Page 2 of
2 A massive wrench thrown in Putin's
works By M K Bhadrakumar
creeping in. This became apparent
when in an interview with the Russian media on
July 6, Russian First Deputy Foreign Minister
Andrei Denisov hit out that the string of Russian
successes in the Caspian energy war was "getting
on Washington's nerves". He continued, "The US has
been lobbying the idea of an East-West energy
corridor for a long time. Its aim is to arrange
the transportation of hydrocarbons from the
Caspian region bypassing
the
territories of Russia and Iran."
He warned
the "notorious trans-Caspian gas pipeline" would
run into obstacles, since the status of the
Caspian Sea was yet to be determined, and second,
Turkmenistan and Azerbaijan were involved in
disputes over the ownership of a number of fields.
"In addition, the special nature of the Caspian
should be taken into consideration. Here the risks
are very high due to the closed nature of the
water system, the geology of the sea bed and the
presence of strong underwater currents," Denisov
pointed out.
Indeed, Denisov has a point.
Moscow is betting on how Washington will be able
to cross such formidable hurdles. Russia and Iran
are literally in a position to throw a wrench in
the wheel if they sense that Washington is getting
close to the realization of the trans-Caspian
project. Both Moscow and Tehran will be keenly
watching Berdimukhamedov's discussions in the US
during his current visit. It couldn't have escaped
their attention that highly influential US oil
majors from Texas, which carry much clout within
the George W Bush administration at the highest
levels, are sponsoring the visit of the Turkmen
delegation to the US. US Secretary of State
Condoleezza Rice, who once served on the board of
directors of Chevron, is scheduled to meet with
Berdimukhamedov.
The wild Iranian card
Iran fully shares Russia's antipathy
toward US "poaching" in the Caspian region. This
was in full display when Berdimukhamedov visited
Tehran on June 15-16. Iranian President Mahmud
Ahmadinejad cautioned his Turkmen counterpart,
"Certain powers are in their own interests turning
the issue of the Caspian Sea into a challenge
among regional countries ... certain bullying
powers are after the oil and energy resources of
the Caspian Sea, but the environment and security
of the sea has a major impact on the life of the
littoral states."
Ahmadinejad made it
clear that Iran will strongly oppose the US
presence in the Caspian region. The Iranian
position is that the establishment of sustainable
security within the Caspian region must be the
prerogative of the littoral states (Russia,
Kazakhstan, Turkmenistan, Azerbaijan and Iran) and
no US involvement will be allowed. Russia sees
eye-to-eye with the Iranian position.
However, Tehran also has its own agenda in
the energy sphere, separate from Russia's, in
opposing the US-sponsored trans-Caspian gas
pipeline project. Tehran has consistently
canvassed for increased exports of Turkmen gas,
oil and petrochemical products through Iran. Given
Turkmen-Azeri tensions, Ashgabat also
traditionally feels more comfortable about
exporting its gas via Iran rather than routing it
through Azerbaijan.
The mutual interest of
Tehran and Ashgabat to route gas via Iran to the
Western market found its expression when the
energy ministers of Turkey and Iran signed a
memorandum in Ankara on July 13 on gas deliveries
from Turkmenistan and Iran via Turkey to Europe.
The idea didn't quite come out of the blue, but it
was nonetheless startling in its freshness. To be
sure, the proposal was a direct snub to Russia. It
in essence aimed at helping to revive the Nabucco
gas pipeline project.
It would open up
Iran's gas reserves for Western markets, thereby
reducing Europe's dependence on Russian supplies.
The proposal involved 20bcm of gas reaching Turkey
annually from Iran and 10bcm from Turkmenistan via
Iran. The entire volume (30bcm) would be added to
the Azerbaijani gas already reaching the Nabucco
pipeline heading to Europe, which would assure the
project's viability. The Iranians threw in a big
carrot for Turkey, offering to the Turkish
Petroleum Corp the right to develop the South Pars
blocks 22, 23 and 24 without any tendering and on
a buy-back arrangement.
At one stroke, the
Turkish-Iranian proposal strove to undercut
Putin's gains through May-June in establishing
monopoly on Turkmen gas. It underscored how Europe
could exploit Iran's ambitions as an energy
exporter if only the Iran nuclear issue didn't get
in the way. In fact, but for the standoff with
Iran, the Turkish initiative fitted admirably well
with Washington's own energy strategy toward the
Caspian.
Not surprisingly, Washington put
its foot down on the Turkish initiative. But the
jury is still out. Most certainly, Washington will
have been quietly pleased that Turkey's memorandum
of understanding with Iran is at the very least
likely to reinforce misgivings in the Turkmen mind
about committing itself to the
Russian-Kazakh-Turkmen inter-governmental
agreement handing over to Moscow virtual monopoly
in the export of Turkmen gas.
The sequence
of dramatic developments has shown that rivalries
over the Caspian energy reserves are getting a
great deal more rough and ruthless. All means are
fair if the end is in sight - as in love or war.
It will be interesting to watch how Washington
reacts to the Turkish-Iranian tango, as time
unfolds. Will it remain adamant that Europe should
have no truck with Iranian gas? Or will it coyly
step aside and let Iran compete with Russia in the
European gas market?
Ashgabat's China
option Meanwhile, Ashgabat began some
maneuverings of its own. It did its homework and
concluded it could bargain better with Moscow if
it had a European option (with US backing, of
course) and, furthermore, that it could do better
still bargaining with Moscow and the Europeans by
developing a "China option". At any rate,
Berdimukhamedov arrived in Beijing on a two-day
visit on July 17 at President Hu Jintao's
invitation.
Before leaving for Beijing, he
said his visit marked "not only a new page in the
chronicles of Turkmen-Chinese cooperation, but
also a milestone in the implementation of
Turkmenistan's foreign-policy strategy". He
intended to build on an agreement his predecessor
Saparmurat Niayzov had signed during his visit to
Beijing in April 2006 envisaging the construction
of a Turkmenistan-China gas pipeline project
capable of delivering 30bcm of Turkmen gas
annually for a 30-year period commencing in 2009.
The joint communique issued after
Berdimukhamedov's visit to Beijing said Beijing
regarded China-Turkmen relations as an "important
component" of China's foreign policy, while
Ashgabat viewed relations with China as "one of
the priority directions" of its foreign policy.
But Turkmenistan's dealings with China
haven't gone down well in Western capitals. They
fear that the West collectively will be the loser
if Ashgabat chooses to send its surplus gas to
China instead of to Europe via the Nabucco
pipeline. Indeed, China's breakthrough in
Turkmenistan has been impressive.
During
Berdimukhamedov's visit to Beijing in July, China
National Petroleum Corp (CNPC) signed a
production-sharing agreement for exploring and
developing gas fields on the right bank of Amu
Darya River in eastern Turkmenistan with known
reserves of 1.7 trillion cubic meters of gas. This
was in addition to the CNPC's previously existing
US$1.5 billion contract for gas-field exploration
in southeastern Turkmenistan during the 2007-10
period.
But Beijing has reason to be
nervous. In the ultimate analysis, will Ashgabat
deliver what it promises, or use the China option
as a bargaining chip vis-a-vis the Europeans? The
Turkmen deal matters a lot to Beijing. The
proposed Turkmenistan-China gas pipeline is
expected to run to China's Xinjiang Uighur
autonomous region and link up with the 6,500km
pipeline under construction (to be completed by
2010) connecting Xinjiang to Guangzhou. Even
though Berdimukhamedov assured his Chinese hosts
in Beijing that the "Turkmen side will do
everything it can to implement the agreements ...
[and] Turkmenistan has enough surplus gas for
export in various directions", doubts persist in
the Chinese mind.
Chinese Premier Wen
Jiabao gave vent to Beijing's anxieties when he
told the visiting Turkmen president of the need to
"implement bilateral agreements, [and] work
closely on the gas project". The joint communique
also made a pointed reference to "the need to
strictly abide by, and conscientiously implement"
Chinese-Turkmen energy cooperation agreements.
Shades of a new cold war If the
Turkmen-Chinese energy deals go through, the West
stands to lose heavily. There simply might not be
sufficient surplus gas left for export to Europe.
In comparison, Russia is better placed to absorb
the entry of the Chinese competitor on the Turkmen
gas scene. As for Tehran, its overriding priority
is that the "Great Satan" (US) is kept away from
Turkmen energy reserves at any cost. Iran welcomes
China's presence in Central Asia. Besides, a
Turkmenistan-China gas pipeline system could
easily be connected to Iran at a future date,
giving Tehran direct access to the Chinese energy
market.
These cross-currents have found
expression in recent weeks. In the middle of
August, on the eve of the annual summit meeting of
the Shanghai Corporation Organization (SCO) in
Bishkek, Kyrgyzstan, the US Trade and Development
Agency offered a financial grant to Azerbaijan and
Turkmenistan for conducting feasibility studies to
build trans-Caspian undersea pipelines. The timing
was perfect. Washington wanted to restrain
Turkmenistan from drawing too close to the SCO, as
that would be a great leap forward in the
realization of an Asian energy grid.
Also,
Washington finally succeeded in getting the EU to
get its act together for a coordinated energy
policy toward Central Asia and Russia. On
September 14-15, a conference was held in Budapest
where the EU resoundingly affirmed its intention
to press ahead with the Nabucco project. Andris
Piebalgs, the EU's energy commissioner, described
Nabucco as an "embodiment of the existence of a
common European energy policy". The EU appointed
the former foreign minister of the Netherlands,
Jozias van Aartsen, coordinator for the Nabucco
project.
The conference clarified the
contours of the 3,300-kilometer Nabucco, which
will now originate in eastern Turkey and run
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