Houston Oil Firm Frontera Drilling In Georgia

The standard boilerplate on Georgia is that the Caucasus country may be small but strategically important.  Straddling the Black and Caspian Seas, Georgia is seen by Washington and Brussels as a key fossil fuel transit country.  The Baku-Ceyhan pipeline attests to that.  It's all part of the grand strategy to tug the region out of Moscow's orbit.  Less know is the fact that Georgia has a little oil of its own and a Houston-based drilling firm is doing its darnedest to suck it out of the ground. 

BELGIANS BEGAN DRILLING IN GEORIA IN 19TH CENTURY

It was the Belgians, of all people, who started drilling for oil in Georgia back in 1870.  At the peak, the Belgians had 383 oil wells in an area called Block 13, an area covering approximately 5,252 square kilometers. 

As Frontera puts it:

Georgia is situated in a geologically favourable position at the western end of the oil rich geological province known as the Kura Basin. This basin extends eastward from Eastern Georgia into Azerbaijan and the Caspian Sea and is home to some of Azerbaijan's most prolific onshore and offshore oil fields. Fields in offshore Azerbaijan are now producing more than 600,000 bpd. In 1981, during Soviet times, production of oil and gas in Georgia exceeded 70,000 bpd.

Former U.S. Secretary of State James Baker spelled out what was at stake in the region. 

“Caspian oil may eventually be as important to the industrialized world as Middle East oil is today,” the Texas oilman and lawyer  enthused  in a 1997 New York Times’ article entitled, “The New Silk Road.”

Frontera inked a deal with Tbilisi what seems like ages ago in 1997, according to Spectrezine.

On June 26th 1997, Houston-based Frontera Resources Corp. signed a contract with the Georgian State Oil Co., Saknavtobi, to develop the Kura Basin and build a petroleum refinery near Tbilisi (the holdings were: Saknavtobi 50%; Frontera 30%; & Amerada Hess Corp. & Delta Oil Central Asia Ltd. 20%) - and the funding for same would be assisted by a $60 million loan from The European Bank for Reconstruction & Development.

Up to 2009, the Houston-based company has sunk $172 million into developing the choicer bits of "Block 12."  The graphic below is 'borrowed' from Frontera's website, http://www.fronteraresources.com/.

As noted by the Spectrezine piece, the EBRD has played the role of moneyman for the Texas oilmen. 

According to EBRD's website, its latest financing of Frontera activities in Georgia include a $10 million loan, with a sweatheart option to turn that into stock in the joint venture, Frontera Caucasus Corporation (FCC).

Some of Washington's high and mighty have graced the executive board of Frontera, among them ex-CIA Director John Deutch and the late Treasury Secretary, Lloyd Benson.  

The company's former chairman was Bill Clinton deputy energy secretary Bill White, who was in charge of formulating Clinton’s Caspian Sea policy. 

Baker's law firm, Baker and Botts, according to its website, represents Frontera.

Frontera is just one of a gaggle of multinational oil firms drilling in the region. 

As Frontera puts it a bit glowingly:

Since the break up of the Soviet Union in 1991, western oil companies such as ExxonMobil, BP, Royal Dutch/Shell and others have successfully entered the Caspian Sea region committing billions of dollars of new exploration and production investments.

British Petroleum is out in front, leading an international consortium investing in three major oil and gas pipelines traversing Georgia.

CanArgo Energy is conducting oil and gas operations over an extensive portfolio of prospects in the onshore region of eastern Georgia located close to Block 12.

Anadarko Petroleum and JKX Oil and Gas are also pursuing deepwater offshore oil and gas exploration projects in the Georgian waters of the Black Sea. Major international companies, including Baker Hughes, Schlumberger and Weatherford, as well as other regional companies, represent the oil service industry in Georgia.

The stakes in the Caspian Sea energy sweepstakes are high.  

Michael Klare, author of thirteen books including Blood and Oil and Resource Wars told Democracy Now! that the 2008 war between Georgia and Russia was not over the breakaway region of South Ossetia, but rather fossil fuels.

Well, I believe that this is what really underlies the conflict, and it has to do with the fact that the US has eyed the Caspian Sea, which lies just to the east of Georgia, as an energy corridor for exporting Caspian Sea oil and gas to the West, bypassing Russia. And this was the brainchild of Bill Clinton, who saw an opportunity, when the Soviet Union broke apart, to gain access to Caspian oil and gas, but he didn’t want this new energy to flow through Russia or through Iran, which were the only natural ways to export the energy.

So he anointed Georgia as a bridge, to build new pipelines through Georgia to the West.

Frontera and other international oil companies are betting there's something more.