Kazakhstan’s frustration was growing. It needed a go-ahead on oil; its economic situation was desperate. GDP had shrunk almost 40 percent since 1990, and its nascent enterprises could not get international credit. Nazarbayev’s anger over the impasse between Deuss and Chevron mounted. “The problem is that the money has to be invested,” the irate Nazarbayev declared. “What difference is it to me if it is Americans, Omanis, Russians? The main thing is that oil comes out.”6
As it was, the oil was coming out, but only with great difficulty and improvisation. As production rose, Chevron started shipping 100,000 barrels a day by tanker across the Caspian to Baku. Then, what seemed to be the entire Azerbaijani and Georgian rail systems were mustered to move the oil on to the Black Sea. Chevron was also leasing six thousand Russian rail tank cars to move additional oil to the Black Sea port of Odessa, which, to make things more complicated, was now part of Ukraine. Once again, it seemed back to the nineteenth century in terms of logistics. And that just would not do.
John Deuss had a particular patron in Oman, the deputy prime minister. But then this minister was mysteriously killed in an auto collision in the middle of the desert. Thereafter Oman’s support for Deuss dwindled away at remarkable speed. At the same time, Kazakhstan canceled Deuss’s exclusive rights to negotiate for financing for the pipeline. The United States was becoming alarmed at the delay in getting the transportation issue settled and the resulting risks to the financial stability and thus the nationhood of Kazakhstan, which had been very cooperative on a number of issues—most notably in disposing of the nuclear weapons left behind in its territory after the collapse of the Soviet Union. Without the oil pipeline, this particular “newly independent” state was certainly going to be less independent. Having a freebooter—oil trader John Deuss—ending up with control of something so strategic and significant for global energy security as the major export route for Kazakh’s future oil was definitely seen as a problem. Finance would be key to whether Deuss’s plan would go ahead. It became clear that Western loans were never going to be available to finance John Deuss to become the pipeline arbiter of Kazakh oil. With that, Deuss faded out of the picture.
But Moscow still needed to agree to a pipeline running through Russian territory. United States Vice President Al Gore used his co-chairmanship of a joint U.S.-Russian commission to successfully convince Premier Viktor Chernomyrdin that this was in Russia’s interests. It also became very apparent that Russian participation in the project itself would be an asset. Russia’s Lukoil, in partnership with the American company ARCO, came in and purchased a share of Tengiz.
Meanwhile, Kazakhstan had asked Mobil to help put up money for the pipeline. “I finally said we were not going to help on the pipeline in order to help Chevron crude to get out of Tengiz,” said Mobil’s CEO, Lucio Noto. “Tengiz was an absolutely world-class opportunity.” Mobil paid a billion dollars, part of it up front, and bought a quarter of the oil field itself.7
In 1996 a new agreement dramatically restructured the original consortium. The oil companies were now members in a 50-50 partnership with the Russians, the Kazakhs, and Oman. The companies paid for the construction of the new pipeline—$2.6 billion—while Russia and Kazakhstan contributed the right-of-way and such pipeline capacity as was already in place. There was still much that was difficult to get done, including securing the actual route.
Matzke and Vagit Alekperov, the CEO of Lukoil, barnstormed by plane, visiting the interested parties all along the proposed pipeline route. Each stop required a banquet or a heavy reception, which sometimes meant as many as eleven meals a day for the traveling oil men, leaving them stuffed and groggy by nighttime. With the door thus opened, the Caspian Pipeline Consortium had to follow up and go into every locality and to negotiate right-of-way agreements for the new pipeline.8
Nonetheless, in 2001 the first oil from Tengiz passed into the pipeline. This was a landmark. Kazakhstan now, too, was integrated into the global oil industry. In the years that followed, there were many points of contention about Tengiz, which continue to the present day, but they were about the traditional issues—about how much the government’s “take,” or share of revenues and profits, would increase. By 2011 production was up to about 630,000 barrels of liquids per day—ten times what it had been when