GAZPROM UNDERMINES NABUCCO IMPLEMENTATION

PanARMENIAN.Net
08.04.2009 22:12 GMT+04:00

/PanARMENIAN.Net/ Europe’s energy consumers should have breathed
a sigh of relief last month, when German Chancellor Angela Merkel
reversed field to support EU funding for the Nabucco pipeline and the
union earmarked â~B¬200 million of seed funding for the project in its
coming budget. At last, the EU had banded together to provide monetary
incentives for investment in the route that would bring natural
gas to Europe through Turkey, providing an important alternative to
Russian-controlled imports.

But now it seems that hard-won unity may have been too little, too
late. The long-suffering Nabucco project – always a geopolitical
priority but a commercial question mark – was designed to depend in
its first phase on new gas coming online from Azerbaijan’s Shah-Deniz
II and Azeri-Chirag-Guneshli fields in the Caspian Sea. The second
phase, when the pipeline reached its full capacity of 31 billion cubic
meters per year (still just a fraction of Europe’s gas needs), would
require gas from Turkmenistan, Iran, Iraq or the Gulf states. In the
beginning, however, Azerbaijan’s gas is key. Yet the Russians may
have just taken it.

Rovnag Abdullayev, the head of Azerbaijan’s state-owned energy
company, visited Moscow on March 27. There, in a quiet ceremony
at the headquarters of Russia’s Kremlin-controlled energy behemoth
Gazprom, he signed a memorandum of understanding that pledges gas from
Azerbaijan’s two new fields for Russian consumption — and possibly
for further export to the EU. While still nonbinding, the agreement
could undercut the viability of the Nabucco project entirely.

European consumers, such as those in Bulgaria who froze this January
when Moscow cut off their gas for almost three weeks, stand to
lose another alternative to Russian gas. Two alternatives, in fact:
Azerbaijan is also the only route through which Turkmen gas can reach
Europe without going through Russia. European energy diversification
could very quickly depend on a potentially hostile Iran, as gas
flowing from Iraq and the Gulf alone would not be sufficient to
justify Nabucco’s construction.

The offer from Gazprom had been on the cards since at least March
of 2008. So what compelled Mr. Abdullayev to visit Moscow now? After
all, Baku has been a driving force behind Nabucco’s construction as
a vehicle for building closer ties with Turkey and the West.

Two major developments in the past few months have changed that
calculus: Russia’s invasion of neighboring Georgia, and Turkey’s
decision to tie energy projects across its soil to Ankara’s gaining
EU membership. The former challenged the region’s Western trajectory
but did not necessarily knock Baku’s ambitions off course. The latter,
however, left Azerbaijan and the other oil- and gas-producing states
around the Caspian without a reliable bridge to Europe. There was
little choice left but to turn north, to Russia.

It is perhaps ironic that EU unity on Nabucco came less than two months
after Turkey’s Prime Minister, Recep Tayyip Erdogan, refused to attend
a conference on the pipeline’s construction, citing the still-closed
energy chapter of Turkey’s EU accession process as a barrier to
cooperation. Turkey has met all of the technical requirements for
opening the chapter, but continuing intra-EU disagreements over
Turkey’s membership stand in its way.

Those disagreements, whether over divided Cyprus, immigration,
culture or religion, also stand in the way of Europe’s energy
diversification. Perhaps their importance should not be played
down, but neither should the implications of Russia’s energy
geopolitics. Barack Obama’s new administration clearly understands
the strategic importance of taking Turkey’s interests seriously,
having made Ankara the final stop on his just-completed European
tour. Turkey-skeptic EU leaders ought to take Mr. Obama’s lead and
at least visit the country to listen to those interests articulated.

The result of Turkish resentment is not only a lost energy-transit
partner but, more important, lost energy producers. This could mean the
collapse of Nabucco, a project the European Commission has labeled an
EU strategic priority. Such a prospect would leave European consumers
in the same position as Azerbaijan: with little choice but to turn
to Russia, The Wall Street Journal reports.