WASHINGTON, Sept. 28 -- President Clinton asked Russian President Boris Yeltsin to help push forward massive Western oil deals in Kazakhstan and in the Caspian Sea, U.S. officials said Wednesday. He urged Yeltsin to 'show more flexibility' in renegotiating a contract for construction of a pipeline from Kazakhstan's Tengiz oil field, in which Chevron has exclusive exploration rights, to the Russian Black Sea port of Novorossiysk, they said. Chevron estimates it can increase output at Tengiz, the largest field to come into production in more than 20 years, from 60,000 barrels of oil a day to 700,000 barrels daily. But pipeline capacity must be increased tenfold to accommodate the additional oil. It was envisioned that the Caspian Pipeline Project, a consortium involving Russia, Oman and Kazakhstan, would carry out the $1.5 billion construction project. But the current deal calls for Oman to receive 25 percent of revenues from fees for pipeline use without providing any money to build it, which Chevron has rejected. Russia and Kazakhstan will also receive a 25 percent fee from pipeline traffic for granting access rights and land. Chevron, which will shoulder the main burden for financing the project under the existing deal, also receives 25 percent. Chevron officials say they want to renegotiate the deal so Oman Oil absorbs some of the financial risk in return for revenues. Kazakhstan is willing to consider a new arrangement, but Oman Oil and Russia do not for fear their share of revenues will be reduced under a new deal, officials said.
Negotiations have been dead in the water now for nearly two years. Clinton told Chevron executives, who came to the White House earlier this month to discuss the Yeltsin visit, he would try to help, officials said. Senior U.S. officials present at meetings Wednesday between Yeltsin and Clinton said the issue was discussed. 'The president told Yeltsin that we are concerned by some unhelpful statements from your government,' the official said under conditions of anonymity. 'Oil development in this region is good for Russia and good for the United States. 'It's in your interest to take another look at this and show a little flexibility.' The officials said that message also applied to Russian objections toward a $7 billion joint venture for development of oil fields in the Caspian Sea that involves Unocal, Pennzoil and Amoco, all U.S. firms, as well as British Petroleum and the national oil firm of Azerbaijan. Russia, which claims a territorial right to oil in the Caspian Sea, indicated it would block the deal. U.S. officials said Russian objections came primarily from officials in the Foreign Ministry. Nevertheless, The Russian national oil company, Luke, recently took a 10 percent share of the deal. U.S. officials point to Moscow's involvement in the joint venture as a positive sign that they will permit development to go forward. 'That was a major breakthrough,' the senior U.S. official said. Russian Foreign Minister Andrei Kozyrev told reporters after a meeting with Secretary of State Warren Christopher that Russia supports development of the Caspian Sea fields providing all partners recognize Moscow's claim to the field. He said extracting the oil must also be done in an ecologically safe manner.