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Turkey Port Key to U.S. Oil Policy

October 5, 2002

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CEYHAN, Turkey (AP) _ This small southern Turkish port would hardly seem to be at the heart of America’s strategic oil policy.

Except for two inactive oil-loading docks extending deep into the Mediterranean Sea, there’s little beyond forest and rocky cliffs.

But Washington hopes that within three years, there will be a third protruding dock, the tail end of a 1,091-mile pipeline bringing Caspian crude to the West and reducing U.S. reliance on Middle Eastern oil.

Government officials and international oil companies recently broke ground on the pipeline during ceremonies in Azerbaijan and Turkey and hope it will be pumping oil by 2005.

But experts caution the pipeline project could be undermined if Iraqi crude comes back on the world market _ a distinct possibility if there’s a regime change in the neighboring country.

Washington has strongly supported the route through Azerbaijan, Georgia and Turkey _ considered a roundabout and expensive way _ in large part because of geopolitical concerns. Shorter and cheaper routes would pass through Russia and Iran, giving those two countries more influence over the $3 billion pipeline than is acceptable to the United States.

``The commercial case for the pipeline is yet to be proven,″ said Bulent Aliriza, director of the Turkey Project at the Center for Strategic and International Studies in Washington. ``It’s a miracle this pipeline doesn’t collapse under the weight of all the political expectations placed on it.″

Meanwhile, an existing pipeline from neighboring Iraq also reaches Western markets through Ceyhan, but that oil has come to a trickle under U.N. sanctions.

However, if the Bush administration makes good on threats to overthrow Iraqi leader Saddam Hussein, one consequence could be a return of cheap Iraqi oil to the market, threatening the commercial viability of the new pipeline.

Aliriza said Azerbaijani crude through the pipeline likely will end up costing three to six times the cost of Iraqi crude by the time it reaches the West.

``If Iraq is free from Saddam Hussein ... that will affect the global energy picture,″ Aliriza said. ``They’re talking about increasing the output of Iraqi oil and have an existing pipeline to bring this about.

``If you have got the option of pumping Iraqi oil at $1 per barrel or Azerbaijani for $6.75, which would you choose?″

President Bush has said the project will increase the world’s energy security and strengthen the sovereignty and independence of the nations involved.

``Although it will be some time before the first barrel of oil flows through this pipeline, it has already made a significant contribution to the future of this region,″ Bush said in a letter read by Energy Secretary Spencer Abraham at last month’s ceremonies in Azerbaijan.

Officials say the new pipeline will be completed by 2004 and pump between 349 million and 421 million barrels of oil annually, from which Turkey hopes to earn between $200 million and $300 million annually in transit revenue.

That represents a small sum compared with the $40 billion Turkey says it has lost in trade with neighboring Iraq as a result of sanctions and the $31 billion it owes the International Monetary Fund.

However, NATO-member Turkey sees other advantages to the pipeline, including the opportunity to deepen its ties with the United States and to increase its influence with resource-rich states in Central Asia.

President Bush has hailed Muslim Turkey as ``a hopeful model of a modern and secular democracy″ in the Islamic world following the Sept. 11, 2001, attacks _ a role Turkey is more than willing to assume.

But in Golovasi, the village nearest the port, Mayor Necip Seyhan does not expect the project to change much for his 1,156 residents.

The cotton-producing village had hoped for some respite from Turkey’s worst recession since World War II _ an unlikely scenario as most revenues likely will head for the capital Ankara.

``Villagers are looking for hope out of this project. They want jobs,″ Seyhan said.

``But I’m not hopeful. Our lives won’t change, everything will be the same. There’s no difference between us and any other village.″

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