Bellerbys Economics - Mr Stephenson

Tuesday, May 30, 2006

Azerbaijan - Buy Now!

Finally, after some delays, the Caspian Pipeline has opened. It runs from Baku through Georgia to Ceyhan in Turkey.

This is excellent news for Azerbaijan which should now see revenues from oil sales triple in the next decade. Previously, the Azeris had only been able to transmit their oil through Russian pipelines at a rate that was more advantageous to the Russians than the Azeris. Now, however, more equitable agreements have been reached with Georgia and Turkey which should benefit all three countries.

This has, however, been a project fraught with difficulties. Azeri oil is expensive and has only become viable recently because of the increase in oil prices. There have also been social and environmental externalities in the creation of the project. Also, this project is clearly dominated by American interests and Baku has been criticised for creating potential instability in the area by favouring the Americans at a time when Russian, Armenian and some Arab groups are feeling a bit anti-American.

American troops will also be sheltered in Azerbaijan for the first time and this has also raised concerns - although the pipeline itself will be guarded by Azeri security.

1 Comments:

  • It has been one year since uprising in Andijan, Uzbekistan. Here is a link worth to visit: http://news.bbc.co.uk/1/hi/world/asia-pacific/4757703.stm

    By Anonymous Iliyas, at 9:48 pm  

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