September 9, 2008

Russian Pundit Notes Lack of Alternatives for EU to Russian Gas Supplies

Text of article by Sergey Pravosudov, Director of the Institute for National Energy Policy, "US digs its own grave: The war in Georgia has shown that energy supplies to Europe that bypass Russia are unreliable" by heavyweight Russian newspaper Nezavisimaya Gazeta on 5 September

In spite of strong pressure from the United States, the European Union declined to impose sanctions on Russia. There is nothing surprising in this, given that Europe, unlike the United States, is dependent upon Russian energy supplies. It is well known that the Americans are interested in strengthening their position in the Caucasus, since gas and oil pipelines run through the area. When American advisers were engaged in training Georgian soldiers, it was done under the auspices of the need to protect the Baku-Tbilisi- Ceyhan oil pipeline and the Baku-Tbilisi-Erzerum gas pipeline.

However, it is surprising that the United States supported the aggression of the Georgian army against the inhabitants of South Ossetia, given that military activities have never increased the reliability of transit. Although there is a simple explanation for this: the main consumers of the energy resources that travel across Georgian territory are European countries and Turkey. By creating tension in the region, the Americans are hoping to strengthen their influence on the European Union. In addition, the United States has made it clear to Russia that it will not stand by while our country strengthens its international position.

It is worth remembering that the United States went all out to prevent agreements being achieved on oil and gas supplies from the USSR to Europe. However, the Europeans managed to resist this pressure and, against all the odds, are continually increasing energy imports from Russia. True, some politicians in Europe have recently begun to talk of the need, at a time when Europe's own extraction of hydrocarbons is rapidly declining, to find alternative energy suppliers. Countries of the Caspian basin are named as possible alternatives. The United States and Europe have actively supported the construction of pipelines from Azerbaijan to Turkey. In the future they hope to attract resources from Turkmenistan, Uzbekistan and Kazakhstan. Although for the time being these countries prefer to transport oil and gas across Russian territory.

Supplies of hydrocarbons through Turkish territory have never been noted for their stability. This is well understood by the Iranians, who export natural gas to the country. The fact is that Kurds live there, who advocate the creation of an independent state: Kurdistan. One of the methods they employ in their struggle for independence is to carry out terrorist attacks on the Iran-Turkey gas pipeline. As a result, supplies of natural gas along this route are regularly interrupted. Usually the situation is resolved by virtue of Russia increasing the volume of gas pumped through the "Blue Stream" line that comes across the bed of the Black Sea.

This summer the Kurds also blew up the Baku-Tbilisi-Ceyhan oil pipeline, which resulted in oil supplies from Azerbaijan being halted. As a result, Azerbaijan exported some of the oil through the Baku-Novorossiysk pipeline.

In such conditions the construction of the Nabucco pipeline, which should transport Azerbaijani gas to Europe, appears a complete fantasy. Earlier the main deficiency of this project was a shortfall in gas to fill it. Azerbaijan has only one major oil field, Shakh- Deniz, but this cannot produce the 30 billion cubic meters of gas per year required to fill Nabucco. Moreover this gas is needed by Azerbaijan, Georgia and Turkey. It turns out that only a few billion cubic meters will reach Europe, which will only have a negligible impact on that market.

Earlier the idea was discussed of creating a Trans-Caspian gas pipeline along the Caspian seabed, so that Turkmen, Uzbek and Kazakh gas could supply Nabucco. But these countries signed agreements with Gazprom on expanding the capacity of the Central Asia-Centre gas pipeline and constructing a Caspian pipeline.

The Europeans had hoped to supply Nabucco with Iranian gas, but the Americans are opposed to this. They are counting on installing a friendly regime in the country and gaining control of Iranian gas and oil reserves. As is well known, the United States has imposed sanctions on Iran and banned American companies from cooperating with the country. Moreover, they have forced their European partners to abandon projects in Iran. In particular, the French company Total suspended its participation in the development of South Pars, the largest Iranian natural gas reservoir. However, the Iranians were unfazed and invited Gazprom to participate in developing South Pars and a number of oil fields.

Today the pro-American Georgian leadership is turning the Caucasus into a zone of instability, which automatically destroys any European hopes of establishing new energy supply routes from the Caspian region. The authorities of Ukraine and Poland invariably follow the lead of American diplomacy, but Germany, France and Italy have traditionally pursued more measured policies. In spite of the harsh statements directed against Russia, the Europeans will undoubtedly continue to strengthen their economic ties with our country. Primarily in the sphere of energy supplies. Therefore it goes without saying that the "North Stream" and "South Stream" gas pipelines will be constructed on schedule and Russian gas supplies to Europe will continue to increase steadily.

[Description of Source: Moscow Nezavisimaya Gazeta in Russian - Daily Moscow newpaper featuring varied independent political viewpoints and criticism of the government; owned and edited by businessman Remchukov]

Originally published by Nezavisimaya Gazeta, Moscow, in Russian 5 Sep 08.

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