THE ROVING EYE Relax and
float south stream By Pepe
Escobar
There's a Central Asian energy
revolution going on. In the key arena of gas
geopolitics, it's no secret Russia favors the
creation of a gas "OPEC" - to the despair of the
George W Bush administration. But Alexei Miler,
the powerful head of Russia's Gazprom, was in for
a rude shock this Tuesday when the three state gas
companies in key Central Asian "stans" -
Uzbekneftgaz, Turkmengaz and Kazmunaigaz - told
him that starting next year, they will only sell
their gas to Gazprom according to European rates.
Gazprom, although with deep pockets, could have
never expected that Uzbekistan, Turkmenistan and
Kazakhstan would all gang up on it this way.
Gazprom used to buy around 4 billion cubic
meters of gas from Uzbekistan at US$140 for a
thousand cubic meters, and 8
billion
cubic
meters from both Turkmenistan and Kazakhstan at,
respectively, $145 and $160 for a thousand cubic
meters. According to the Russian daily Kommersant,
by 2009 Turkmen gas will probably be charged from
$250 to $270. Gazprom can realistically expect to
sell its gas in Europe for around $300 the cubic
meter.
The great loser, according to
Russian daily Vremia Novostiei, is Ukraine, which
basically buys Central Asian gas transported by
Gazprom. But Ukraine could brandish the weapon of
transit tax of Russian gas; thus "the alignment to
an European level may offset the effect of the
Central Asian diktat. In that case, it's Gazprom
which will be the victim."
This new
development threatens to turn upside down the
success of Russian President Vladimir Putin' s
visit to Kazakhstan and Turkmenistan in May 2007 -
when he made sure that prized Turkmen gas would
arrive in Europe only through Kazakhstan and
Russia. Putin convinced the "stans" just as an
"anti-Russian energy summit", as dubbed by
Kommersant, took place in Krakow, uniting Poland,
Ukraine, Azerbaijan, Georgia and Kazakhstan
itself.
These five countries somewhat
agreed to build a new pipeline from Odessa to
Gdansk, bypassing Russia, and part of the
TransCaspian pipeline. But the agreement was
basically rhetorical. Poland wanted it to mean the
beginning of an "energy NATO". It didn't work.
Instead, Putin's key objective was reached - to
reinforce Gazprom's iron clad position in an
"energy dialogue" with the European Union (EU).
And now
for a real energy war What's taking
place between Russia and the EU is more of an
energy war than an energy dialogue. The EU and the
US pin all their hopes on the 3,300
kilometer-long, $5.8 billion Nabucco pipeline,
planned in 2004 and with construction about to
start in 2009, already approved by the European
Commission. Nabucco would transport Caspian Sea
natural gas (potentially even from Iran, barring
US opposition) from Erzurum in Turkey to
Baumgarten an der March in Austria via Bulgaria,
Romania and Hungary.
Nabucco is owned by a
consortium including Romania's Transgaz,
Bulgaria's Bulgargaz, Austria's OMV, Turkey's
Botas and MOL and Germany's RWE. France's Gaz de
France may soon join. Nabucco is thus the EU's
channel to not import natural gas only from
Russia.
Russia's answer to Nabucco is the
1,200km, $15 billion South Stream pipeline,
carrying Siberian natural gas by way underground
of the Black Sea from Russia to Bulgaria. From
Bulgaria, one branch would run south through
Greece and southern Italy while the other would
run north, through Serbia and Hungary towards
northern Italy. The memorandum of understanding
for South Stream was signed in Rome in June 2007
by Gazprom and Italy's ENI.
It's very easy
to see who's winning in the Nabucco vs South
Stream war. In early January, Bulgargaz spurned
insistent EU siren calls for Nabucco and opted for
South Stream - despite the fact that Bulgaria is
both a EU and NATO member. Then Serbia also came
on board - with Gazprom taking a 51% stake in NIS,
the Serbian oil monopoly.
What the three
"stans" have done to Gazprom this week softly
mirrors what Gazprom has done to Ukraine - no more
gas if you don't pay what we want. This is enough
to raise plenty of multinational heartbeats at the
European Commission in Brussels - terrified that
the EU, which import 40% of its gas from Russia,
will become a hostage of Gazprom's whims.
The same day the three "stans" were
handing Gazprom their new tariffs for 2009, energy
experts from the 27 EU member countries were
meeting in Brussels with Energy Commissioner
Andris Piebalgs to debate what to do as Gazprom
decided once again to pump less gas to Ukraine -
and thus to Europe.
The Iraqization of Nabucco
Nabucco is hardly a solution for
Europe, for a number of key reasons. Will the EU
be able to buy Iranian gas via Nabucco? Will the
"stans" have enough gas to supply both Russia and
China? Will they renege on their deals with
Gazprom? Or will they keep rising their prices to
Gazprom, as they announced this week?
Turkmenistan, for instance, pledged to
sell 50 billion cubic meters a year to Gazprom; it
also has to provide 30 billion cubic meters for a
pipeline to China starting in 2009; and it needs
to supply 30 billion cubic meters for Nabucco. Few
believe it can export that much.
All these
variables have led Duma deputy speaker Valery
Yazev to already declare "the death of Nabucco".
Reinhard Mitschek, the head of the Nabucco
consortium, flatly disagrees, extolling its
"future potential".
Finally, in late
February, Putin signed a bilateral agreement with
Hungarian Prime Minister Ferenc Gyurcsany at the
Kremlin. Hungary was also on board of South
Stream; 10 billion cubic meters of gas a year
running through Hungary after running through
Bulgaria and Serbia. Now Romania is the only
southern European country still pledged to
Nabucco.
What this all graphically spells
is Caspian - and Siberian - gas basically arriving
to the EU via Russia. Bulgaria, deciding to go the
Gazprom way, definitely split up the EU
amalgamation. Italy also went the Gazprom way.
Putin went to the heart of the matter in late
February, while he was still president: "Our
partners should do a very simple thing: they
should take a calculator and see what is more
profitable."
As for US deputy assistant
secretary of state Matthew Bryza, he has been
crying "Follow your wallet" like a madman; for
him, it's Nabucco that makes commercial sense,
cutting the EU's dependence on Gazprom by up to
25%. He insists this is all in European countries'
"national interests" even though no US energy
multinationals are part of the deal.
But
what this is in fact is classic George W Bush
administration thinking. First of all anything
goes to bypass Russia. And of course there is
always the unspoken, invisible Iraqi angle.
The Bush administration still hopes that
the Iraqi Parliament will approve its key
"benchmark" - the new Iraqi oil law, which will in
fact denationalize the oil industry. Thus, in this
best of possible worlds, Iraqi gas, pumped through
Syria, would be able to fill Nabucco, which would
not be wholly dependent on the "stans". And
there's always that neo-con dream of regime change
in Iran - enabling Iranian gas to reach Europe but
under US terms.
Any speculation about what
Russian president-elect Dmitry Medvedev is up to
is idle. As Viatcheslav Nikonov, president of the
Politika foundation, wrote in the Russian daily
Izvestia, "Russia remains a force in itself,
preserving sovereignty in all its domains" and
developing its economic, political and military
power. "We are too big to follow anyone."
Medvedev, says Nikonov, is all for "free
market, democracy, the force of the state,
sovereignty and traditions". He is a conservative.
He was personally chosen by Putin. And he is a
Gazprom man. So everybody better relax and float
South Stream.
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