Kazakh-Iran Oil Swap Said Near

ALMATY, Kazakhstan -- Kazakhstan is close to sending its first shipment of oil to Iran, part of an oil swap that will offer the landlocked republic a badly needed alternative to Russia's pipelines.

The official Iranian news agency IRNA reported last month that the two governments had signed an agreement to allow exports of Kazakhstan's oil to international markets via Iran. Kazakhstan would send 2 million tons of oil a year to northern Iran, raising that to 6 million tons by 2007, in exchange for Iranian crude deliveries to Kazakhstan's clients in the Persian Gulf.

Kazakh officials declined to comment on the report, which coincided with U.S. outcry over the news that Turkey would buy $23 billion worth of Iranian gas over the next 23 years. Three days after the news broke, Harry Shtoik, the deputy prime minister, flatly denied there was a deal: Kazakhstan's agreement with Russia on construction of the Caspian Pipeline to Novorossiisk had solved Kazakhstan's export problem, he said.

Another three days later, Vyacheslav Gizzatov, the deputy foreign minister, claimed he had never heard of the IRNA report.

"If the Iranians say there is a deal I guess there is one," he said with a shrug. "There were no major differences." Privately, other officials say the truth is somewhere in between -- Iran and Kazakhstan have agreed on all major issues but have yet to sign an agreement.

Negotiations on the oil swap have been going on since 1993, and the presidents of both republics signed a formal agreement in Tehran last May, paving the way for talks on tariffs and other details.

Kazakhstan is a landlocked country and all of its pipelines lead to Russia; plans for pipelines to China or across the Caspian to Azerbaijan, Georgia and Turkey have yet to move beyond feasibility studies. A U.S. boycott of Iran would make construction of a pipeline to Iran difficult to finance, but a swap would be relatively cheap. Iran, in turn, stands to gain from transit tariffs and will be able to cut costs in delivering oil to domestic users in northern Iran, now supplied from the south.

Gizzatov said the only outstanding issue had been over an Iranian request for compensation for reconverting existing pumps at the port of Neka, in northern Iran, to allow for unloading the Kazakh oil. Some analysts doubt that facilities at Kazakh and Iranian ports are ready for such shipments anytime soon, but Gizzatov said that both the Kazakh port of Aktau and Neka had been upgraded to handle 2 million tons. Kazakhstan does not own barges but is negotiating with shipping companies from Baku and Iran, he said.

While Iran's agreements come on the heels of tougher U.S. sanctions against Tehran, U.S. officials have told the Kazakh government repeatedly that they would not object to incidental oil swaps with Iran, provided that no U.S. companies were involved.

Some of the Kazakh oil is likely to come from the Tengiz oil field, however, which is exploited by a joint venture of Chevron and Mobil. "Chevron and Mobil have nothing to do with this deal," said Carl Burnett, Mobil's representative in Kazakhstan. Instead, he said, the Kazakh state company Tengizmunaigaz, the Kazakh partner in the venture, may exercise its right to take its profits in oil.

"We're trying to avoid the whole Iranian question like the plague. We cannot be involved in that," Burnett said. "Of course, from a TCO [Tengizchevroil] perspective, if the government moves its share of the oil that way, it leaves more room for TCO oil going the other way. But this is one sovereign state sending its crude to Iran. That is very different from a major gas sale to Turkey. Kazakhstan is not investing a penny in Iran."

This controversy may be one reason for Kazakhstan's reluctance to discuss the deal; another, analysts suggest, is that Kazakh officials are wary of upsetting Russia, which only recently backed construction of the Caspian Pipeline, or CPC, for transporting Kazakh oil across its territory.

Gizzatov disagreed. "I have not heard a word from the Russians on this, neither for or against," he said. "It seems Russia is simply indifferent. For Russia 2 [million] or 6 million tons does not matter at all -- for us, though, it does matter." He added, however, that "CPC remains our priority. It will take care of Kazakh oil exports for the first 10 to 15 years to come."

Turkmenistan, meanwhile, has been quietly executing a much more extensive deal with Iran. The state news agency Turkmen Press said Aug. 17 that Turkmenistan and Iran will start laying a gas pipeline linking up the two republics in September.

The 140 kilometer pipeline, starting at the Turkmen Korpedzhe field, should be operational before the end of 1997 and will pump 2 billion cubic meter of gas annually, rising to 8 billion cubic meters in a later stage.