Caspian oil up for grabs

Summt-level talks expected to focus on the fate of millions of tons of Caspian oil, and the future of Russia's cosmodrome in Kazakhstan have started in Moscow.

Russia's President Vladimir Putin and his Kazakh counterpart Nursultan Nazarbayev are also expected to discuss regional security and economic co-operation as Moscow seeks to reassert its influence in the strategic region.

Kazakhstan has recently come under pressure from the United States to support a US-backed route for Caspian oil from Baku in Azerbaijan to the Turkish port of Ceyhan on the Mediterranean.

In June, Kazakhstan started transporting oil to Azerbaijan, but kept its options open.

Russia remains the only major transit exporter of the Caspian oil - 7.5 million tons of oil passed through Russian territory in 1999.

Launch

Kazakhstan complains about Russia's use of the space centre

Moscow insists the crude should be transported via the Russian Black Sea port of Novorossiisk, attracting valuable transit fee revenues.

Kazakh Prime Minister Kasimzhyomart Tokayev said last week that the country's priority was a project to transport oil from the giant Tengiz field to the Russian Black Sea port of Novorossiisk.

The Caspian Pipeline Consortium, comprising 11 companies, is laying the 1580km pipeline from the giant Tengiz field in Kazakhstan, around the north of the Caspian Sea, and through southern Russia to the Black Sea port of Novorossiisk.

Due to be up and running by the end of 2001, the pipeline would double the production of Kazakh oil.

Russia remains Kazakhstan's largest economic partner, accounting for $2.5bn of its annual trade turnover of $9.3bn in 1999.

Cosmodrome

The other key issue for the two leaders is Russia's lease of Baikonur space centre, which Kazakhstan inherited after the collapse of the Soviet Union.

Moscow's failure to pay its annual rent of $115m for the cosmodrome and its disregard for perceived environmental damage caused by rocket launches has proved a thorn in bilateral relations.

Kazakhstan's complaints over Russia's use of Baikonur climaxed last year after two failed rocket launches scattered toxic fuel and rocket parts over the Kazakh steppe.

Following the accidents, the two countries set up a joint commission to deal with the problems.

Under Mr Putin, Russia has launched a determined drive to win back lost political influence in Central Asia.