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. Last Updated: 07/27/2016

NEWS ANALYSIS: Russia Fears Losing to U.S. Over Caspian Oil




Defense Minister Igor Sergeyev's claim Friday that the U.S wants a weak Russia and wants to dominate the Caucasus reflects growing Russian anger that the U.S. is winning the race to control Caspian oil, analysts said.


Sergeyev said U.S. and NATO policy toward Russia was one of "weakening its international position and ousting it from strategically important regions of the world, above all the Caspian region, the Transcaucasus and Central Asia."


Oil and gas are the economic lifeblood of the Caspian basin, and oil exports from the region have traditionally moved by pipeline across the Caucasus and through Russia's rebel region of Chechnya to Russian ports on the Black Sea.


This gave Russia effective control over the region. But since the end of Soviet power in 1991, the new Caspian states have been trying to secure their independence from Russia by seeking new export routes.


The United States has given them enthusiastic support, to Russia's undisguised dismay.


The United States has for years employed a special adviser to the president on Caspian energy issues, whose main function is to persuade governments and companies in the region of the desirability of building export routes avoiding Russia and Iran.


"One of the key tenets of U.S. energy policy is to prevent dependence of Central Asia and the Transcaucasus on Russia, and to allow them independence not only politically but economically," said Stephen O'Sullivan, head of research at the United Financial Group in Moscow. "Obviously transport routes are part of this."


He added that U.S. interests in the region included energy and general political stability, "but the political stability is only important because energy routes transit the region."


Russia has suffered significant setbacks in recent months.


At the beginning of the year, Russian crude oil pipeline monopoly Transneft effectively lost control of the main crude pipeline running across Chechnya from Baku in Azerbaijan to the Black Sea port of Novorossiisk, and was forced to close it. It attempted to limit the damage by moving oil by rail through Dagestan, which neighbors Chechnya, and last month began building a new pipeline there bypassing Chechnya.


But while Azerbaijan has agreed to export a certain volume of oil every year across Russia, it has so far failed to agree to commit any extra volumes through the new line.


In April a pipeline opened from Azerbaijan to the Georgian Black Sea coast, allowing Azerbaijan's main foreign producer, a consortium led by BP Amoco, to avoid Russia altogether.


Analyst Julian Lee of the Centre for Global Energy Studies in London said Sergeyev's belief that the U.S. was trying to weaken it was justified.


"The Russian attitude is very understandable," he said. "There is a genuine desire [by the U.S.] to make sure that Russia doesn't have a stranglehold over hydrocarbon exports from the Caspian."