Book Review: The Oil and the Glory: The Pursuit of Empire and Glory on the Caspian Sea

The vermin-filled pit in which the Emir of Bukhara held Colonel Charles Stoddart and Captain Arthur Conolly before beheading them is today clean, sunny and empty—the main attraction of a museum in present-day Uzbekistan. Stoddart and Conolly met their maker in 1842 in the midst of the “Great Game” between the Russian and British Empires. As Imperial Russia expanded into Central Asia, the British worried that a Russian invasion of India was next. Intelligence officers like Stoddart and Conolly were sent to map the terrain and discover as much as they could about the adversary’s intentions.

Over 150 years later, the scramble for oil contracts and pipelines, recounted in Steve LeVine’s The Oil and the Glory: The Pursuit of Empire and Fortune, is redolent of the Russo-British rivalry. Like stories about the Great Game, Mr. LeVine’s tales of oil fields, pipelines and back-room deals are permeated with treachery and treasure. But what makes his account a compelling read is that today’s competition for oil is actually quite different from the Great Game. Instead of two empires competing for hegemony, today’s story involves a multitude of individual players vying for resources in a contest where victory is often fleeting.

The oil companies that descended on Central Asia in the waning years of the Soviet Union were driven by the promise of new sources of energy wealth. In the late 1980s, it was becoming increasingly expensive to extract oil from older fields. Demand for energy was growing, yet there was a reluctance to depend exclusively on the unstable Middle East. With rumors flying that the Caspian Sea could be the next Persian Gulf, and Mikhail Gorbachev opening up the country, companies like British Petroleum and Chevron jockeyed to get the first contracts. Victory was decided by negotiation skills, connections and resolve. Bribery often helped, too.

The Oil and the Glory’s most fascinating chapters describe how ambiguous such victory could be. Before the fall of the Soviet Union, BP’s John Browne signed a protocol with Nursultan Nazarbayev, the leader of the Kazakh Soviet Socialist Republic, to negotiate development of the Tengiz oil field. Tengiz was located in the Kazakh republic’s northwest and had oil reserves of 14 billion barrels. Meanwhile, the American company Chevron cozied up to Mr. Gorbachev. When he realized that awarding Tengiz to Chevron would improve U.S.-Soviet relations, the BP deal was scrapped. Chevron’s negotiations with Soviet officials were successful in 1990 until Mr. Nazarbayev declared the agreement null and void. The Kazakh president decided that he “could not accept a deal that had been done by the Soviet Union.” As the Soviet Union collapsed at the end of 1991, Chevron was back at square one.

Episodes such as these were common because the pursuit of oil and gas in the Caspian region was not a two-sided contest, but a playground for dealmakers, oil company bosses, Caspian autocrats, Russians and Americans alike. Mr. LeVine introduces the reader to an especially shady dealmaker, James Giffen. While the Soviet Union was on its last legs, Mr. Giffen led an organization of U.S. companies doing business in the U.S.S.R., of which Chevron was a client. A few years after Kazakhstan gained independence, the dealmaker became Mr. Nazarbayev’s personal oil adviser. By facilitating deals between the Kazakh government and the oil companies, Mr. Giffen made millions.

In 2003, Mr. Giffen’s joyride ended when he was arrested for violating the Foreign Corrupt Practices Act by paying out more than $78 million to Kazakh officials. The dealmaker was also charged with 33 counts of money laundering, fraud, and tax evasion. “Kazakhgate,” as the case is referred to, is still pending, and the World Bank is administering the millions in frozen funds to help poor children in Kazakhstan.

Infighting among U.S. government officials closely following the events in the Caspian region suggested that it was difficult to define national interests. Rosemarie Forsythe, the Director of Russian, Ukrainian and Eurasian Affairs on the National Security Council from 1993-95, organized a meeting between Azerbaijani President Heydar Aliyev and U.S. President Bill Clinton to hasten the signing of  a deal between several oil companies and Azerbaijan. When it came time to figure out how the oil would be transported from the region, she and her successor Sheila Heslin butted heads with Strobe Talbott, Clinton’s Deputy Secretary of State. Mr. Talbott advocated treading lightly with the Russians by opposing the construction of a pipeline that would avoid Russian territory. Ms. Forsythe and Ms. Heslin, however, firmly believed that U.S. influence in the region would be strengthened with a pipeline that emptied into the Black Sea, and eventually another that ended at the Mediterranean’s shores. While the women were eventually successful, it took much persuading to get the oil companies, including American businesses, onto their side. Incidentally, Ms. Forsythe went to work for Exxon Mobil after leaving government.

Having just as much a stake as any other player, the leaders of Azerbaijan and Kazakhstan did not passively stand by and watch as others made their fortunes. Aliyev had the courage to support the construction of a pipeline heading west instead of north through Russia, while Mr. Nazarbayev sometimes demanded cash up front. The ability of Aliyev and Mr. Nazarbayev to maneuver so deftly increased their capacity to stay in power. When Aliyev died in 2003, he successfully arranged for the succession to power of his son, Ilham. As the standard of living rose in Kazakhstan as a result of the oil boom, Mr. Nazarbayev did not face significant opposition when he made himself president for life in 2007.

Government officials and oil companies could not blindly sign agreements without considering their constituencies and consumers. When Unocal Corp.’s John Imle wanted to build a natural gas pipeline from Turkmenistan through Afghanistan, he and U.S. officials “watched approvingly as the Taliban widened their hold on the country,” writes Mr. LeVine. Mr. Imle openly courted Taliban officials with President Clinton’s implicit support until the Islamists captured Kabul in 1996 and killed former President Najibullah, dragging his corpse through the city. The Taliban’s treatment of women outraged the activist Feminist Majority Foundation, and Taliban-supported al-Qaeda attacks on the U.S. embassies in Kenya and Tanzania in 1998 forced Unocal to abandon its cooperation with the extremists. 

The Central Asian energy saga hardly ends with the book’s conclusion. In December 2006, Turkmenistan’s despotic President Saparmurat Niyazov died unexpectedly, and his successor indicated a greater willingness to engage the international community. Just last month, representatives from an unprecedented150 companies and 21 countries converged on the capital city of Ashgabat for Turkmenistan’s annual oil and gas conference. Underscoring the significance of the event was the attendance of U.S. Secretary of Energy, Samuel Bodman, the first high-level U.S. official to visit Turkmenistan in several years. Secretary Bodman’s remarks emphasized energy security, defining it as “having options… a diversified set of partners and new infrastructure.”

It is the quest for energy security that will define this new sort of “Great Game” for some time to come. Russia is hoping that Turkmenistan and Kazakhstan will cooperate in building a gas pipeline along the Caspian Sea north to Russian territory, while the U.S. and others are pushing for the construction of a trans-Caspian pipeline under the sea bed connecting Turkmenistan and Azerbaijan, by-passing Russia.

Yet the rivalry is not just about dominance in the Caspian region. The European Union is supporting a new project called the Nabucco pipeline that will transport Caspian gas from Turkey to the Balkans. Russian energy giant Gazprom, meanwhile, singed an agreement with Italy’s Eni to build the South Stream pipeline under the Black Sea to Bulgaria, avoiding Turkey. With more and more players involved, it is unlikely that a clear winner will emerge any time soon.