- The Washington Times - Sunday, September 13, 2009

ANALYSIS/OPINION:

ANKARA, Turkey.

In the geopolitical duel that is Eurasian pipeline diplomacy, Russian Prime Minister Vladimir Putin’s August trip to Ankara was meant to be the riposte to July’s Nabucco pipeline signing ceremony.

On July 13, the transit countries involved in the strategic project to bring natural gas to the European Union devoid of Russian control finally agreed to a route. However, it goes without saying that an agreement among transit states that does not include producer countries — i.e. those with the gas to fill the line — is only half an agreement. Mr. Putin’s deal with Turkish Prime Minister Recep Tayyip Erdogan, however, was even hollower.

It was meant to be another step forward for Nabucco’s rival pipeline, South Stream, a mammoth project proposed by Russia’s energy monopoly Gazprom. South Stream would cross the Black Sea, directly connecting Russia with EU consumers, thus avoiding Ukraine and the increasingly regular gas-cutoff disputes between Kiev and Moscow. According to Russian media, Turkey agreed that South Stream could run through Turkish waters. However, the fine print reads that Russia will only be allowed to conduct preliminary routing studies. Once those are finished, the routing will have to be approved by Ankara in a separate agreement.

It is becoming increasingly apparent that South Stream is nothing more than a geopolitical gambit to undermine Nabucco. Hence the emphasis on Turkey, Nabucco’s primary transit state. The price for South Stream quoted by Gazprom’s No. 2 officer, Alexander Medvedev — 20 billion to 24 billion euros — is prohibitively high. And the planned capacity of 63 billion cubic meters a year probably is not technically feasible for such a long undersea pipeline. No wonder Bulgaria’s new center-right government just pulled out of South Stream as well as all other Russian-backed energy projects planned for its territory.

South Stream also has the same central problem as Nabucco: Where’s the gas? Moscow knows that Russian reserves in 2018 (when the project realistically would be finished) will not be able to fill the pipeline. Hence the strong-arming of Turkmenistan to funnel its vast resources through Russian territory. That policy seems to have backfired, with Ashgabat exploring all other options more intensely.

While Russia and Turkmenistan argued over who was to blame for a destroyed Soviet-era pipeline earlier this year, Turkmen President Gurbanguly Berdymukhammedov was busy further cultivating his country’s growing relationship with China. Beijing has invested $3 billion into Turkmenistan’s South Yolotan gas field, potentially the world’s fourth-largest, and stepped up construction to finish its import route heading east by next year. Mr. Berdymukhammedov also has revived interest in the Turkmenistan-Afghanistan-Pakistan-India gas-pipeline idea and the old Trans-Caspian pipeline project that would link to Azerbaijan and routes heading to European markets, such as Nabucco.

A new beginning for the Trans-Caspian, first proposed in the early 1990s, remains very much in doubt, as Ashgabat and Baku, Azerbaijan, cannot agree on the status of undersea Caspian gas reserves. Recent talks ended with Mr. Berdymukhammedov threatening to bring the matter to the International Court of Arbitration. This does not bode well for Nabucco, as the pipeline most likely will require at least some Turkmen gas to reach full capacity

Those who think the United States does not play a major part in Eurasian energy geopolitics should think again. The Nabucco signing ceremony was attended by the State Department’s special envoy for Eurasian energy, Richard L. Morningstar, as well as Sen. Richard G. Lugar, Indiana Republican, for whom Nabucco is a pet issue. There will be a major U.S. presence in Bucharest, Romania, later this month, when the region’s energy ministers meet at the Black Sea Energy and Economic Forum.

The official U.S. position is not to support one pipeline over another, but rather market-based options. That said, past pipelines in the region that have avoided Russia were realized only because of significant diplomatic support from Washington. The same will be true of Nabucco. Even though not one cubic meter of its gas will reach U.S. consumers, the strategic route will do much to strengthen the sovereignty and independence of Russia’s neighbors, both within and outside of the EU. If this were not the case, Mr. Putin wouldn’t be trying his darndest to undermine the project.

There is difficult work ahead in fully realizing Nabucco. Compelling offers will have to be made to bring producer countries on board. Policymakers and pundits should not fall prey to the belief that competing Russian projects are one step ahead. If Nabucco is a pipe dream, South Stream is pure fantasy.

Alexandros Petersen is Dinu Patriciu Fellow for Trans-Atlantic Energy Security and associate director of the Eurasia Energy Center at the Atlantic Council.

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