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LONDON, Nov. 8 (UPI) - After six years of delicate and costly negotiations, the United States is preparing to give its blessing to a $2.5 billion project that will bring Azerbaijani crude oil to a Turkish Mediterranean coast via Georgia, bypassing alternative routes through Russia and Iran.
Few international industrial projects can match the Caspian pipeline project in its complexity, an aptly Byzantine mix of behind-the-scenes diplomacy and fierce business rivalry.
Oil from Azerbaijan's offshore fields in the Caspian is not expected to flow until 2004, but the project has suffered and enjoyed - depending on one's point of view - the attentions of multinationals and governments alike since the collapse of the Soviet Union.
The fall of the communist empire freed Azerbaijan and its Caucasian and Central Asian neighbors, firing their ambition to join the ranks of rich oil producers further south in the Gulf and the Arabian Peninsula.
The region sits on vast untapped resources, but Azerbaijan's oil deposits are rated by experts to be some of the most lucrative, followed by Turkmenistan's gas reserves.
Added to the mathematical calculations of hard-nosed economic strategists are the western oil operators' fascination with the mystique of the place, once the setting for 'The Great Game' between Czarist Russia and Imperial Britain.
A western oil consortium drilling for oil in and around the Caspian Sea is led by BP Amoco Plc, the world's third-biggest publicly traded oil company and one with extensive experience of the region.
When western leaders gather in Istanbul for the Organization for Security and Cooperation in Europe conference beginning Nov. 17, they are likely to witness the signing of a series of agreements that will bring the pipeline project nearer realization.
The United States, although not a direct party to the project, is likely to be a special signatory, sending a clear signal to all sides that the U.S. administration is keen to see it through and have Azeri oil flow safely into Ceyhan, the Turkish oil terminal on the Mediterranean Sea.
Of all parties in the arrangement, Turkey is the country U.S. strategists feel most comfortable with, as it is the easternmost member of the North Atlantic Treaty Organization and also is more equipped than either Azerbaijan or Georgia to respond to military or economic contingencies.
The 1,196 miles (1,994 km) of the pipeline will traverse some of the most unstable territory from the Caucasus along eastern Turkey to its southern coast, near the Syrian border.
Turkish security authorities already are well versed in defending oil pipelines. An existing pipeline from Iraq to Ceyhan was frequently under attack from Kurdish guerrillas with like-minded allies in both Iraq and Iran.
Exactly how much oil the region holds is yet to be proven, with the U.S. State Department estimates of 200 billion barrels contrasting with conservative industry estimates putting the entire Caspian Sea oil deposits at about a seventh of that estimate.
Either way it's a huge strategic resource - not a substitute for OPEC oil from the Middle East, but a potential backup in times of crisis.
The pipeline's international importance and its fragility were chief reasons behind the U.S.-led opposition to alternative routes through Iran, which would have been shorter and terminated on the Persian Gulf coast, or through Russia. Although Iran's "moderate" President Mohammed Khatami has opened possibilities for an Iran-American reconciliation, one is not foreseen to materialize soon.
The pipeline is seen by both Turkish and western strategists as a way of loosening Russia's hold on the Caucasus, increasingly under international scrutiny with Moscow's controversial conduct in Chechnya. Turkey and Turkish-speaking Azerbaijan see the project as a way of cementing historical, racial and economic ties.
Added attractions are Turkey's offer to absorb Turkey-based costs if they overrun and Turkey's experience with large-scale construction and engineering projects in the region.
Despite these, the project was in the doldrums until BP Amoco last month withdrew its objections and announced it was backing the route for the pipeline. The company previously had opposed the plan, voicing fears the volume of exports would not justify costs that could easily exceed estimates.
A BP Amoco spokesman told United Press International the company now saw the pipeline as strategically important and would support its financing through governments, lenders and multilateral institutions.
"We have come to the conclusion that the Baku-Ceyhan pipeline is a strategic transportation route that should be built," said the spokesman. "Our most important job is to convince governments and the international financial institutions who can make this project work to step forward."
Industry sources told UPI the project still can face problems if financing fails to come through. They warned that the costs of building the pipeline would escalate rapidly if the project dragged on due to poor funding or coordination among all parties involved.
So far, private and public sector negotiations have featured representatives trading responsibility for cost overruns, among other multilateral issues. The Istanbul talks are expected to resolve these issues. Various government and business representatives already have held talks in Ankara, Baku and London.
The BP Amoco consortium, named Azerbaijani International Operating Co. (AIOC), includes Exxon Corp. and Unocal Corp. of the U.S., Statoil A.S. of Norway and OAO Lukoil Holding of Russia. BP Amoco holds more than 34 percent of AIOC.
Both the companies and governments have been encouraged by the doubling of oil prices since February, which they hope will be sustained near current levels, about $23 a barrel, through the new year.