the top of the Caspian Sea, and then straight west for 450 miles to the Russian port of Novorossiysk on the northern coast of the Black Sea. From there oil would be transshipped by tanker across the Black Sea through the Bosporus Strait and into the Mediterranean. In other words, the pipeline would have to traverse Russian territory.
What was not obvious was how to get it done—not physically, but commercially, and even more so, politically. The battle would be no less contentious than the struggle over the pipelines out of Azerbaijan, no less complicated in the clash of ambitions and politics. It would also be caught up in the complex post–Cold War geopolitical struggle to redefine the former “Soviet space” and the relationships among Moscow, the Near Abroad, and the rest of the world. The players here would include Kazakhstan, Russia, the United States, and, later, China; Chevron and other oil companies; as well as the Persian Gulf oilproducing nation of Oman. Improbably, at the center of it all, at least for a time, was a flamboyant Dutch oil trader, John Deuss, whose penchant for high living included stables with champion jumping horses, two Gulfstream jets, yachts, ski resorts, and a variety of homes. His involvement in Kazakhstan was bankrolled by Oman, with which he had developed a very close relationship.
Chevron, so focused on the Tengiz field itself and also the risks that went with it, had left it to Kazakhstan to finance and organize the pipeline. “We hadn’t planned on building a pipeline,” said Richard Matzke, the head of Chevron Overseas Petroleum. “We felt that the pipeline would be a national asset, and there would be objections to foreign ownership across Russian territory.”
Kazakhstan, still building its institutional capability as an independent nation-state, had turned to Deuss, who, with Oman, would be the “principal sponsor” of the pipeline. What, one might ask, was a Dutch oil trader with Omani money doing trying to build a pipeline across Russia? Deuss had been functioning as a senior oil adviser to the newly independent nation of Kazakhstan and had helped arrange an Omani line of credit for Kazakhstan in its first months of independence. Deuss had won the Kazakhs’ trust. His Omani backer put up the money to initiate what would be called the CPC—the Caspian Pipeline Consortium.
Deuss and Chevron were soon at loggerheads. Chevron now realized that Deuss would be able to extract high tariffs and make a huge profit on the pipeline and also get what he was really after—control of the pipeline. “That wasn’t going forward,” said Matzke.
What followed has been called “one of the most prolonged and bitter confrontations of the era.”
Kazakhstan loomed large to Russia. The two countries shared a 4,250-mile border, and the large ethnic Russian population testified to Kazakhstan’s close links. The Russians resented the growth of U.S. influence in the newly independent states, including in Kazakhstan, and what they saw as an American initiative to cut them out of the action in their natural sphere, the Near Abroad.
More specifically, the Russians regarded Tengiz as “their oil.” They had found it, they had drilled for it, they had begun to develop it, they had put money and infrastructure into it—and it would have been the great new field. But it had been snatched from their hands by the collapse of the Soviet Union. They were determined to extract maximum recompense and ensure that they participated in Tengiz. The two sides were constantly at odds. “It took six years to talk the Russian side round to building the oil pipeline,” recalled Nazarbayev. “The oil lobby in Russia put tremendous pressure on Boris Yelstin to get him to convey the ownership of the Tengiz oil field to Russia. I had many disagreeable conversations . . . about this.”
Once, at a meeting in Moscow, Yeltsin said to Nazarbayev, “Give Tengiz to me.”
Nazarbayev looked at the Russian president and realized that he was not joking. “ Well,” Nazarbayev replied, “if Russia gives us Orenburg Province. After all, Orenburg was once the capital of Kazakhstan.”
“Do you have territorial claims on Russia?” Yeltsin shot back.
“Of course not,” Nazarbayev replied.
With that, the presidents of independent countries, both of whom had risen up together in the Soviet hierarchy, burst out laughing. But Nazarbayev had no intention of giving way. For, if he did, Kazakhstan would have become Russia’s “economic hostage”—and, once again, “an appendage.”5
“THE MAIN THING IS THAT THE OIL COMES OUT”
But with no progress on resolving the ownership and economics of the pipeline,