Inspirational Account: Securing the Baku-Tbilisi-Ceyhan Oil Pipeline

Inspirational Account: Securing the Baku-Tbilisi-Ceyhan Oil Pipeline

A Spirited Diplomat's Tale: Navigating Energy Politics in Central Asia

Joe Presel was no ordinary diplomat, and his influence didn't go unnoticed. As the US envoy in Uzbekistan, Joe's flair for mingling with the high and low society, combined with his street-smart mind, left a lasting impact on his peers.

In the winter of 2001, towards the end of John's tenure in Turkmenistan, Joe was visiting him. Beth Jones, the State Department's Caspian energy envoy, sent an email: "Have I got a job for you!" She needed a replacement, and after some hesitation, Joe managed to nudge John into accepting the position. Joe, ever the crafter of grand adventures, played a significant role in propelling John towards new horizons.

Oil, Gas, and Daring Pipelines

In the 1990s, Kazakhstan, Azerbaijan, and Turkmenistan boasted vast oil and gas reserves, waiting to be tapped by eager investors. The challenge lay in getting these resources to market,as Russia exercised tight control over existing pipelines. To counter Russian influence, the Clinton administration appointed a special envoy for Caspian Basin energy diplomacy, a role John found himself maneuvering.

The Pipes in Question

By the time John took on the role, some pipelines were already underway. The Caspian Pipeline Consortium (CPC) line, linking western Kazakhstan to Russia's Novorossiisk port, started operations that year, despite running through Russian territory. Meanwhile, Turkmenistan's gas pipelines, TAP and TCP, faced significant hurdles - notably, the Taliban's rule in Afghanistan and the duplicity of the Turkmenistan government.

With TAP and TCP out of reach, the focus shifted to the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, designed to carry 1 million barrels of Azerbaijani crude oil daily to Turkey's Ceyhan port. The success of BTC would pave the way for a parallel South Caucasus gas pipeline (SCP) to transport natural gas.

John's predecessors had laid much of the groundwork, but the project still required years of collaboration between governments, companies, and financial institutions.

Signing on the Dotted Line: The Job at Hand

As a diplomat, John recognized that he wasn't an oilman; instead, he left these matters to the companies. However, the clock was ticking. BP and its partners needed to secure financing to fund the pipeline construction, and this required meeting stringent criteria from commercial and development banks. To obtain financing, the banks needed assurances of political backing, and John was tasked with ensuring that support remained strong.

Unleashing the Fury: Navigating the Region's Politics

Traveling extensively throughout the region was part and parcel of the job. John's speeches at conferences aimed to reinforce political resolve, but the real work revolved around resolving practical problems through governmental meetings. As the envoy, John played a critical role in brokering agreements, cajoling, and overcoming obstacles in the pipeline construction process.

One of the key challenges involved environmental concerns, which proved to be a major stumbling block for many in Georgia. Despite still facing administrative hurdles, the Georgian government approved the necessary environmental decrees, paving the way for the BTC and SCP pipelines.

Acknowledgments: Unsung Heroes

John led an exceptional team of colleagues, including Dan Stein of the US Trade and Development Agency, Ed Chow, a USTDA consultant, Bud Coote of the CIA intelligence directorate, Geoff Lyon of the Energy Department, as well as a series of dedicated assistants: Justin Friedman, Eric Green, Mary Doetsch, and Rebecca Kinyon.

Colorful Encounters and Fruitful Negotiations

The job demanded incessant travel, often resulting in sleepless nights and hurried meetings. John's commitment to fostering political will was evident at conferences like the annual Tale of Two Seas conference in Istanbul, graced by the leadership of Turkey's energy undersecretary, Yurdakul Yigitguden.

In Baku, John met with Azerbaijani officials, working closely with state oil company executives like Valekh Aleskerov. In Georgia, John collaborated with Georgia's relentless chief national oil company CEO Gia Chanturia, who demonstrated remarkable resourcefulness and diplomatic acumen.

Kazakhstan: A Chessboard of Deals

In Kazakhstan, John interacted with President Nazarbayev, who was staunchly committed to energy development. One of their discussions revolved around Caspian Sea delimitation, with John skillfully discrediting Iranian claims on Azerbaijan's oil fields.

Russia: A Watchful Eye

Russia kept a keen eye on U.S. energy diplomacy, sending its own special envoy, Viktor Kaluzhny, to the Caspian trail. While these talks provided invaluable insights, they also highlighted the uncertainties surrounding Russia's stance on the new pipelines.

Presidential Meetings: Cutting Through bureaucracy

The pinnacle of the envoy's work involved high-level meetings with Presidents, where John presented lists of necessary government actions to keep the pipeline projects on track. These meetings allowed John to bypass bureaucratic red tape and directly influence the countries' energy policy decisions.

Victory Lap: BTC's Triumph

In 2004, the BTC pipeline became a reality, marking the culmination of years of dedication and perseverance. The South Caucasus gas pipeline followed suit shortly after, heralding a new era of energy independence for the region.

Lessons from the Trenches

John's experience underscores the importance of seizing opportunities in the aftermath of monumental geopolitical shifts to shape energy policy and diplomacy. The United States' decisive role in the development of the BTC pipeline serves as a testament to the power of energy diplomacy in fostering economic growth, promoting regional stability, and strengthening relationships with key allies. While energy diplomacy has since evolved into more complex challenges focused on alliance management, energy security, and climate change, the private sector remains the cornerstone for energy projects to succeed. Ultimately, the decisions made in boardrooms continue to play a pivotal role in shaping the global energy landscape.

1. Joe's influence as a diplomat extended beyond traditional realm, leaving an impact on the history of the energy industry in Central Asia.
2. The Caspian Basin, rich in oil and gas reserves, presented challenges in the 1990s, with Russia exerting control over existing pipelines and hindering access to markets.
3. Central to the region's energy politics was the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the South Caucasus gas pipeline (SCP), which required years of collaboration between governments, companies, and financial institutions.
4. Apart from politics, environmental concerns posed significant obstacles, particularly in Georgia, with the Georgian government approving necessary environmental decrees to pave the way for the pipelines.
5. John's career highlights the role of education and diplomacy in fostering political will, as he traveled extensively, meeting government officials and key figures in the energy industry to broker agreements and overcome obstacles.
6. The triumph of the BTC pipeline in 2004 and the subsequent success of the SCP pipeline marked a new chapter in the region's history, signifying a shift towards energy independence and greater collaboration between governments, industries, and financial institutions.

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