December 10, 2007
SINGAPORE
ABSTRACT — In today’s world it is common ground that multinational corporations (M.N.C.s) are gaining more and more power in their negotiations with foreign governments. Some scholars argue that M.N.C.s are on the same level as national states. In some sectors this may be true, but in the oil and gas sector this assumption should not be taken for granted. This paper will try to explain that since the fall of the Soviet Union in December 1991, many things have radically changed with reference to the way M.N.C.s operate in the oil and gas sector. Probably, these oil and gas M.N.C.s have gained access to new and larger areas of the world, but in their relations with national states they are not as powerful as they were before. In particular, the analysis will be developed through two empirical case studies: the Mossadegh Case and the Kashagan Case.
Introduction — The relations between
private oil companies and foreign governments have always been very difficult
since the beginning of the oil industry. With reference to oil and gas it is of
clear evidence that, sadly, the most important reserves are located in the so-called
“difficult countries”: Persian Gulf states, Russia, ex-Soviet-Union republics,
Angola, Nigeria and Venezuela, just to mention the principal owners of oil and
gas. This distribution of these resources is one of the reasons for which a lot
of states are today reconsidering the nuclear option (in fact, uranium is
located principally in "friendly places" such as Australia and
Canada). The above-mentioned “difficult countries” normally have always lacked
the know-how in order to start and run oil and gas fields. In other words, also
today still in those countries that have been producing oil for decades the
expertise of Western petroleum companies is necessary and fundamental.
Obviously, for a private oil and/or gas company the measure of its success is
the profitability for its investors in the long run (not in the short run). In
fact, every oil or gas field requires huge investments and years of production
before it can turn to be profitable and for these reasons political stability
is fundamental.
In
today’s world at the international and domestic level we assist to an increase
in the power of new actors in addition to the national states. In reality, these actors have always existed in the previous decades, but today they are much more powerful than they were in the past. They include principally
non-state actors like multinational corporations (also called transnational
corporations) and N.G.O.s. In particular, the principal oil and gas companies are
multinational corporations and are among the oldest ones. In fact, companies
like British Petroleum (BP), Royal-Dutch Schell, ENI and Total S.A. have always
managed production establishments or deliver services in at least two countries
(this is in general the requirement necessary to be considered a multinational
corporation). All this said, to a more detailed analysis it is possible to
affirm that after the collapse of the Soviet Union in December 1991 oil
and gas companies have gained a lot of scope of action, which before was
impossible. But in addition to this, at the same time — differently from other
types of multinational corporations —
oil and gas companies started immediately to face a more complex environment where
their power was not anymore as strong as it had been in the past decades. In fact, before 1991 supported by their own
governments they had more power in order to carrying out their policy although they had a limited scope
of action given the division of the world into two opposite blocs (the West
around the U.S. and the east around the Soviet Union). Today, they have gained a
bigger chessboard in which they can freely invest and operate, but they have to
confront with an increased number of shareholders — before non existing or
with no possibility to voice their ideas —
which can sharply limit their power. The aim of this paper is to examine
two different cases that well explain these differences. This analysis will show how
oil and gas M.N.C.s worked before 1991 and have been working since then. The first example is related to
the nationalization of the Iranian petroleum industry in 1951 and to the
powerful response that the oil company investing in the area could put into
action supported by the governments of the U.S. and the U.K. The second example
is, instead, an ongoing event and is related to Kazakhstan's Kashagan oil field
where in the last months the Italian oil company ENI has been facing a very
difficult confrontation with the Kazak government. In particular, this second
case will permit us to really understand the way the conditions in which oil
companies operate today have really changed and how many more are the actors
involved in the process. If before the relations were between oil and gas
companies plus their own governments on one side, and the national governments
where the resources were located on the other side, today this scheme is too
simple and it is necessary to add more players with vested interests.
Mossadegh
Case — In the
1950s there was a real unbalance between the revenues obtained by the oil
companies and what was given to the national governments. The Anglo-Persian Oil
Company (A.P.O.C.)[i]
was founded in 1909 in
order to develop a large oil field in Masjed Soleiman in Iran. In the 1920s the
revenues Iran was able to get were only 16 percent of the net revenues. For
almost thirty years despite continued discussions between A.P.O.C. and the
Iranian institutions nothing had really changed.[ii]
Then, after negotiations concerning higher oil revenues for Iran had failed, on March 1951 the Iranian
Parliament voted to nationalize Iran’s oil industry. Following this event, Prime Minister Razmara, who had opposed the nationalization, was
assassinated and the Parliament elected Mohammad Mossadegh as new prime minister. The
new prime minister immediately enforced the Oil Nationalization Act. This meant
the nationalization of Iran’s oil, the cancellation of the A.I.O.C.’s concession (A.P.O.C.
had been renamed Anglo-Iranian Oil Company (A.I.O.C.) in 1935) and the
expropriation of the assets of the oil company in Iran. In response to this
law, the U.K. government decided to support A.I.O.C. and to impede Iran to ship
oil out of the country. In addition, the oil company called back all the
technicians from Iran causing a de facto
block of the oil production[iii].
Given disagreements with his former allies Mr. Mossadegh then dissolved Parliament
using a referendum to avoid his own impeachment. Finally, he was removed from
power on August 19, 1953, thanks to a military intervention. The coup d’état
had been supported and funded by the British and American governments and received
an important help by the C.I.A. (that run there the Operation Ajax)[iv].
After the regime change, the Iranian government was able to solve the dispute
with A.I.O.C. A consortium of eight companies from four nations (U.K., U.S.,
Holland and France) was built up and restored the oil production technically
under the National Iranian Oil Company.
This case explains how, before 1991, the real stakeholders
The
Kashagan Case — Kashagan
Field is an oil field located in Kazakhstan, which, given its oil and gas
resources, is one of the most interesting non-OPEC oil producing country. This
field is located in the northern part of the Caspian Sea. It was discovered in
2000 and it seems to contain more than 38 billion of barrels (it should be
capable of providing more than 1.5 million barrel per day). The Kashagan field is
operated by Italy's ENI (Ente Nazionale Idrocarburi[vi])
under the North Caspian Sea Production Sharing Agreement[vii].
This agreement includes seven companies: ENI, Shell, France's Total, U.S. Exxon-Mobil and ConocoPhillips, KazMunayGas (Kazakh) and Impex (Japanese).
This oil field is offshore in a very harsh environment with temperature ranging from -35° C in winter to 40° C in summer. In addition to this, the Caspian Sea has a very fragile biodiversity. The Kashagan field is located in a natural reserve close to the delta of the Ural River where live some species of animals like the European sturgeon, which currently risks disappearing. The shallow water of the Caspian Sea requires special boats to reach the wells, which are in the middle of the sea approximately 70 kilometers south of the city of Atyrau. Moreover, the consortium has been forced to build up special islands in order to drill off-shore. Last but not least, the pressure of gas and oil is very high (oil is 1,500 meters to
The
initial agreement specified that the companies should have gotten 90 percent of
the revenues with Kazakhstan keeping 10 percent of the total profits from the
extracted oil. Obviously, Kazakhstan would have also received 8.33 percent of
the corporate portion of production through KazMuniaiGaz, the state-owned oil and
gas company of Kazakhstan (this 8.33 percent should have been added to
the state portion of the extracted oil). Since the beginning the government
wanted to have oil, gas and revenue as fast as possible. The production should
have started in 2005, then ENI first postponed production to 2008 and then, in
August 2007, to 2010 with a huge increase in costs from $57 billion to $136
billion. Probably, the supposed reason is linked to the fact that the oil
contains mercaptan (a colorless gas also called hydrogen sulfide) which obliges
the companies to clean the polluted oil. Notwithstanding all these
difficulties, at Kashagan the investment will continue for two main reasons: an
amount of more than $9 billion (out of the $19 billion envisaged) has already
been spent and with oil prices well beyond $70 per barrel, also the most
complicated oil to be drilled becomes interesting for the oil companies. On
August 27, 2007, the government of Kazakhstan suspended all working activities at
the Kashagan field because of environmental violations, “a move that mirrored the
Kremlin’s first move against Shell at Sakhalin”[viii].
In addition to this, the Kazak government gave ENI 60 days to seal an accord (the
deadline would have expired on October 22, 2007). If an agreement had not been
found, the consortium could have been thrown out of the project concerning the development of
Kashagan. Moreover, on September 27, 2007, the Parliament of Kazakhstan approved
the law enabling the Kazakhstan government to alter or cancel contracts with
foreign oil companies if the way they work threatens the national interests.
Eventually, on October 7, 2007, the visit in Astana of the Italian prime
minister, Romano Prodi, together with a delegation of 200 people including
Italian industrialists and bankers, was beneficial to the negotiating process
because on October 22 — the day of the deadline — ENI and the government of
Kazakhstan released a joint statement in which they affirmed that the parties
had agreed to continue their negotiations beyond October 22, 2007, in a spirit of
positive and constructive cooperation[ix].
At the moment this is the latest event and it is not clear what will happen in
the next months.
Would
this kind of negotiation between a consortium of multinational corporations
(the oil companies) and a national government have been possible before 1991?
The answer is probably no. And the principal reason is linked to the increased
number of the actors involved in the process. If in the Mossadegh Case the
actors were four, in the Kashogan Case the actors are at least 10: ENI, the other 5
oil companies (the sixth KazMunaiGaz is Kazakh and is linked to the national
government), the government of Kazakhstan, the Italian government, the European
Union (E.U.), the Russian government, Russian oil company Lukoil, N.G.O.s of
different composition, financial institutions, China and India. The presence of
so many stakeholders so interested in the development of the project, really
gives to the Kazakh government a lot of negotiating power, although Kazakhstan
alone would not be absolutely capable of exploiting the oil of Kashagan[x].
Now the government of Kazakhstan has a very different leverage in this dispute
compared to similar situations all around the world in the previous decades and
it can stop a project on the basis of environmental damages that ENI has not tried to avoid. In reality, these environmental reasons are really weak. In fact,
in the previous months the government of Kazakhstan first has requested
compensations for the delay in the beginning of the production, then it has asked
for an increase in the profits of KazMunaiGaz, then it has wanted a
compensation of $10 billion (which ENI or the other
companies are not able to pay), then again it has stressed the necessity to increase the profits
and to give a role of co-operator for KazMunaiGaz together with ENI. In other
words, in the previous months there has been no real trace of environmental concerns.
Instead, it is obvious that Kazakhstan wants to renegotiate the deal for
monetary reasons principally linked to the fact that the increase in the costs
of the project and the delay in the beginning of the production have forced
Kazakhstan to reduce its forecasts for the amount of available economic
resources in the next years. Given this situation, in any case:
There is little doubt that at the end of the day the
consortium partners will have to pay more to the government and to accept
greater scrutiny of future expenditures. They will have also to comply with
some of the strictest environmental and safety rules in the industry, fully
understandable given the fragility and uniqueness of the Caspian ecology and
the deadly danger posed by hydrogen sulfide gas[xi].
Principal Actors in the Kashagan Case
|
|
ENI
|
ENI
needs to find a solution with the government of Kazakhstan.
The
Italian company has everything to win in operating the oil field and
everything to lose in been thrown off from its position. If the company wants
to continue to be one of the most important energy companies in the world it
has to find a way to negotiate with the government of Kazakhstan.
|
OTHER WESTERN OIL COMPANIES
|
All
the other Western companies want ENI to be successful in the negotiating
process.
An
expropriation by the government of Kazakhstan would mean that all the
partners in the consortium are going to be severely hit by the lost
investment. Money is a critical issue.
|
KAZAK GOVERNMENT
|
The
government wants to get a bigger share of the profits. The fact of not
belonging anymore to a specific bloc gives the government of Kazakhstan much
more negotiating power because it has now always the possibility to find
another partner if the deal with the first partner does not work out well.
In
addition, Kazakhstan’s environmentalist Tabigat (Nature) Party criticizes the
oil industry and suggests it could be responsible for the environmental havoc
in the Caspian Sea (for instance, the deaths of many seals).
The
Caspian Environment Program is a regional umbrella program established by the
Caspian littoral states and it receives aid by the international agencies.
|
ITALIAN GOVERNMENT
|
The
Italian government fully supports ENI. The visit of the prime minister, Romano
Prodi has been done in order to lobby in favor of ENI. Not only the
delegation (including businessmen and bankers) did speak about Kashagan, but
also it spoke about many other economic deals that could be achieved between
the two countries. In addition, the prime minister has reminded to the Kazakh
government how strongly Italy could lobby in favor of the accession of
Kazakhstan to the W.T.O.
|
EUROPEAN UNION
|
The E.U.
wants ENI to continue to be the operator of the Kashagan field. This is
of vital importance for the E.U., which does not have many new relevant oil
fields. Andris Piebalgs, the European commissioner for energy openly
expressed the view that, in case of a serious stop for the consortium, the E.U.
would strongly support ENI[xii].
In addition to this, the E.U. is really concerned and cautioned Kazakhstan
over the new oil law allowing Kazakhstan to break off contracts with foreign
companies, warning that investors need a secure and predictable climate for
large energy projects[xiii].
|
RUSSIAN GOVERNMENT and LUKOIL
|
Russia
is very interested in the Kashagan field. Moscow would like to assist to an
integral nationalization of the Kashagan field by the Kazakh authorities and
then to substitute the operator ENI with the Russian oil company Lukoil[xiv].
Russia pushes for a solution similar to Sakhalin II.
|
LOCAL AND INTERNATIONAL N.G.O.s OF DIFFERENT
COMPOSITIONS
LOCAL N.G.O.s:
Globus
Tan
Caspian Press Club
INTERNATIONAL N.G.O.s:
Campaign for the Reform of the World Bank
The Corner House
Platform
CEE Bankwatch Network
|
The principal document to be examined for a clear
understanding is the “Preliminary N.G.O. Fact Finding Mission Report” of
September 4-13 2007[xv]. According to the report:
A) some N.G.O.s insist on the environmental concerns related
to the fact that the Kashagan field has a very fragile biodiversity and that it
is located in a natural reserve close to the delta of the Ural River, which
hosts many rare animals (like the European sturgeon and the seal). Other
environmental concerns are related to the fact that, in winter, ice could
create serious damages to the artificial islands and the undersea pipelines,
resulting in oil spillover.
B) Some N.G.O.s insist on health concerns for the residents
of the area (for example in the city of Atyrau). Principally these
organizations point out the risk of toxic exposure and mass poisoning to
hydrogen sulfide and other sulfates, which have to be separated from oil.
C) Some N.G.O.s insist on the fact that local residents have
never been included in any public form of consultation regarding the project
while Kazakh law requires public hearings.
D) Some N.G.O.s insist on social concerns explaining that
the Kashagan field threatens the livelihood of millions of residents in the
area. In fact, oil development in the area places at risk tourism and fishing
activities and prevent investment in other economic ventures that could
contribute to the sustainability of the region.
E) Some N.G.O.s insist on the fact that the majority of
workers employed in the Kashagan Project are not local residents but come from
other part of Kazakhstan, Russia or abroad.
|
FINANCIAL INSTITUTIONS
|
The three major banks involved in Kashagan are: BNP Paribas,
Citigroup and Société Générale. Part of the project is also financed by the
European Bank for Reconstruction and Development (E.B.R.D.).
The Japan Bank for International Cooperation (J.B.I.C.),
which is an export credit agency, is financing Inpex together with three
Japanese banks: Mitsui, Mitsubishi and Mizuho.
BNP Paribas, Citigroup, Société Générale and the E.B.R.D.
are requiring that the financing to be put in place to include provisions for
the project to be compliant with the Equator Principles[xvi], which call for a
full environmental and social impact assessment (ESIA) and associated action
plans to comply with I.F.C. performance standards and World Bank pollution
prevention and abatement standards.
|
CHINESE
GOVERNMENT
|
China
is always more interested in the Kazakh oil giving its increasing necessity
of energy. In particular, China and Kazakhstan started collaboration in the
energy sector in 1997 and in 2005 an oil pipeline between western Kazakhstan
and China’s Xinjiang Province was completed. This pipeline is designed to
transmit 20 million tons of oil a year.
|
INDIAN
GOVERNMENT
|
Similarly
to China, India has a huge necessity of energy, and Kazakhstan could provide this energy. Since 2005, there have been specific Indo-Kazakh bilateral ties.
|
A
national government is using — although only pro forma — environmental tools that not long ago would have been unimaginable
in such a situation. Concepts deriving from international environmental law
were simply out of question until few years ago. But today this body of laws — although not really binding — is emerging and in the Kashagan case it is creating a
sort of temporary alliance between N.G.O.s, which are seriously committed to the real damages
engendered by oil companies, and national governments, which are seriously committed to get
more money from their own resources. N.G.O.s, which until few years ago did not
have any means to voice their opinions, now utilizing modern ways of
communication, may easily voice their concerns.
Astana,
the new capital of Kazakhstan, is sending out the message:
That the international
oil companies will be subject to ever increasing control, ever higher taxes and
obligations and will ultimately have to concede both ownership and control. All
this is provided for in the P.S.A. [production sharing agreement] of course, but could take place well before
2037, when the P.S.A. expires. Ultimately speeding up the process is what the
current talks are all about. With billions of dollars still to be invested in a
long-term project several years away from delivering at full regime, the oil
companies still have powerful cards in their hands. With oil at US$80 a barrel
there is still plenty for everyone and the government’s share is bound to rise
now, and over the longer time frame. But Kazakhstan is not Russia. It remains
far more amenable to the idea of win-win solutions which leave foreign
investors feeling both comfortable and valued — even if slightly less well off
than they may once have hoped.[xvii]
Conclusion — The two cases well explain
two situations in which there is a confrontation between an M.N.C. and a national state. But, the outcomes are completely
different. The first example ended with a total victory of the involved M.N.C.
The second example testifies a radical change in power relation between oil
and gas companies on one side, and national states on the other side. As
mentioned before, this evolution is directly linked to the emergence on the
international stage of many more actors that before 1991 were or hidden or were
absolutely incapable of expressing their position. In other words, the second
example shows how an increased number of actors in the relation M.N.C. versus
national government does not mean anymore a complete victory of the M.N.C. In fact, increasing the number of actors means giving more
alternatives. The result is a balance of power that will only in a partial manner continue to
benefit more M.N.C.s than national states. In fact, the relation is not anymore
so disproportionately favorable to the M.N.C.s side as it was before. Maybe in other business
sectors in today’s world, M.N.C.s are gaining more power but according to the two
cases considered with reference to the M.N.C.s operating in the oil and gas
sectors the result seems to be the opposite.
[i] A.P.O.C. was renamed in
[ii]The
International Court of Justice was called in to settle the dispute, but a 50/50
profit-sharing arrangement, with recognition of nationalization, was rejected
by both the British government and Prime Minister Mossadegh. At this
point direct negotiations between the British and the Iranian government
ceased, and over the course of 1951, the British ratcheted up the pressure on
the Iranian government and explored the possibility of a coup against it.
[iii] The situation was particularly harsh for Iran because Iran was mainly
exporting its oil to Great Britain. An industry that before the nationalization
brought over $100 million had become to increase Iran’s debt.
[iv] FISK, B., La Grande Guerre Pour la
Civilisation, L’Occident à la Conquête du Moyen-Orient (1979-2005), La
Découverte, Paris, 2005, pp. 123-167
[v]The only doable actions were indirect actions. For
example, the Soviet Union in those years funded the Iranian communist party
whose name was Tudeh.
[vii]ENI was nominated
operator in 2001 and then decided to undergo the change in name to Agip Kazakstan
North Caspian Operating Company (AGIP K.C.O.). See: http://www.agipkco.com/wps/wcm/connect/AgipKCO+EN/Home
[viii] ROBINSON, A., Have the Oil Majors
Bitten Off More Than Every They Can Chew With Kashagan?, in www.oilbarrel.com, October 21, 2007.
In Sakhalin, Shell admitting to have to face cost worth
$22 billion versus the previous estimated $10 billion with reference to
the L.N.G. project created an ideal opportunity for Russia to modify the contract.
Shell’s stake was reduced from 55 percent to 25 percent and the control passed from Shell to
Gazprom.
[ix] MARKEVIC, S., ENI-Kazakhstan:
Siglato Memorandum, Si Va Verso Accordo, in
http://www.italkazak.it, October
24, 2007. ARPAIA, A., Le Nostre “Campagne”
Energetiche All’Estero: Il Kazakistan, in
http://www.edicolaciociara.it,
October 15 2007. AFP, Kazakhstan, Consortium Agree To Continue Talks On Giant Oilfield,
in http://www.afp.com/home, October 22, 2007.
[x] One of the reasons for the inclusion of KazMunaiGaz in the consortium
is – apart the revenues — principally for acquiring the expertise to work oil
fields located in very difficult areas.
[xi] ROBINSON, A., Have the Oil Majors
Bitten Off More Than Every They Can Chew With Kashagan?, in www.oilbarrel.com, October 21, 2007.
[xii] UTKIN, E., Così Cambierò il Mercato
dell’Energia in Europa. E farò Felici i Consumatori, in www.panorama.it, September 18, 2007.
[xiii] AP, EU Concerned With Kazakh Law Allowing It To
Cancel Foreign Oil Contracts, in http://www.ap.org, October 25, 2007.
[xiv] KOVALEV, N., ENI-Kazakhstan, Un
Conflitto Diretto Da Mosca, in http://www.aprileonline.info,
September 12, 2007.
[xv] This document written by national and international N.G.O.s explains the
different problems linked to Kashagan Field. In:
www.banktrack.org/doc/File/dodgy%20deals/Kashagan%20oil%20project/071011%20FFM_Report_with_cover.pdf
[xvii] ROBINSON, A., The Kazakhstan
Government Would Probably Like to Do A Russian Style Grab for Major Oil and Gas
Assets but Does It Have the Wherewithal?, in www.oilbarrel.com, October 28 ,2007.
BIBLIOGRAPHY
AFP, Kazakhstan,
Consortium Agree to Continue Talks on Giant Oilfield, in http://www.afp.com/home, October 22, 2007
AP, EU Concerned
With Kazakh Law Allowing It to Cancel Foreign Oil Contracts, in http://www.ap.org, October 25, 2007
ARPAIA,
A., Le Nostre “Campagne” Energetiche
All’Estero: Il Kazakistan, in http://www.edicolaciociara.it, October
15, 2007
ATTALI, J., Une
Bref Histoire de L’Avenir, Fayard, Paris, 2006.
BURCHILL, S., LINKLATER, A., Theories of International Relations, Palgrave Macmillan, Houndmills,
Great Britain, 2001
DINGWERTH, K., PATTBERG, P., Global Governance as a Perspective on World Politics, in 12 Global
Governance, 2006, pp. 185-203
FISK, B., La Grande
Guerre Pour la Civilisation ,
L’Occident à la Conquête
du Moyen-Orient (1979-2005), La Découverte , Paris, 2005, pp. 123-167
HEWSON, M., SINCLAIR, T., J., Approaches to Global Governance Theory,
State University of New York, New York, 1999
HOBSON, J., M., The State and International Relations, Cambridge University Press,
Cambridge, 2000
KEGLEY, C., W., Junior, Controversies in International Relations Theory, Realism and the
Neoliberal Challenge, St. Martin’s Press, New York
KOVALEV,
N., ENI-Kazakhstan, Un Conflitto Diretto
Da Mosca, in http://www.aprileonline.info,
September 12 2007
LEVY, D., L, PRAKASH, A., Bargains Old and New: Multinationals Corporations in Global Governance,
in 5 (2) Business and Politics, 2003,
pp. 131-150
MARKEVIC,
S., ENI-Kazakhstan: Siglato Memorandum,
Si Va Verso Accordo, in http://www.italkazak.it, October 24, 2007
MURPHY, C., N., Global Governance: Poorly Done and Poorly Understood, in 76 (4) International Affairs, 2000, pp. 789-803
ROBINSON, A., Have
the Oil Majors Bitten Off More Than Every They Can Chew With Kashagan?, in www.oilbarrel.com, October 21, 2007
ROBINSON, A., The
Kazakhstan Government Would Probably Like to Do A Russian Style Grab for Major
Oil and Gas Assets but Does It Have the Wherewithal?, in www.oilbarrel.com, October 28, 2007.
SELL, S., K., Multinational Corporations as Agents of Change: The Globalization of
Intellectual Property Rights, in A. Claire Cutler, Virginia Haufler and
Tony Porter (eds), Private Authority and International Affairs, Albany, New
York, State University of New York Press, 1999, pp. 169-198
STRANGE, S., The Retreat of the State: The Diffusion of Power in the World Economy,
Cambridge, Cambridge University Press, 2000, pp. 44-65 and 91-99
UTKIN,
E., Così Cambierò il Mercato dell’Energia
in Europa. E farò Felici i Consumatori, in www.panorama.it,
September 18, 2007
VIOTTI, P., R., KAUPPI, M., V., International Relations Theory: Realism
Pluralism, Globalism, and Beyond, Allyn and Bacon, Boston, 1997