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Black Gold: The Race to Develop Caspian Sea Oil May Steam Right Over the Environment

E/The Environmental Magazine November-December 1999By Jim MotavalliPacific Environment and Resources Center

The premise of Tom Clancy's "Force 21," a post-cold war computer game, is that the planet is on the verge of a Third World War over the Caspian Sea oil fields. Why such high-stakes maneuvering over this salty inland ocean, the world's largest land-locked body of water?

According to the Energy Information Service, the six-nation Caspian Sea region harbors vast natural gas reserves and at least 100 billion barrels of oil, 10 times that of Alaska and second in supply only to the Middle East. The 4,000-square-mile Caspian is a lifeline to oil companies scrambling to find new sources in an unstable world. The international race to develop those resources, though, is an increasing threat to the region's fragile environment. With caviar-producing sturgeon as one bellwether (legal catches declined 78 percent between 1990 and 1994, reports TRAFFIC) , the effects are already being felt.

The presence of oil around and under the California-sized Caspian is hardly news. Marco Polo noted the black, tarry stuff that was "good to burn" in the 13th century. With Robert Nobel, brother of the Prize progenitor, and John D. Rockefeller in the lead, Europeans first staked claims in the region more than 100 years ago. By the turn of the century, more oil was coming out of Baku, on the Caspian's shores in what is now independent Azerbaijan, than anywhere else in the world. But the oil rush was largely over by the 1920s, as onshore resources were pumped dry.

It's the vast offshore oil that keeps the hotels humming with international guests in Azerbaijan, Kazakhstan and Turkmenistan, formerly sleepy Soviet republics. Certainly, these newly independent, but economically strapped, countries are encouraging oil development. The general state of human health in the region is poor, says Martha Brill Olcott, a Caspian expert and Colgate professor in residence at the Carnegie Endowment think tank. In testimony before the Senate Foreign Relations Committee last year, she blamed the deterioration on contaminated drinking water and higher food prices since the Soviet collapse, as well as virulent epidemics of typhus, cholera, hepatitis, polio and tuberculosis. And, ironically, these oil-rich states have suffered from periodic energy blackouts.

But sudden oil wealth may not provide a key to the region's problems. As Erjan Kurbanov and Barri Sanders noted in their 1998 report Caspian Sea Oil Riches: A Mixed Blessing, "Overall, the discovery of oil rarely means immediate or long-term prosperity for the people who live in an oil-producing country." Despite billions in profits from Nigerian oil, the authors report, the majority of Nigerians remain desperately poor. Iran has had a similar experience.

Kazakhstan, caught in a worsening economic crisis, may feel no "long-term prosperity" at all, as it has been forced to put nearly half of its share of the nine-billion-barrel Tengiz oilfield on the international marketplace with an asking price of $1.6 billion. Nearly half that amount is needed to close the 1999 budget gap. Chevron, Mobil and the Russian Lukoil company are currently drilling in the field. University of San Francisco economist Harmut Fischer notes that the high cost of bringing Caspian oil to market via pipeline--$10 a barrel, versus just $4 for Saudi oil--leaves little margin of profit for Central Asian governments.

The offshore oil drillers are beginning work in an environment that's already severely challenged by pollution, rising water levels and overfishing. "The Caspian is in a critical state and its treasures [including the sturgeon and the threatened Caspian seal] are in danger," reported the Cousteau Society in 1998, following a three-month investigation. The World Bank has estimated that a million cubic meters of untreated industrial wastewater is discharged directly into the Caspian, much of it the result of oil operations and mining. Mercury and hydrocarbon levels are high in sea sediments. The Iranian caviar industry declined from $40 million in 1997 to $34 million in 1998, reports Reuters, and sturgeon poaching is rampant. Peter Sinnott, coordinator of the Columbia Caspian Project, says that corruption is so endemic, and economic conditions so poor, that environmental controls are unlikely to take hold soon.

During the Soviet era, large central planning projects damaged the Sea, which has a natural cycle of rising and subsiding water levels. After a decline was noted in the 1960s, the Soviets built a large dam across a critical strait, resulting in the drying up of what had been a stable salt lagoon. According to Richard M. Levine of the U.S. Geological Survey, the dam created salt-laden dust storms that turned surrounding towns and villages into ghost towns. Desertification and other environmental damage accelerated until the dam was finally demolished by Turkmenistan in 1992. Today, the waters are rising, threatening to inundate shoreline towns and industrial areas.

The Caspian is ecologically rich, with 120 species of fish (including 90 percent of the world's sturgeon) , as well as 33 mammals and 256 birds (including the endangered white-tailed eagle) . Ducks, swans and flamingos in the millions winter on the Caspian.

Since the Caspian is land-locked, any oil produced there has to be transported via pipeline, always an environmentally risky proposition. The Soviets pumped oil from Baku on the western shore across Russia to the port of Novorossisk on the Black Sea, which forces shipping to pass through the narrow Bosphorous strait near Istanbul, Turkey. The U.S., with Turkish backing, prefers a more southerly route across Armenia to the Turkish port of Ceyhan on the Mediterranean. The NATO allies are dead-set against a route through Iran, for obvious reasons.

Rory Cox of the San Francisco-based Pacific Environment and Resources Center points out that most of the routes pass through territory that is not only unstable politically and ethnically, but geologically as well. "The Caspian is seismically active," he says. "In fact, there's a fault line right through it." He adds that Russia's existing pipeline passes through the breakaway state of Chechniya, where illegal taps have caused major leakage problems.

S. Frederick Starr, chairman of the Central Asia/Caucuses Institute at Johns Hopkins University, notes that some of the environmental concern now expressed in Russia about various pipeline routes is disingenuous, considering the Soviets' own role in polluting the Sea. "To put it bluntly," he says, "the Volga River [which flows into the Caspian] is a sewer, and nothing's been done to clean it up since the end of the Soviet era."

Considering that many of the Soviet-era oil wells on the Caspian remain in place, rusting and uncapped, Starr concludes that the involvement of the more up-to-date Exxon and British Petroleum might actually lead to an environmental improvement. But it was Exxon, of course, that dumped 11 million gallons of crude oil into Alaska's Prince William Sound in 1989 and, a year later, pumped 567,000 gallons from a ruptured pipeline into the Arthur Kill River off Staten Island. Against that background, optimism is hard to muster.