TBILISI, Georgia - As Europe pushes forward in the race to lock down natural
gas supply commitments from Central Asian countries, it now hopes that its new
creation, the Caspian Development Corp, will allow the continent to take the
lead against Russia and China.
Europe has long sought to develop the "southern energy corridor" - an energy
route that would pass south of Russia and connect Europe to Central Asia's
largely untapped natural gas resources.
The Caspian Development Corp (CDC), which is currently undergoing a feasibility
study, would aggregate European demand and allow the European Union to propose
a deal to buy a massive quantity of Turkmen gas.
While much of the discussion over European supply deals in the
Caspian Sea region has focused on the European Union-backed Nabucco pipeline,
the strategy behind the CDC is much bigger.
"The Southern Corridor implies a number of pipelines, the main two would be
Nabucco and [the Interconnector Turkey-Greece-Italy], but we do look in the
future to have [Trans-Adriatic Pipeline] or White Stream," said Ferran
Terradellas Espuny, energy spokesman for EU Energy Commissioner Andris
Piebalgs.
Terradellas said the goal of binding European gas buyers and these pipeline
projects together under a single entity is to simplify the process going
forward and give Europe a leg-up in buying a large portion of Turkmenistan's
huge natural gas resources.
"Having a one-stop-shop buying point makes it more attractive [to Turkmenistan]
than having to negotiate with many different companies. So this is the main
point. Also, from the point of view of the European companies it will create
the possibility to buy bigger volumes - and not only to buy bigger volumes -
but bigger volumes at a better price," he said.
Although EU spokespersons maintain that the CDC's purpose is merely to make the
European market more attractive to Caspian suppliers, many experts say that in
reality Europe needs the CDC in order to convince Central Asian countries to
risk repercussions from Russia for undermining its energy dominance by dealing
with Europe.
"It's a huge political decision [for Central Asian countries]. It has to have
some sort of guarantee of value for them: it has to be [a deal to buy] more
than 50 billion cubic meters [bcm] of natural gas per year] for it to make
sense to disobey Russia," said Mamuka Tsereteli, an expert on Eurasia and
energy policy and professor of international relations at American University
in Washington, DC.
By 2020, Nabucco will only be able to transmit 31 bcm per year, however
additional European pipeline projects could reach could be pumping 80 bcm or
more altogether by this time.
Nabucco and the Interconnector Turkey-Greece-Italy (ITGI) pipelines would link
Southern and Central Europe to the Caspian region through Turkey while the
Trans Adriatic Pipeline (TAP) would link Italian and Balkan pipeline networks.
White Stream, which has just concluded its own feasibility study would run
under the Black Sea from Georgia to Romania and Ukraine, therefore bypassing
Turkey.
Giorgi Vashakmadze, director of corporate development for White Stream, said
that White Stream's route inherently addresses one of the other concerns of
Central Asian countries - dependence on Turkey as a transit country for their
gas.
"If Caspian countries are going to be dependent on Turkey, then Turkey should
be dependent on them. But Turkey has other options, so other options should be
offered to Caspian countries," he said.
Even before an agreement on the Nabucco pipeline was signed, Ankara showed its
willingness to use its position for political gains.
After Turkey rejected involvement of Gaz de France (GDF) in the Nabucco project
in February 2008, French Secretary of State for Enterprise and Foreign Trade
Herve Novelli, said Turkey made the decision based on "political
considerations". The Turkish decision came allegedly based on the French
parliament's recognition of the Armenian genocide in 2001.
Although the CDC could open doors for the EU in Caspian Sea countries, not all
European players in the natural gas market are enthusiastic about its creation.
Elio Ruggeri, CEO of ITGI said that he worries that by focusing on a long-term
strategy the EU may lose the short-term battle over access to the second phase
of Azerbaijan's Shah Deniz field, which Russia has been eyeing.
"If you wait for the big picture to come along you increase the possibility
that Shah Deniz II will go to Russia. And if Turkmenistan sees this - if
Azerbaijan [supply deals] do not succeed, then Turkmenistan [deals] will not
succeed," he said.
Ruggeri also expressed concern that the CDC's proposed format might violate EU
competitiveness regulations. Tsereteli, however, said such regulations would
not be an obstacle.
"I think Europe considers this a priority and they will change [the
regulations] if there is a conflict. The entire geo-politics is changing since
the war, there is a different dynamic," he said making reference to the August
2008 war between Russia and Georgia.
Nine months after the war, EU leaders convened in Prague to sign what became
known as the declaration of the "Southern Corridor summit." At the summit, the
leaders agreed upon the creation of the CDC in order to assuage the growing
nervousness among Central Asian countries about Russia's willingness to use
force in the region.
The decision also came as Russia made gains in its plans to create its proposed
South Stream pipeline, which would also run under the Black Sea and transport
natural gas to Southern Europe. Although, South Stream would serve the same
market at the EU's proposed pipelines and would possible draw from the same
natural gas field, Terradellas said it is not a threat to Nabucco.
"Well, first of all South Stream and Nabucco are not competing projects because
Nabucco offers something to the European market that South Stream cannot offer
and that is to diversify," he said. "So in a sense, for gas companies in Europe
it doesn't change much because they will have to buy from [Russian state energy
giant] Gazprom [if they buy gas through the South Stream pipeline]."
Nicholas Clayton is a Tbilisi-based journalist and blogger covering the
Caucasus and the world. His blog can be found at
http://www.threekingsblog.com/
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