Russia, China, Iran redraw energy map
By M K Bhadrakumar
The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday
connecting Iran's northern Caspian region with Turkmenistan's vast gas field
may go unnoticed amid the Western media cacophony that it is "apocalypse now"
for the Islamic regime in Tehran.
The event sends strong messages for regional security. Within the space of
three weeks, Turkmenistan has committed its entire gas exports to China, Russia
and Iran. It has no urgent need of the pipelines that the United States and the
European Union have been advancing. Are we hearing the faint notes of a
Russia-China-Iran symphony?
The 182-kilometer Turkmen-Iranian pipeline starts modestly with
the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual
capacity is 20bcm, and that would meet the energy requirements of Iran's
Caspian region and enable Tehran to free its own gas production in the southern
fields for export. The mutual interest is perfect: Ashgabat gets an assured
market next door; northern Iran can consume without fear of winter shortages;
Tehran can generate more surplus for exports; Turkmenistan can seek
transportation routes to the world market via Iran; and Iran can aspire to take
advantage of its excellent geographical location as a hub for the Turkmen
exports.
We are witnessing a new pattern of energy cooperation at the regional level
that dispenses with Big Oil. Russia traditionally takes the lead. China and
Iran follow the example. Russia, Iran and Turkmenistan hold respectively the
world's largest, second-largest and fourth-largest gas reserves. And China will
be consumer par excellence in this century. The matter is of profound
consequence to the US global strategy.
The Turkmen-Iranian pipeline mocks the US's Iran policy. The US is threatening
Iran with new sanctions and claims Tehran is "increasingly isolated". But
Mahmud Ahmadinejad's presidential jet winds its way through a Central Asian
tour and lands in Ashgabat for a red-carpet welcome by his Turkmen counterpart,
Gurbanguly Berdymukhammedov, and a new economic axis emerges. Washington's
coercive diplomacy hasn't worked. Turkmenistan, with a gross domestic product
of US$18.3 billion, defied the sole superpower (GDP of $14.2 trillion) - and,
worse still, made it look routine.
There are subplots, too. Tehran claims to have a deal with Ankara to transport
Turkmen gas to Turkey via the existing 2,577km pipeline connecting Tabriz in
northwestern Iran with Ankara. Indeed, Turkish diplomacy has an independent
foreign-policy orientation. Turkey also aspires to be a hub for Europe's energy
supplies. Europe may be losing the battle for establishing direct access to the
Caspian.
Second, Russia does not seem perturbed by China tapping into Central Asian
energy. Europe's need for Russian energy imports has dropped and Central Asian
energy-producing countries are tapping China's market. From the Russian point
of view, China's imports should not deprive it of energy (for its domestic
consumption or exports). Russia has established deep enough presence in the
Central Asian and Caspian energy sector to ensure it faces no energy shortage.
What matters most to Russia is that its dominant role as Europe's No 1 energy
provider is not eroded. So long as the Central Asian countries have no pressing
need for new US-backed trans-Caspian pipelines, Russia is satisfied.
During his recent visit to Ashgabat, Russian President Dmitry Medvedev
normalized Russian-Turkmen energy ties. The restoration of ties with
Turkmenistan is a major breakthrough for both countries. One, a frozen
relationship is being resumed substantially, whereby Turkmenistan will maintain
an annual supply of 30bcm to Russia. Two, to quote Medvedev, "For the first
time in the history of Russian-Turkmen relations, gas supplies will be carried
out based on a price formula that is absolutely in line with European gas
market conditions." Russian commentators say Gazprom will find it unprofitable
to buy Turkmen gas and if Moscow has chosen to pay a high price, that is
primarily because of its resolve not to leave gas that could be used in
alternative pipelines, above all in the US-backed Nabucco project.
Third, contrary to Western propaganda, Ashgabat does not see the Chinese
pipeline as a substitute for Gazprom. Russia's pricing policy ensures that
Ashgabat views Gazprom as an irreplaceable customer. The export price of the
Turkmen gas to be sold to China is still under negotiation and the agreed price
simply cannot match the Russian offer.
Fourth, Russia and Turkmenistan reiterated their commitment to the Caspian
Coastal Pipeline (which will run along the Caspian's east coast toward Russia)
with a capacity of 30bcm. Evidently, Russia hopes to cluster additional Central
Asian gas from Turkmenistan (and Kazakhstan).
Fifth, Moscow and Ashgabat agreed to build jointly an east-west pipeline
connecting all Turkmen gas fields to a single network so that the pipelines
leading toward Russia, Iran and China can draw from any of the fields.
Indeed, against the backdrop of the intensification of the US push toward
Central Asia, Medvedev's visit to Ashgabat impacted on regional security. At
the joint press conference with Medvedev, Berdymukhammedov said the views of
Turkmenistan and Russia on the regional processes, particularly in Central Asia
and the Caspian region, were generally the same. He underlined that the two
countries were of the view that the security of one cannot be achieved at the
expense of the other. Medvedev agreed that there was similarity or unanimity
between the two countries on issues related to security and confirmed their
readiness to work together.
The United States' pipeline diplomacy in the Caspian, which strove to bypass
Russia, elbow out China and isolate Iran, has foundered. Russia is now planning
to double its intake of Azerbaijani gas, which further cuts into the Western
efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran
is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan
inked an agreement to deliver gas to Iran through the 1,400km
Kazi-Magomed-Astara pipeline.
The "big picture" is that Russia's South Stream and North Stream, which will
supply gas to northern and southern Europe, have gained irreversible momentum.
The stumbling blocks for North Stream have been cleared as Denmark (in
October), Finland and Sweden (in November) and Germany (in December) approved
the project from the environmental angle. The pipeline's construction will
commence in the spring.
The $12-billion pipeline built jointly by Gazprom, Germany's E.ON Ruhrgas and
BASF-Wintershall, and the Dutch gas transportation firm Gasunie bypasses the
Soviet-era transit routes via Ukraine, Poland and Belarus and runs from the
northwestern Russian port of Vyborg to the German port of Greifswald along a
1,220km route under the Baltic Sea. The first leg of the project with a
carrying capacity of 27.5bcm annually will be completed next year and the
capacity will double by 2012. North Stream will profoundly affect the
geopolitics of Eurasia, trans-Atlantic equations and Russia's ties with Europe.
To be sure, 2009 proved to be a momentous year for the "energy war". The
Chinese pipeline inaugurated by President Hu Jintao on December 14; the oil
terminal near the port city of Nakhodka in Russia's far east inaugurated by
Prime Minister Vladimir Putin on December 27 (which will be served by the
mammoth $22-billion oil pipeline from the new fields in eastern Siberia leading
to China and the Asia-Pacific markets); and the Iranian pipeline inaugurated by
Ahmadinejad on January 6 - the energy map of Eurasia and the Caspian has been
virtually redrawn.
The year 2010 begins on a fascinating new note: will Russia, China and Iran
coordinate future moves or at least harmonize their competing interests?
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign
Service. His assignments included the Soviet Union, South Korea, Sri Lanka,
Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.
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