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Prepared by the
Institute for the Analysis of Global Security

November 15, 2004
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Energy Security Current Issue

Baku-Tbilisi-Ceyhan pipeline: not yet finished and already threatened
The long-delayed 1000-mile Baku-Tbilisi-Ceyhan (BTC) pipeline to transport 1 million barrels of oil a day from the Caspian to the Turkish port of Ceyhan is progressing toward completion as early as 2005. But even before the construction is finished, terrorist elements may already be planning attacks on this high quality target. IAGS' Gal Luft discusses the threats.

Terrorism Goes to Sea
New evidence suggests that piracy is becoming a key tactic of terrorist groups. In light of al Qaeda's professed aim of targeting weak links in the global economy, this new nexus is a serious threat: most of the world's oil and gas is shipped through pirate-infested waters. In a recent Foreign Affairs article, IAGS' Gal Luft and Anne Korin analyze the situation and recommend policies to mitigate the risk.

Radical Islam and LNG in Trinidad and Tobago
Trinidad and Tobago alone account for 80% of all U.S. LNG imports. Security analyst Candyce Kelshall warns that Islamist terrorist groups are active on the island and might find LNG shipping an attractive target.

Chinese Quest for Crude Increases Focus on Africa
Leading oil sector analysts have warned of growing conflict between Western and Asian countries as they seek to outbid each other for key hydrocarbon assets in Africa. These forecasts have been largely based on the expectation that China will become the major player in nontraditional oil and gas producing regions on the continent. IAGS Associate Fellow Cyril Widdershoven discusses.

Target: Energy
On September 27, 2004, the Institute for the Analysis of Global Security (IAGS) and the Foundation for the Defense of Democracies (FDD) hosted Target: Energy, a symposium to assess threats to the global energy system and how to address them.

Needed: Three 1-billion-barrel oil banks
The lesson from the recent oil price jump is that the oil market has too little wiggle room to deal with supply disruptions. It's time for consuming nations to think about providing their own liquidity mechanisms.

On the technology front

Biomass-to-Ethanol Progress
The enzyme costs of converting cellulosic biomass into sugars for fuel ethanol production have been reduced approximately twenty-fold with technology developed by the National Renewable Energy Laboratory (NREL) and Denmark based Novozymes, biotech-based leader in enzymes and microorganisms.

EU study: Methanol from biomass - competitive with gasoline
A study of a new patented Swedish technology concluded that the alchohol fuel methanol can be produced from biomass via black liquor gasification at a cost competitive with that of gasoline and diesel.

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Back Issues

A strategic approach to pipeline security

The most important infrastructure project in the Caucasus, Baku-Tbilisi-Ceyhan (BTC) oil pipeline, is about to be completed. Next year, the 1,000 mile long $3 billion pipeline, passing through the territories of Azerbaijan, Georgia and Turkey, will be able to export up to 1 million barrels a day of crude oil from the Azeri-Chirag-Guneshli offshore oil fields in the Caspian Sea (reserves of 4.3 billion barrels) to the Western markets. Along with the currently existing Baku-Supsa (Georgian port on the Black sea) oil pipeline, BTC will be a valuable tool for reducing Western dependence on Middle Eastern energy and will serve as a geopolitical binder of the Caucasus to the Europe.

Aside from BTC, a consortium of Western energy companies has already started the construction of the South Caucasus Gas Pipeline, which will enable the export of natural gas from the large gas field of “Shah Deniz” in the Caspian sea through Azerbaijan and Georgia to the Turkish city of Erzurum. It will be $1 billion worth, 425 mile long pipeline and will have the capacity to export up to 7 billion cubic meters of gas (if upgraded even double that volume).

Given the unstable nature of the Caucasus, much has been said about the threats to these pipelines. Indeed, most of the statements have been valid. Located in a troublesome part of the world, Azerbaijan and Georgia face major threats of terror on a daily basis. Some of these threats are related to international terrorism (both Azerbaijan and Georgia are members of the US-led war on terror). International terror groups such as PKK and Al-Qaida have threatened to destroy oil pipelines, should their political demands not be met. Additionally, the unresolved conflicts in Nagorno-Karabakh, Chechnya, South Osetia and Abkhazia as well as the presence of criminal gangs in the Northern Caucasus increase the risk of attacks on the pipelines. Although both pipelines will be buried underground, recent history shows that this does not secure pipelines from petty thieves and minor explosions.

Thus far the host countries of the pipelines along with the Western energy companies have taken responsibility for the protection of the critical energy infrastructure. Yet, it is clear that by sole attention to the military aspects of the pipeline protection it will be impossible to guarantee their full protection. The host countries can upgrade their pipeline protection units and patrol teams and purchase the most advanced technology in the world, yet experts argue that it is also vital that the communities along which the pipelines will pass be involved in the protection process.

BTC and South Caucasus Gas Pipeline pass through rural communities where thousands of people have been living for centuries. Shepherds move their herds and children pass the pipeline on the way to their schools. Farmers irrigate the land and villagers hurry to their relatives across the village. And all of these happen on a daily basis. The majority of residents of the communities along the pipelines are excited about the projects. Some of them have been employed directly or indirectly in the construction process. Others have big hopes and expectations that the pipelines will bring much desired social and economic improvements to their empowered areas. In some villages, the construction of the pipelines has already brought in some social investment as well, such as the repair of the local schools and hospitals, installation of the water and sewerage lines as well as mobilization and creation of community groups and associations. It is imperative that the communities see the economic and social benefit of the pipelines and that these benefits trickle down to ordinary households. This would significantly reduce the risk of social unrest, a major threat to the pipelines.

More than 70 years of Soviet rule and centralized economy have created a mentality in which ordinary people do not feel responsibility for public property. Absence of initiative and mobilization skills at the grassroots level discourages people from joining their resources to help protect the pipeline. This, in turn, creates perhaps the most dangerous threat to the pipelines- lack of a feeling of ownership among the people.

In many ways, BTC and South Caucasus Gas Pipeline will become a test for a new method of protection of critical energy infrastructure. Traditional methods of utilizing high-tech hardware and military units to safeguard the pipelines often do not yield desired results. It is the involvement of the communities into the decision making and protection process that can ensure the long-term safety of the pipelines. Feeling ownership over the pipelines and being sure about the positive impact to their communities can encourage people to take an active role in the protection of the pipeline and serve as a support resource to the government’s para-military protection units. The resources of ordinary people should not be underestimated in this case.

Fariz Ismailzade is a Baku based analyst focusing on Caucasus politics and economics.