officer in his crusade against high-level corruption, handing Boris Yeltsin a slap in the face a month before full-blown impeachment hearings.
But only hours after the vote, in what could be seen as an attempt to discredit Attorney-General Yury Skuratov, television in neighbouring Georgia showed film of Skuratov apparently having sex with two women.
Governors and regional chiefs in the Federation Council voted 143-6 to reject the dismissal of Skuratov, the 46-year-old attorney-general who had �resigned� last month allegedly on health grounds.
The refusal by the normally docile Russian upper chamber to ratify Yeltsin�s February 2 decision was seen as a surprising demonstration of hostility to the ailing Russian president just a month ahead of a impeachment hearings against him set to start April 15.
The Kremlin shot back within hours, issuing a rare joint statement by Yeltsin and Prime Minister Yevgeny Primakov criticising the vote and questioning Skuratov�s fitness to stay in his job.
�While fully supporting the upper chamber of parliament�s fight against crime and corruption, the president and prime minister are of the same opinion, that unscrupulousness and intrigues are incompatible with the high office of the attorney-general,� the Kremlin communique said.
�The fight against corruption must be led only by morally unsullied people,� the statement added in a veiled reference to rumours about Skuratov�s private life.
Only hours after the senators had voted, a private television station in Georgia, the now-independent Caucasian former Soviet republic, transmitted film showing Skuratov in bed with two women.
The film, taken by a camera hidden in the ceiling of the apartment, appeared to confirm Russian media reports of a video tape containing compromising details of Skuratov�s private life.
In a 20-minute speech to the Federation Council, Skuratov said his enemies had even �used events in my private life which they gained by illegal methods.� �That is blackmail and the public prosecutor�s office knows how to respond,� he warned.
Wednesday�s ballot was the latest chapter in a long-running saga, extraordinary even by Russian standards, of Kremlin intrigue, high-level corruption, blackmail and alleged sexual misconduct.
The official said his probe into the activities of the Central Bank and the business interests of Russia�s so-called �oligarchs� had made him many enemies who wanted him removed from office. �Unfortunately certain forces drove a wedge between me and the president,� Skuratov said. �These were people who created an atmosphere and gave the president information which discredited me.
�These were the oligarchs,� he said. Skuratov�s dismissal coincided with a string of probes launched by prosecutors into companies linked to business tycoon Boris Berezovsky.
Appealing for �political support� from senators, Skuratov told how he had felt, �almost physically, that the actions of the state attorney�s office stuck in the throat of certain forces, above all when we started to investigate corruption in the corridors of power, as well as abuses within the CBR.�
This was a reference to his bitter battle with Russia�s Central Bank which he accused of pilfering more than one billion dollars during the country�s financial meltdown last year.
Skuratov, appointed attorney-general in October 1995, also waged war on captains of industry, ex-ministers and deputies in the lower house State Duma, by ordering probes into supposedly rigged privatisations.
Andrei Piontkovsky, head of Moscow�s Centre for Strategic Studies, said the vote by the senators in the upper house had dealt a serious blow to Yeltsin in backing Skuratov, who targeted the Kremlin with his revelations.
TASHKENT
March 16
(AFP)
Turkish President Suleyman Demirel and his Uzbek counterpart Islam Karimov attended the opening of the SamKocAuto joint-venture in Samarkand on Tuesday highlighting trade relations between their countries.
The 64-million-dollar plant will produce 5,000 minibuses and small trucks per year in Uzbekistan�s second-largest city, a former Silk Road trading center.
The factory�s opening �confirms one more time that economic cooperation between our countries is at a high level,� Karimov said.
The Uzbek president added that negotiations are being conducted between SamKocAuto�s Turkish partner Koc Holding and Uzbekistan to open a spare-parts factory in the former Soviet republic.
In addition, the Turkish firm Arcelik is a partner in a 100-million-dollar joint-venture in Samarkand set to begin producing refrigerators and other household appliances, Karimov said.
For the last seven years, Turkey, Uzbekistan�s largest foreign investor, has invested one billion dollars in the Central Asian country of 24 million people, official statistics showed.
Trade volume between the two countries was 275 million dollars in 1998.
During Demirel�s two-day visit, the two presidents also agreed to begin negotiations on Uzbekistan�s use of ports and depots in several Turkish cities, located in economic free zones, including Istanbul, Karimov said.
Demirel was expected to return to Ankara Tuesday after visiting Bukhara, another Silk Road city in western Uzbekistan.
All Over the Globe is published by IPA House.
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