The Oil Road in Washington – Constructing Caspian Pipelines on Capitol Hill

30 Oct 2013 admin

Mika Minio-Paluello, Anna Galkina and James Marriott travelled in North America as part of a tour over September and October to promote The Oil Road – Journeys from the Caspian to the City of London. The fifth of a series of blogs on the journey is adapted from a talk that James Marriott gave at Busboys & Poets, 2021 14th Street NW, Washington, DC, on 23 September 2013. Thank you to Janet Redman of the Institute for Policy Studies for her help in arranging the event.

Mike Townshend

It`s the end of a long week’s work in the office block next door to the hotel and Mike – in black airtex short sleeved shirt and neat, slightly greying, hair – passes the half hour swapping tales of company life. His junior, Ian, talks of water-skiing on a Scottish loch. Mike responds that during his posting in Washington, he`d water-ski in Chesapeake Bay. However, as he explains, the jellyfish are a perennial problem, their sting irritates the skin of one’s thighs. So his wife brought him a pair of tights as protection, a neat seam running up the back of his legs.

Mike’s mobile phone goes, it’s David. They arrange to meet at 7.30 at ‘Panchos’, the Tex-Mex restaurant in the centre of Baku. He phones his driver and asks him to pick him up at 7.00. Then, finishing his sandwich, he bids everyone a good weekend, and leaves.

The scene described took place in the capital of Azerbaijan, but it provides a vignette into the life of one of BP’s key executives on Capitol Hill.

Mike Townshend, BP Senior Policy Adviser in Washington between 2000 and 2002, played a vital role lobbying in Washington to get support for the Baku-Tbilisi-Ceyhan oil pipeline (BTC) and its sister, the SCP gas line. This period encompassed part of the Presidency of Bill Clinton, and Secretary of State Madeleine Albright, and part of the Presidency of George W. Bush, and Secretary of State Colin Powell. Intriguingly, Townshend was also there during early negotiations, in February 2002, for the Nabucco pipeline which was in planning as the second phase of the Caucasus pipelines – which are still being negotiated today.

Of course precisely what Townshend did on Capitol Hill is a closely guarded secret, private to the company, but that he was involved in the negotiations over BTC was neatly illustrated when he moved directly from Washington to become head of the BTC company in Azerbaijan. He was based in Baku between 2002 and 2006, overseeing the construction of the oil and gas pipelines in the fields of Azerbaijan, the forests of Georgia and the mountains of Turkey. He was there the day that the first oil was finally delivered to the terminal on the Mediterranean coast. With the task done, he and some colleagues dived into the warm sea – a ‘cleansing moment’ he had long dreamed of. Later he said, ‘You actually know when it’s all done when you see that physical tanker at the other end, and it’s not until that moment you can say that it is all done.’[1]

Townshend went on to become head of BP in Iraq from 2009 to 2013 – negotiating BP’s technical service agreement for the super-giant Rumaila oil field. For the last six months, he’s been head of BP Russia – overseeing the battle to get into the Arctic. He’s steadily climbing towards board level and could well be in the running to be BP’s next CEO, but he earned his spurs in Washington, guiding the construction of BTC and being an ‘invisible father’ of the Euro-Caspian Mega Pipeline, the gas pipeline currently under political and financial construction.

Long before the BTC pipeline was laid in the ground in the Caucasus, it was built in Washington. Indeed if we were forced to choose one key driver for this immense project, it would be the State Department. From at least 1989, underneath Secretary of State George Shultz and President George Bush senior, US foreign policy was directed at pulling the constituent parts of the collapsing Soviet Union out of the Russian orbit. Crucial elements of the jigsaw were the socialist republics of Georgia, Azerbaijan, Kazakhstan and Turkmenistan. Arguably rolling back the imperial conquests of the 18th century Czars was a more important US strategic aim than obtaining access to the oil reserves of the Caspian region, or at least establishing that this oil came to the global market outside of OPEC or Russian control. Central to ensuring the latter, was the task of securing access to oilfield production by western private oil companies.

Alongside Mike Townshend, another ‘invisible father’ was Richard Morningstar. For the last twenty years his career has been entwined with the struggle to gain US access to Caspian oil. In June 1993 he was appointed Senior Vice President for Policy and Investment Development at the Overseas Private Investment Corporation (OPIC). This is US government body that provides underwriting to American companies investing in foreign countries and had a key role in backing corporations in the Caspian region. During this period, BP and the US firms, Amoco, Pennzoil and Unocal, secured the agreement from the Aliyev regieme in Azerbaijan to extract oil from the offshore Caspian fields – what was known as ‘The Contract of the Century’. By April 1995, he was Special Advisor to the President and Secretary of State on Assistance to the New Independent States of the Former Soviet Union – this was a new role created by the Clinton Administration with the rank of ambassador confirmed by the Senate. Three years later he was made Special Advisor to the President – Bill Clinton – and the Secretary of State – Madeleine Albright – for Caspian Basin Energy Diplomacy. In that capacity Morningstar was a driving influence in the construction of the Baku-Tbilisi-Ceyhan pipeline. And his role in fostering the latter didn’t end when in 1999 he was made United States Ambassador to the European Union. While he was in Brussels, Mike Townshend was in Washington – it seems highly unlikely that they weren’t coordinating efforts to realise the pipelines in the Caucasus.

Morningstar bows to Heydar

After a break from office during the Bush era, Richard Morningstar is once again back in the Caspian. In July last year he was appointed US Ambassador to Azerbaijan – and caused outrage amongst the Azeri democratic oppostion by publicly bowing to the statue of former President  Heydar Aliyev, who ruled Azerbaijan with an iron fist for several decades.

While Mike Townshend is ensconced in Moscow as President of BP Russia, trying to do all he can to remain in Putin’s favour, Richard Morningstar is at work in Baku, busily supporting the latest phase in the grand strategy to ensure Caspian hydrocarbons reach the global market without crossing Russian territory. For a new pipeline system is under political and financial construction – Euro-Caspian Mega Pipeline. This is a string of three linked industrial endeavours – the SCP X pipeline, the TANAP pipeline, and the TAP pipeline. If built their combined length would run to 4,000 km – over twice the scale of BTC – and deliver gas to Turkey, Bulgaria, Albania, Montenegro, Bosnia, Croatia, Slovenia, Greece, Italy, Switzerland, Austria, France, Germany, Belgium, Netherlands, and the UK. It is a vast undertaking – intended to pump gas from beneath the Caspian Sea to kitchens and power stations as far away as England.

Of course something of this scale, requiring an immensity of risk capital, cannot be undertaken without huge political support. Despite the fact that the system may well not deliver a single cubic foot of gas to the USA over its projected forty-year lifespan, it is again being built in Washington. Not only through the actions of Morningstar operating under the auspices of Secretary of State John Kerry, but also through other mechanisms.

Last December, senior Republican Richard Lugar, Senator for Indianapolis which is home to BP’s Whiting Refinery, had to resign his seat. He’d been Chairman of the Senate Committee on Foreign Relations from 1985 to 1987 and from 2003 to 2007, serving as the ranking member of the committee until his retirement.  One of his last acts was to introduce a report on Azerbaijan emphasising its strategic importance to the US.

Three months ago, on 27th June, Congressman Mike Turner, who represents Ohio’s 10th District, just east of Cleveland on Lake Erie, introduced a resolution in the House of Representatives entitled Resolution Supporting Southern Gas Corridor. The text proclaimed that:

further energy exploration in the Caspian Sea region will enhance energy security of European allies’ and ‘that it is in the national interest of the United States to support and enhance Europe’s energy security by opening up the Southern Gas Corridor.

Senator John McCain speaking at the inaugural event of the Azerbaijan America Alliance
Senator John McCain speaking at the inaugural event of the Azerbaijan America Alliance

Of course Azerbaijan is not passive in this process. In 2010, Anar Mammadov, the playboy son of Ziya Mammadov, a powerful Azeri government minister, established the Azerbaijan America Alliance (AAA) in Washington. He was assisted in this work by the DC lobbying company, Fabiani & Co. Funds come from his fathers shadowy business empire, according an investigation by the US Department of Justice Foreign Agent Registration Unit (FARA). With this financing AAA have hosted lavish receptions, attended by high-level US officials and Congress members, including House Speaker John Boehner, Republican Representative from Ohio’s 8th Congressional District. In May this year the AAA helped organise the US-Azerbaijan Convention in Baku. Three members of Congress travelled to the Caspian in order to participate, whilst a further three members joined by video. Washington’s influential think-tanks, the Heritage Foundation and American Enterprise Institute, also participated. Ambassdor Richard Morningstar delivered an address to the conference.

We can be sure that BP is also playing a role in establishing support for the Euro-Caspian Mega Pipeline. The person currently undertaking the work that Mike Townshend once did in Washington is Elizabeth Reicherts, Senior Director, US Government & International Affairs at BP America, on New York Ave North West.

There is a great battle taking place in America over the Keystone XL pipeline, to prevent an exponential increase in the of import of tar sands into the USA, and an increase in the export of tar sands-derived fuel to the rest of the world. It is a powerful and successful campaign against a delivery system of climate change.  The Euro-Caspian Mega Pipeline is a similar delivery system. It will not deliver gas to USA, but the battle against it, which has begun, will have to be fought in Washington, as well as in Brussels, London, Berlin and Paris.  And like the struggle against the construction of Keystone in Nebraska and Texas, the struggle against this pipeline will take place in communities in Azerbaijan, Georgia, Turkey, Greece, Albania and Italy.

SOS_logoGreat political pressure, intense human effort, had to be exerted over the past two centuries to push society deeper and deeper into ‘hydrocarbon world’ – and since the 1890’s to keep it on track down the Oil Road. The shift to our carbon dependency did not come ‘naturally’, did not come easily. Now in order to push us out of our addiction, we all need to be part of the countervailing force. How can political pressure from Washington, against the Euro-Caspian Mega Pipeline, be exerted? Perhaps the coalition around Keystone XL, once successful, will turn its energy against other pipelines? Fundamental in the exerting of this pressure will be the need to unpick the web of support for oil & gas companies on Capitol Hill, and as is being pushed for by Oil Change International, forcing of the separation of Oil & State.





[1]           S. Levine, The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea, Random House, 2007, p. 380

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