RUSSIA RULES PIPELINEISTAN

By Pepe Escobar
Asia Times
March 24, 2012

Nabucco ~ the alleged gas Holy Grail from the Caspian Sea to Europe, 4,000 kilometers from Turkey to Austria ~ is the perennial Pipelineistan soap opera.

Part of the gas to supply Nabucco may come from Azerbaijan. Another part might ~ a very problematic “might” ~ come from Turkmenistan. But every self-respecting energy analyst knows Nabucco could only possibly work if it was supplied by natural gas from Iran. That will happen over Washington’s collective dead body.

So, once again, the spineless European Union (EU) political “leadership” ~ once again acting like the poodles of choice ~ gloriously sabotaged what it has always billed as its most ambitious energy project; caved in to US pressure; and ultimately sacrificed its energy independence.

And all this from people who never lose an opportunity to decry that Europe is a “gas hostage” to Russia’s Gazprom.

As with all things Pipelineistan, there are layers and layers of nuance. Moscow is pulling out all the stops to prevent Iran from eventually joining Nabucco ~ because its top policy agenda is to extend its stranglehold over the EU’s gas supply to 30%.

 

The crucial Azerbaijan gas angle is centered on the huge Shah Deniz 2 fields. For what is called the Southern Corridor, via Italy, two possible pipelines are in competition. Then there are two others competing on a Northern/Balkans route; one of them is Nabucco; the other, faithful to the acronym-laden ethos of Pipelineistan, is the South East Europe Pipeline (SEEP). Only next year will the world know the end chapter for this never-ending soap opera.

For the Southern Corridor, the favorite is TAP (Trans-Adriatic pipeline), a Swiss-German-Norwegian joint venture. TAP will use infrastructure already in place and only needs investment in a short underwater pipeline from Greece to Italy. Norway's Statoil, crucially, is a 25.5% partner in the exploitation of Shah Deniz 2 fields; that makes things way easier.

For the Northern/Balkans route, the fat lady may be about to sing for Nabucco. The favorite to win is a BP project, much cheaper than Nabucco, and with no need to use Turkmen gas.

BP - of Gulf of Mexico polluting fame - happens to be the major stockholder of Shah Deniz 2. Azerbaijan - mired in corruption - can be reasonably described as BP country. Even his close ally Washington knows Azerbaijani President Ilham Aliyev is something of a Mafia boss. The Azeris, by the way, happen to be very popular in Washington courtesy of the Israeli lobby.

WE PLAY CHESS THE WIN-WIN WAY

A certified winner in this complex Pipelineistan battle is Turkey. After all, any gas from Azerbaijan towards Europe must transit through Turkey.

Since last December, in fact, Turkey and Azerbaijan have a memorandum in place committing both to the construction of the TANAP (Trans-Anatolian Pipeline). TANAP will eventually become part of the Southern Corridor.

Even if Azerbaijan decides to sell its extra gas wealth to Russia, Turkey also wins. Turkey has authorized the underwater passage of the Russian-Italian (Vladimir Putin-Silvio Berlusconi?) South Stream pipeline in its territory in return for even more robust trade and energy ties with Russia.

But most of all Russia wins. South Stream is a go. Gazprom for its part has increased its charm offensive all across Central Asia; this means that the more Gazprom imports gas from them, the less gas will be available for Europe (unless it is sold by Russia)

With Putin back in the presidency in May, the strategy that he laid out back in 2000 is graphically paying all kinds of dividends.

Gazprom's head Alexei Miller ~ appointed by Putin ~ is totally invested in creating a complex economy of scale with energy supplying countries in the region, applying a very Chinese "win-win" mentality.

The leadership in Azerbaijan, for instance, knows very well that Russia is the only player capable of determining what goes on in the Caucasus ~ and on top of it offers great energy deals. So here's the writing on the wall; Russia under Putin will be even more influential from the Caucasus to Central Asia.

For this to work, Russia had to torpedo Nabucco. In fact, the European-wide financial crisis took care of it. Nabucco may end up costing a staggering $25 billion ~ and counting. Nabucco's construction "might" start by the end of 2014 and be finished by the end of 2017; but all dates have been incessantly postponed for years. Azerbaijan could only provide less than half of the gas.

Nobody anywhere really knows what will be Turkmenistan's game. And Iran has been ruled out by His Master's Voice ~ Washington.

Still, the TCP (Trans-Caspian Pipeline) ~ between Turkmenistan and Azerbaijan ~ remains in the cards. That, in theory, would be the gate for Europe to finally have (indirect) access to the Central Asian energy wealth of the Caspian Sea. Ashgabat and Baku seem to be in synch about it - the whole thing helped by EU-brokered negotiations. Turkey has also endorsed it. But Russia under Putin will do whatever it takes to bomb the TCP idea.

Still the most pressing question seems to be whether anybody in Brussels will wake up from its masochistic haze, stop the sanction nonsense, and talk energy with Iran.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His most recent book, just out, is Obama does Globalistan (Nimble Books, 2009).

He may be reached at pepeasia@yahoo.com