The Oil and the Glory | Steve LeVine | Talks at Google

Good afternoon and welcome to a talk sponsored by authors at Google. It's my great pleasure today to introduce a good friend of mine, Steve Levine. Steve is a former reporter with the New York Times and was a bureau chief for the Wall Street Journal based in Almaty, Kazakhstan for some 11 years. I met Steve when he and his family moved into Palo Alto about four years ago. Our daughters were best friends while they lived here. Steve had come to Stanford as a visiting scholar to write this book, the Oil and the Glory, which he conceived of more than 10 years ago while living in the Caspian Sea region. We had many late night discussions about fascinating region where he had just come from and domestic politics. I gave him a hard time about working for that well known progressive paper, the Wall Street Journal and he gave me a hard time about working in a self absorbent cocoon of Silicon Valley. Steve is the first person I've met that I've personally known to be portrayed in a movie. Of course he didn't get the part himself. I think it was Brad Pitt. Right. But he was portrayed by Gary Wilms in the film A Mighty Heart, the Story of Daniel Pearl. He has written a fascinating book detailing a behind the scenes look at how big oil has tried to take advantage of the vast oil reserves in the Caspian Sea region once the Soviet Union collapsed. It's a truly epic but not very well known story. It's with great pleasure I present to you Steve Levine.

Thank you, Carl. It's a big pleasure to be here to give this talk because what Carl didn't say is that in these long talks we would have. He would say, sure, sure, you're writing a book. Okay, have another drink. I know that you had my friends Peter, Peter Baker and Susan Glasser here yesterday. Yesterday. And so I admire them a lot and I hope you don't overdose on the former Soviet Union. I've got a slightly different take on the paradigm on the prism to use to examine Russia, to examine Putin, and I'll get to that. But what I wanted to say first was to. Here, let me go straight to a map. This is the area that we're dealing with here that I'm going to be talking about Central Asia and the Caucasus. I wanted to say first why I was drawn to the era, why I spent 13 years working on this book. The first thing that drew me to it were these giant historical characters who appear on the canvas in this region. Winston Churchill, Theodore Roosevelt, Lennon, Stalin, of course, Brezhnev, Margaret Thatcher. Queen Elizabeth plays a cameo role in this region. But then When I really began reporting on it, reporting on the, on the story, I found the truly interesting people and they were the entrepreneurs, the guys who showed up throughout history in this region under their own steam, not connected to a country or a company, though they often claimed they were, and managed to insinuate themselves in the very biggest deals on the Caspian and become very close to the presidents of the country countries. John Doyce. John Doyce showed up on the Caspian in about 1990. He's a Dutch oil trader. He made people very nervous. People thought he was a dangerous man. He had this strange scar crossing the back of his head. Head. And the KGB for some reason was pursuing him all across Europe. There's something about a hundred million dollar debt he owed to somebody. And he showed up on the Caspian not as the Dutchman he was, but the official representative of the Sultanate of Oman. He had this unusual way of conducting his business negotiations. They were all men, oil being a man's world. And the men would be sitting in these tense negotiations and suddenly the doors would open and these beautiful tall, slender models would walk in, speaking all the European languages and sit down with the men for tea and lunch or whatever, and then at some unspoken signal walk out again through that door and the negotiations would resume. This whole show made the oil men, the western oil men who had to deal with him very nervous. He became the closest advisor at one time to the prime ministers of Russia and Kazakhstan. Jim Giffen. Jim Giffen was the biggest entrepreneur, the biggest privateer of them all. A Berkeley graduate, he came from small town roots in the Central Valley. But while at Berkeley, he met and married June Hopkins, the granddaughter of Harry Hopkins, the intimate of fdr. He had a personality that made older, very powerful men want to mentor him and take him under their wing. And he used that personality and this marriage to catapult himself into a deal making role in the Soviet Union during the heady days of detente. And he stayed there. He stayed there through the whole Soviet period. The Soviet Union fell apart and he launched himself into Kazakhstan and like Doyce, managed to become the chief oil advisor to the president. In the mid-1990s, Jim Giffen controlled the biggest oil deals in the whole world. An American who, who sat on the same side of the negotiating table as Giffen, told me this genius that he had, the way he described it in this homespun way of knowing exactly how much blood was in the turnip and how to squeeze that out. He, in 2004, was taking one of his routine trips to JFK on his way to Kazakhstan. And he was met by the FBI and he was handcuffed. Giffen is awaiting trial in New York right now in the biggest foreign bribery case in U.S. history. He is accused of funneling $80 million in payments from the oil companies to the president of Kazakhstan. I call this period of American activity, American on the Caspian Sea, one of the biggest American foreign policy successes of the last 10 years. And it all revolved around this pipeline starting, if I can make this work, Okay, starting here in Baku on the Caspian Sea and connecting it to the Mediterranean Sea. Thousand mile oil pipeline that came online last year and ships a million barrels a day. And I'll explain why later, why that's so important. The conventional wisdom about Russia and about Vladimir Putin is that the way to understand them and understand Russia and their foundation and what power is in Russia, Russia is the KGB state that somehow that the so called Slovaki, the successor agency to the KGB and the military are the powers behind the throne. And one must understand that mentality in order to get what Russia is all about. I argue that this analysis, that one single entity survived from the rubble of the Soviet Union, the Solovaki, is wrong. There were two entities that survived from the rubble, the other one being the energy sector, Gazprom, the gas giant, and Transnef, the oil pipeline company. To understand what Russia is doing, what Putin is all about, how Putin intends to assert his power at home, abroad and where Russia is going. If you can get these pipelines and look at the energy sector, it's all very clear and I'll come to that too. So I'm going to today Discuss Old Baku, 19th century and 20th century, early 20th century Baku, just a little bit. And then I'm going to talk about these first entrepreneurs, the first oil men who showed up on the Caspian pipelines. And then I'll conclude with where we are today, how the great game is being played today. Old Baku in the 19th century and the early 20th century, not Texas and not Pennsylvania, but Baku was the oil capital of the world. 51% of the world's oil was produced here. When you look at the diaries that Western travelers going to baku in the 18th century, in the 19th century and the early 20th century, said they had a uniformly astonished description of what they saw at night in Baku. And that was this eerie blue glow that crossed the whole horizon. And this was the natural gas. The natural gas. And oil in Baku was so close to the surface at that time that you actually could dig your hand into the soil and get to it. Just like that. And that eerie blue glow was the natural gas spontaneously and deliberately lit. Deliberately because the people would actually cook their food at times right there in the dirt, dig a hole, light the soil and, and put their pot right there on the soil. This gas being so close to the surface, could have horrific results. There was a diary in 1754 that described a stable with eight horses blowing up and burning all of the horses alive. Somebody accidentally lit the ground there and the stable blew up. And the amazing physics that this fire sometimes burned cold. Ludwig Nobel, the oil king of Baku, steered his steamship straight through the burning sea and came out fine. Ludwig Nobel brother of Alfred Nobel inventor of dynamite, namesake of the Nobel Prize. The Nobel family was the biggest oil family in the biggest oil men in Baku. Ludwig Nobel by himself produced 9% of the whole world's supply of oil. But he was famous not because of that, he was famous because that family was so inventive. Ludwig Nobel invented the oil tanker. The oil tanker today that revolutionized the whole world economy was invented in Baku. The Zoroaster, the one at the top, 136ft long, it carried 1,750 barrels of oil. No one believed on the outside, then or now, that the Russian Empire was capable of producing any technology worth adapting. So the west adapted this ship eight years after he invented it, he invented a revolutionary means of refining oil. The west adapted it 25 years later. It's one of the surprising things for me in looking at that region. These oil men created a cosmopolitan city right in the midst of a backward area of the Russian Empire and of the Persian Empire. And it collapsed when the Bolshevik Revolution happened and the oil fields were burned. Lenin found when he took power that he was going to lose the revolution. The civil war had destroyed the whole empire and it had destroyed the basis of the Russian economy, the oil fields. And so to secure, to save the revolution, he invited Westerners and into Baku to revive these oil fields. And the first one who arrived was Henry Mason Day, Jim Giffens forerunner Henry Mason Day was from New York. He was a raconteur. He ended up as the official trade representative for all three republics in the caucuses. What he found when he arrived in Baku was that the people had a very odd method of producing oil. They would put a man on top of a platform with a heavy object connected to a pole and they would drop it repeatedly onto the soil until it created a hole. And that would be their oil well. It was called percussion drilling. And he brought this revolutionary state of the art oil Drilling method, rotary drilling, and with some Germans and some other Americans revived the oil fields. And in 1928, Stalin kicked them all out. The work being done. And in World War II, he. Stalin cemented all of the oil fields shut. He cemented them shut because he feared that Hitler was going to capture those oil fields. And historians today believe that if Hitler had captured the Baku oil fields when they were still working, we very well could have had a different victor in World War II. But that spelled the end of the Baku. That was it. It went into decline, the oil industry went elsewhere and its heyday was over until the Berlin Wall came down in 1989. The Berlin Wall came down and Mikhail Gorbachev declared the Soviet Union open for business. The spirit that this produced around the world was electrifying. I'm sure some people here remember. People saw that the Cold War was over, free markets were going to take over the whole world. There was going to be a different day. And this spirit was especially captured on the Caspian Sea. And these oil men, Western oil men, who had spent all of these decades on the outside, knowing, tantalized by how much oil was in the Soviet Union, but they couldn't get at it because of the Soviets rushed in. And where they rushed in was Baku. When the oil men flew in, if they looked out of their left, out of the left window of the plane, this is what they would see. This is the world's first offshore oil city. 10,000 people lived here, but by this time it was falling into the sea, totally decrepit and literally pieces of it falling into the sea. And if they looked out of the right side of the. What they would see, what several oil men described to me was a gorgeous city of trees. They would describe how mesmerized they were by this beautiful city that they just didn't expect of these trees until they got closer, the plain got closer to the ground. And they saw that those trees were not trees. These were the derricks. These were the old abandoned oil Derricks from the 1920s and 30s, now abandoned and covered with oil, surrounded by these big pools of crude. The first American diplomat to arrive on the ground was a guy named Robert Finn. And he told me how when these diplomats came, they didn't get the same sort of accommodations that they came to expect in other parts of the world. He got a $60 a month apartment there. And he described it this way. He said the rats had the kitchen, I had the bedroom. An interesting sideline of that was he told me this just a couple years ago after it became plain how important the region had become. And one of his colleagues told me that Finn had stolen the story from him. He said he was the one with the rats. The oil men who arrived on the scene didn't do so without resistance. The KGB wanted to know what they were doing, wanted to keep up with them. And so the oilmen, as a routine thing, would be sitting in their hotel rooms and looking, and there would be a portrait on the wall, a painting of some sort. And they would see coming down from the bottom, a wire and look behind the portrait and there was a microphone. They would go to their offices. All of these guys were very suspicious. And so they had sweepers, these sweepers that measure these. If there's a microphone present. And the offices would be filled with microphones, with bugs. They would remove the microphones, come to the office. The next day in the morning sweep, again, the office is filled with microphones. The KGB would come during the evening with their teams and reinstall microphones in these offices, dig into the holes and then plaster them over. This created such an atmosphere of suspicion and paranoia that the British ambassador at that time described to me how one time him, he and the local BP representative wanted to conduct a very sensitive bit of conversation. So they went out onto the seashore and they're walking along the sea. They're walking along the sea and as they're going, they notice that a car drives up and a dog jumps out. And as they're walking, the dog is following them. And every time they talk, the dog's tail is going up. What are those dastardly Russians up to now? And they went back to the office and when I interviewed this ambassador, I said, come on, you didn't really think that this dog is bugged. How would they make the tail go up and down? He said, who knew these oil men? And the diplomats who came onto the Caspian at that time, on both sides of the Caspian, were dealing with a type of negotiator. The local negotiators with whom they were dealing, they had never met anywhere else in the world. Murat Manafov, this was an Azeri negotiator for a short time. And in the first session that he conducted with the oil men, he said, why don't we become acquainted? Everyone passed around their business cards. So this group began trading business cards, introducing themselves. Then it came time for him. Menopause. And he reached into his jacket and he pulled out a 9 millimeter pistol and he slapped it on the table. This was his calling card. These deals eventually were done on both sides of the Caspian, in Kazakhstan and in Baku. Then began the real challenge. And the challenge being, how do you get that oil out? Because oil in the ground is worth nothing. But as you can see, the whole region is landlocked, unlike the Middle east, unlike, unlike West Africa. There's no sea. There's no sea to take the oil out. They had to find a pipeline route. They had to build pipelines to get the oil out. And this took on geopolitical significance. When Bill Clinton came to power, he brought along with him an old buddy from college, Strobe Talbot. Strobe Talbot was named the Deputy Secretary of State and the point man on Russian policy and on former Soviet policy, the whole former Soviet Union. Clinton regarded Talbot as the smartest man he had ever met on Russia. But Talbot's understanding of Russia was founded in literature, in music, in art. He had a romantic view of the region. Like a lot of us, he couldn't get out of his mind that moment in August 1991 when Boris Yeltsin stood on that tank and prevented the Soviet Union from reverting to its Soviet past. This romantic idea that Russia was going inexorably in a reformist, pro Western, non threatening direction came to be American policy at that time. And Talbot believed that no other policy, no other analysis from another part of the former empire ought to interfere with that goal. And he had a point. Russia itself said, we are the inheritor of the Soviet mantle. We've assumed the debt of the Soviet Union, we've disarmed the Soviet Union. Therefore we deserve the asset side of the ledger, too. What's the asset side of the ledger? These oil fields, the oil fields on both sides of the Caspian Sea across which these oil men, these Western oil men, were crawling like ants in Russia's view. But that opinion, that opinion of Russia's and that opinion of Talbot's, did not hold. It couldn't hold. Underneath Talbot, a groundswell of opinion formed among the junior officers in the State Department, on the National Security Council, in the Energy Department, opposing this point of view. This. These junior officers felt that Russia was a threatening power, was a dangerous power, and why it was based in what they saw going on in Central Asia and the caucuses in, pardon me, 1993, Russia was responsible for the near dismemberment of Georgia. I lived there at the, at the time, and I was reporting with a colleague from the Financial Times, and he came back from his own reporting one day to the apartment and he told me that he had encountered In a field just west of the capital, Tbilisi, a field with Russian tanks in it. And he said that he had gotten to talk to one of the tanks drivers and that the fellow told him that he had come from Sukhumi from the Russian military unit here. This part of Georgia had just broken away from the rest of Georgia, and this Russian unit had fought against the Georgians in order to help that part of the country break apart. And that precipitated the whole west of Georgia marching on East Georgia in this Yugoslav type ethnic conflict. Russia did not want Georgia to disintegrate. So this tank driver said that his unit commander asked for volunteers who will save Georgia? And these are the tanks that were sent to help. The same year, I went to Baku and interviewed the deputy Defense Minister who was bitterly complaining how the Armenians were. I'm sorry, the Russians were helping the Armenians to fight here in Nagorno Karabakh, helping to. To take this part of Azerbaijan away and make it part of Armenia. And I said, how do you know. How do you know that Russia is helping these Armenians? Well, because they were helping us. Last year, Russia did not only fan the flames of these small wars, it also strangled economies. And it did so through its iron umbilical cord. Iron umbilical cord, this is a really important term. It was coined by one of these junior officers underneath Strobe Talbot, Sheila Hesslin, a junior director on the National Security Council. She was referring to the Soviet era natural gas and oil pipeline system that required every barrel of oil, every cubic meter of natural gas produced in this whole region to pass through Russia on its way out. No oil, nothing, no natural gas could be produced, could be exported without Russia saying yes. And Russia didn't always say yes. One illustration of this was a meeting that occurred in Almaty, then the capital of Kazakhstan. And it regarded a plan to build one of these pipelines out. And at the meeting were the minister, energy minister of Russia, Kazakhstan, Oman, and those two privateers, John Doyce and Jim Giffen. And the Russian, Yuri Shafronik, was angrier and angrier as this meeting progressed, as he wasn't getting his way from the Kazakh side. And at one point he says to the Kazakh oil minister, do you mind if I borrow your mobile phone? Sure. So he takes that mobile phone and he disappears into a corner and has this muffled conversation, returns to the table. The meeting breaks up after a short time for the day, and the Kazakhs return to their office where they found out what this phone call was all about. Because there on the fax Machine was a piece of paper that said, freak storm on the Black Sea. All oil shipments postponed until further notice. What does it mean? Don't mess with Russia. The United states decided in 1996 that it was going to try to weaken this iron umbilical cord. And the way it happened was at another meeting in Washington. Strobe Talbot was there, Sheila Heslin was there, and a bunch of other of these deputy secretaries. And Talbot, as usual, was resisting the idea, Heslin's idea, of getting behind these states, helping them in their situation. So she took out a blank piece of paper, and on this piece of paper, she drew Central Asia and the Caucasus. And what you could see when you drew that, when she drew it, is what you're looking at now, that all surrounding the whole region were countries of primary American strategic interest. Iran to the south, China to the east, and Russia to the north. Heslin argued that this land, the Caucasus in Central Asia, were bound to become a battleground for influence among these countries, and that it was incumbent upon the United States to get behind them, to get in that battle and win it. And what she argued was the way to do it was to help make them economically independent and then by extension, politically independent. And the way to do that was to build a pipeline, an oil pipeline, independent of Russia. And so was born American policy getting behind that region right there on the spot. And this pipeline, it's the same one we talked about earlier, came online last year. It's shipping a million barrels a day, million barrels a day of oil. And it has provided breathing space, political breathing space, base for this part of the Caspian region, the Caucasus side. And it happened right in the nick of time. As your speakers yesterday described. Russia, this resurgent reassertive Russia on the world scene. These states now have some leverage against that. I'm going to move now into the concluding part, which is about what's going on right now. Russia has shown itself to continue to be a consummate player of pipeline politics, and it's done so by controlling this side of the Caspian Sea, Kazakhstan and Turkmenistan. Turkmenistan having the fourth largest natural gas reserves in the world, and Kazakhstan having three of the 10 largest oil and natural gas fields in the world. And it's continued to strangle their exports. And oil man, one of these American oilmen in Kazakhstan gave me a rule of thumb for understanding. What does that mean? What PRISM do you use to understand that? And the way he put it, this very colorful way, generally, if a man is holding a knife to your throat, he wants something. What does Russia want? Well, when Putin is going around the world and getting into these scraps with these blunt statements of his and the moves that he's made with the oil industry, taking it under his control and so forth, he is following in a long line of Russian leaders who crave international respect and who resent that they don't get it. And he has proposed a series of pipelines to project that power out of this policy. The irony is that it's not the United States that has learned the lesson that power in that region and into Europe comes out of control of the flow of natural gas and oil. Putin learned it. Putin has proposed a series of oil and natural gas pipelines that would harness this tremendous store of energy, oil and natural gas in this region and on into Russia and then project it into Europe. And one of the pipelines would go from Turkmenistan, getting all of its natural gas into Kazakhstan and. And getting its natural gas and combine it. Let's see. Okay. And combine it with Russia's and then send it. This is. There it goes. Send it into Europe through Nord Stream, Northern Europe. The Nord Stream natural gas pipeline into Southern Europe through the South Stream pipeline. The objective here being to capture more of the European energy market. It already. Russia already controls more than 30% of the natural gas and oil supply into Europe. And there's a debate right now in Europe. Critics of Russia say that this is a worrying thing, that Russia already controls 30 or 35% of the oil and natural gas supply in Europe. And what does it mean that these pipelines are going to come on online and it's going to control more that Russia is buying up oil and natural gas installations in Eastern and Central Europe? That. The head of the northern pipeline is the former Chancellor of Germany, Gerhard Schroeder. He's an employee of Gazprom. The outcome of the construction of these pipelines would further. Would further keep the east side of the Caspian apart from the rest of the. Of the world. And it would make. It would strangle the diversification, energy diversification in Europe. For my own 11 years in that region, I've got my own worries. I saw in that time there, when I lived there that in fact, Russia did use its petro power, the way we've described as a blunt instrument, to get its way in the Caucasus and Central Asia. And it seems to me that it behooves one to take out an insurance policy just in case. And that insurance policy could be this. This has been a pipeline that's been proposed for a long time in the 1990s, it couldn't be built because the president of Turkmenistan was demanding a $500 million bribe to make that happen. He's dead now, and his successor just might, just might agree to do that. If that pipeline were built, and that's a natural gas line, and then an oil pipeline were combined with it, what you would have is a unit of Central Asia and the Caucasus linked to the west through Azerbaijan, Georgia, on into Turkey and into Europe. And you would provide breathing space, the same political breathing space for this side of the Caspian and this diversified oil on the. I'm sorry, diversified supply in Europe. I wanted to close with some cultural advice since I meant, meant precisely for you Google guys who go who you guys are going all over the world and making deals and having Google. Do you have Google Kazakhstan yet? If you do, what do you do if your host hands you over dinner a sheep's eye or a sheep's ear? Wrap it in a noodle. You've looked at the book. John Brown, the former head of Ben P. Was handed a sheep's eye over dinner. Al Gore, when he landed in the region, was alerted that over dinner he was going to be handed a sheep's ear. And he was given the following advice that you must remember. Swallow, don't chew. Thank you very much. Please. I see you.

Thanks for your talk. It's very interesting. So all the pictures you drew showed pipelines facing west, and yet there's this big blob there called China to the east. And we've seen the last few years, China's become very aggressive in securing energy supplies. And I'm wondering if there's any activity on that front. Are the Chinese involved in this region and possibility of building Chinese pipelines, I guess across the Himalayas or the step. What's the story with China?

That's a good question. There are. China is active and there are plans on the table. China has built an oil pipeline into Kazakhstan and It's proposed a $26 billion. I'll go back $26 billion. Pipeline, gas pipeline from Turkmenistan into China. China is, in effect, an ally of the west of the United States in this respect. There's no difference if China builds a line. There's this prevailing wisdom, or at least that I read a lot, that's China is our enemy on the energy front. It's not, at least in this region, if China. I don't believe China will because $26 billion is a lot of money for a pipeline. But if they did, it would. It would coincide with the best interests of that region, it would help make them politically independent.

Great.

I have a somewhat different question, and that is you showed the northern pipeline last couple of years there's been this standoff between Russia and Ukraine and Belarus about the pipelines that flow across through central Europe. And I'm wondering if the same argument doesn't hold in reverse, why doesn't Ukraine have this power over Russia or Belarus have the power over Russia because they can shut down the pipelines at any time.

Well, that's what those, that is what those standoffs are all about. Well, it depends who you believe. But the Russians claim, and I believe it's true, that the Ukrainians are stealing oil from the lines going through there and the Belarusians too, the way they see their advantage is on the economic side. But they don't have, in the same way that none of these states has geopolitical aspirations, this aspiration that Russia does of projecting power, squeezing in that manner. The Slavic states don't either have not demonstrated one Ukraine and Belarus. What they try to do is squeeze for dollars. And so for example, the latest one you heard was it was a month or two ago and Russia, a day after the Ukrainian election or the day of the Ukrainian election suddenly announced Ukraine owes us $1.3 billion and we're going to shut down the pipeline Monday unless you pay us this. And I tracked that down and what happened was a Ukrainian mafia figure named Dmitry Firtosh had been stealing natural gas in this with there's a Russian mafia deal, Russian, Ukrainian mafia deal. And he stole what, $1.3 billion worth of natural gas from this mafia deal and took off to London. And this went all the way to the top in the Kremlin. We want our money. And so they announced it as though it was the Ukrainian government that did this. But in fact it was mafia to mafia. And I blogged about this by the way, on my blog.

Thanks.

All right.

Thank you for coming to talk to us today. It's very interesting. I was looking at this picture during your whole talk thinking about why don't they just cross over the Caspian like this proposed pipeline here. Especially if Kazakhstan and Turkmenistan don't want to be under the thumb of Russia. It seems like a no brainer. So why on earth is this still in proposal phase? Why would the prime minister of Turkmenistan say no, I want $500 million, I'd rather go through Russia and be under their thumb. Why isn't this done already?

Let's conference call these guys. I feel exactly the same way, but I can tell you A couple of facts. One is, is the reason the Baku Jehan pipeline happened was not because the US got behind it. It was because it was conceived by the presidents at that time of Azerbaijan and Georgia, Heydar Aliyev and Edward Shevardnadze. They decided they were going to have both of them, remember, coming from the Kremlin, decided, we're going to take on Russia. They were brilliant guys with real nerve who knew what the Kremlin was going to do before it did it, and they decided they were going to take the risk. The guys on the east side of the Caspian don't seem to have that same nerve. And they'll argue it square, they'll argue it round wide why they don't do it. But in the end, because of the logic that you just raised, it's obvious they just don't have the guts.

I was wondering about, sort of, we've talked about the north, the south and the east of there. How does running the pipeline through Turkey change its geopolitical role in the world or its ability to influence what's happening there since its relationship with its surroundings are changing and evolving, both due to internal and external influences?

Yeah, it is the hub. Turkey. Well, Turkey, these are almost all Turkic countries. Georgia, Armenia and Tajikistan are not, but the rest of the five are, so they're kin. And Turkey regards itself as the father, the patron of the whole region. And it is the hub. It's kind of a patron client relationship. And the US has kind of used Turkey. I don't mean used in a bad way, but as a surrogate in the region. It's a very positive role. And Turkey is serving as that way station, that channel for the energy coming out of there and going on into Europe.

Thank you. Hi. Can you comment on the current situation in Georgia where the Western government now facing the mass demonstrations, they shut down TVs, mass media and stuff like that. So can you comment on that? What do you think is going to happen?

What do I think is going to happen?

Yes. What do you think is going to happen and how it may affect the pipelines?

I don't think it will affect the pipeline. Just to say first, everybody knows that Georgia is nothing without that pipeline. Its whole future, its anchor as a real country in the world, relies on its strategic relationship with the United States. The United States, which is linked to. To the existence of that pipeline. But I don't know what's going to happen. Who was behind these demonstrations? Boris Berezovsky's former business partner is financing them. What's that all about, what is Russia's role in this? My hunch is that they won't succeed in this goal of bringing down the government. But it's. You know what it looks like? It looks like an attempt to have poetic justice from the Russian side about the Orange Revolution and the Tulip Revolution and the Velvet Revolution, which, as you know, really irritated Russia that the west came in and financed the overthrow of the governments in Georgia, in Ukraine and Kyrgyzstan. Well, you can do it. We can do it, too. So sorry for not being able to predict the future, but that's kind of how I look at it from right now.

Okay, thank you.

All right.

Isn't a pipeline very exposed to anybody who wants to damage it? And does that not make the economies.

Of the west very volatile? Yes. I mean, BP's pipeline in Colombia is broken up. Broken is blown up almost every week. The Baku Jehan pipeline is buried underground. The pumps are above ground. But this issue is raised currently because of this conflict between the Turkish army and the PKK on the Iraq border. There's a very interesting story today in the New York Times about that conflict, and I really recommend this because it's this measured, reasonable account. When you're in a. When you're at a place where there is a conflict, it looks a lot less dangerous than when you're 1,000 or 10,000 miles away from it. And this story, it says this, where you're sitting, it looks like Turkey and the Iraqi Kurd. The Turkish Kurds living in Iraq are just about. About to go to war. But this writer is saying, I can tell you that they're not. And then he describes this whole scene, you know, at the market and how they're friends. It's in no one's best interest. So the current. What I'm trying to say there is that this current prevailing wisdom out there, that that is a sign that this pipeline is in danger is false.

Hi. Thanks for coming. Thanks. What is the role of US or Western oil companies in all of this? And as a related question, are some of these private equity firms like Carlyle Group and so on so forth, are they kind of involved in some of the politics around this area?

Yeah, good question. American companies have 40%. That's right. That one doesn't work. 40% of the oil deal here in Baku. And Chevron and Exxon have 75% of the Tangiz oil field. And Exxon, ConocoPhillips are among the companies in the Kashagan oil field, the big. This is natural gas field. It's an Oil field. Talk to that man. Okay, but it's the largest oil field found anywhere in the world in the last 30 years. So the US is big in that region. But this, let me just go forward. Say hedge funds are not yet involved there, but you can imagine going forward that they will be. These oil companies, Exxon, Chevron, Total BP, they look huge and invincible right now. Earning $9 billion a quarter, $10 billion a quarter, record earnings. Chevron's shares are up 18% this year. I know that's nothing compared to Google, but in the oil world, it's big. These oil companies are in their last years. This is their heyday right here on the Caspian Sea. This is their last heyday. In the next 10 or 20 years, these companies will shrink. They will be employees, they will be service companies for the national oil companies, the Iranian state oil company, the Russia Gazprom PetroChina Venezuelan state oil company that control 80 to 90% of the world's natural gas and oil. These companies, the big oil companies, can't replenish the reserves that are behind these huge profits. And in say, two decades from now, in other words, in our lifetime, these companies are going to be like, you know, you name some old, you know, these old dinosaurs that once were giant like Detroit, you know, these car companies, they're going to be like that. And they are furiously trying to save themselves, figure out, retool themselves, how will we survive? And that's what I'm really looking at now, just trying to figure out what, you know, where are we going in that energy industry.

And with the amount of available oil diminishing so quite soon there will be very little oil left. And they think that at that time the free market for oil might stop and say Russia would decide that they no longer export oil and use it inside the country or China will do the same or what. Well, you know, that oil will become so strategically important that it will not be supplied to the free market. Will it happen?

That's the peak oil theory. That's a different thing from what I was discussing this. You know, first you've got state oil companies, national oil companies controlling. And so you've got, you know, a two or three decade horizon there where you've got a different canvas on which you're working. And then this theory says that in 50 or 60 or so many years, oil peaks and goes down. Suddenly the world has no oil. You know, the jury's out. What do you think about peak oil? I mean, these guys are fighting like cats and dogs on whether it's, whether it's true or not.

Yeah, definitely. The amount of oil is limited, you.

Know, is limited, is limited. But have we reached that peak? This is that theory. If there are 2 trillion barrels of oil, which is what dan Jurgen says, 2 trillion barrels of oil left, then we're not close to that peak. But this raises, I think what this raises is will the world of the green world that's trying to create alternative resources, alternative ways of powering the world, produce a technology that can do so without fossil fuels? That's a question for Google to ask. Thank you.