September 19, 2008

Russian Paper Says Gazprom a Winner in Russia-Georgia War

Text of report by Russian newspaper Gazeta, owned by metals magnate Vladimir Lisin, on 27 August

[Article by Nikolay Vardul: "Pipeline Residue Left by War"]

The conflict in South Ossetia is, of course, first and foremost a territorial and ethnic conflict. Tbilisi is talking about Georgia's territorial integrity. Tskhinvali is talking about a third genocide of the Ossetian people perpetrated by Georgians. After the war the chances of self-determination for South Ossetia and Abkhazia have increased greatly.

At the end of the 20th century there were many conflicts like this, first and foremost because of the disintegration of the multinational USSR and SFRY [Socialist Federated Republic of Yugoslavia]. But in these states the territorial and ethnic conflicts were merely frozen. Their nature goes back to somewhere in early capitalism, accompanied by national revolutions.

Against this epic-tragic background it is somehow awkward to talk about commercial and prosaic matters like a barrel or an oil or gas pipeline. But I cannot help it!

The point is that one of the main winners in the Russian- Georgian war in South Ossetia was Gazprom. And not only in economic terms, but also in geopolitical terms. I do not want people to think I mean to say that Russia's biggest state company was involved in unleashing the war or, indeed, took part in it in any way. They had nothing to do with it. But the fact is that the war was a severe blow against Gazprom's competitors, or more specifically, the rival infrastructure projects for delivering gas to Europe.

As Britain's BBC rightly notes, it is through Georgia that the so- called "fourth corridor" runs, by which hydrocarbons and especially natural gas reach the EU countries. The first is from Russia, the second is from Norway, and the third is from Algeria.

The biggest gas pipeline runs through Georgia: Baku-Tbilisi- Erzurum (Turkey), from where the gas continues towards southern Europe. With the growth in the volume of extraction in Azerbaijan, the pipeline's capacity could rise from today's 6 billion cubic meters a year to 20 billion by 2014. Even if it did not stop deliveries, the war, first of all, pushed gas prices up, and second, it was bound to influence plans for the expansion of the "fourth corridor."

True, the conclusions from the war could be twofold. The BBC claims that the Russian-Georgian war could be interpreted by the gas and oil extracting countries as a show of strong pressure by Moscow, pressure that could also be turned against them. Which might make them abandon plans to support non-Russian - essentially, anti- Russian - projects for the delivery of hydrocarbons to Europe. But exactly the opposite conclusion is also possible. For the EU, the main value of the Baku-Tbilisi-Erzurum pipeline is that it has nothing to do with Russia, and therefore Gazprom. There could be a boom in non-Russian projects with the support of the Europeans. Germany, for instance, has already sounded out the subject of pipelines as one of the priorities in postwar talks. Berlin is threatening Moscow that "without the help of the EU it will be difficult for Russia to modernize the gas infrastructure." The same arguments also apply to the Georgian transit oil pipelines, such as Baku-Tbilisi-Ceyhan, for instance.

One war has ended, another lies ahead. That is what always happens. This time a territorial and ethnic war will give way to a pipeline and hydrocarbon war.

Originally published by Gazeta, Moscow, in Russian 27 Aug 08.

(c) 2008 BBC Monitoring Former Soviet Union. Provided by ProQuest LLC. All rights Reserved.