The Great Pipeline Game
In May 2006, the US and EU made a determined effort to convince Kazakh officials to build a gas pipeline, around Russia in order to supply the energy needs of Europe. "Top officials from the European Union and the US are visiting Kazakhstan in an attempt to revive the idea of a gas pipeline bypassing Russia. Kazakhstan's energy minister told the EU's energy commissioner his country favoured the proposal for a pipeline across the Caspian Sea." Kazakhstan should be pumping up to 45 billion cubic meters of natural gas by 2015.
That effort failed today as Russia, Turkmenistan and Kazakhstan signed a deal to build a gas pipeline through areas controlled by Moscow to the EU. "The pipeline will skirt the Caspian Sea from Turkmenistan to southern Russia via Kazakhstan and will be built by the end of 2010. The trilateral agreement was signed in Moscow in the presence of President Vladimir Putin of Russia and President Nursultan Nazarbayev of Kazakhstan."
The agreement will likely disappoint the US and the EU, which have been lobbying for a rival pipeline to be built under the Caspian Sea, analysts said. They had hoped to pipe Turkmen gas across the Caspian Sea via Turkey, in order to reduce the EU's dependence on Russian-controlled energy. ... Prospects for pipelines under the Caspian have been clouded by high costs, environmental concerns and disputes over ownership of the sea resources.
It was do-or-die not only for the EU but also for Russia, which needed to cement relations with Kazakhstan in order to keep it's leverage over the other 'stans. STRATFOR, in a subscription-only report said that failing to get the pipeline would mean
Russia could lose control over the region's petroleum output of some 2 million barrels per day of crude and 70 billion cubic meters annually of natural gas. That would not just hit the Russian pocketbook from lost transit income, but in the case of natural gas it would prevent Russia from meeting its European supply contracts. Those contracts have long been vital in influencing Europe.
Second, more is at stake in Kazakhstan than "merely" the points mentioned earlier. Russia does not border the other four Central Asian states -- its influence there must be projected through Kazakhstan. Should Kazakhstan slip away from Russia, the other four states will have little choice but to follow, expunging Russian influence from the entire region.
The deal between Russia, Turkmenistan and Kazakhstan looks to represent a big win for Russia. The Asia Times points out that Russia's growing lock over the EU's energy markets may also be a big win for Iran. With Europe's growing dependence for energy, it may soon have no place else to turn for alternatives but Iran.
After much US prodding for a coordinated European energy security policy, European Union (EU) members adopted at their spring summit in Brussels an action plan for energy security for 2007-2009, which emphasized the need to diversify Europe's energy sources and transport routes. But the ground reality continues to be that Europe's dependence on Russian energy supplies is growing. In 2006, Europe imported from Russia 290.8 million tonnes of oil and 130 billion cubic meters of gas. ...
As supply becomes concentrated in Russian hands, the Kremlin will find itself in a position to dictate oil and gas prices. There is also the possibility that the supply and demand situation itself might become less elastic - Russia's own demand for gas, for instance, is growing by over 2% annually.
Clearly, the economics of energy supply to Europe are getting highly politicized. Ariel Cohen, a prominent Russia specialist at the US think-tank, Heritage Foundation, who is closely connected with the George W Bush administration, wrote recently, "It is in the US's strategic interests to mitigate Europe's dependence on Russian energy. The Kremlin will likely use Europe's dependence to promote its largely anti-American foreign policy agenda." ...
The commitment of Turkmen gas to Russia has broader implications. For one thing, the fate of the US-supported proposals for a trans-Caspian pipeline and the Nabucco pipeline depended significantly on the availability of Turkmen and Kazakh gas. Their future is now up in the air. That, in turn, means Europe is increasingly left with only one serious option for diversifying its gas imports - Iran.
Now Russia is expected to vie with US majors for the control of the Caspian fields themselves. The Asia Times suggests that energy politics makes it vital for America to consider entering into a rapproachment with Iran in order to woo it away from partnerships with Russia.
But the most important consideration for Russia will be that Iran's energy policy should not come into conflict with Russian interests. Once the US's engagement of Iran commences, Tehran will have plenty of choice while accessing foreign capital and advanced upstream oil and gas technology. Iran is bound to probe gas markets such as Turkey, the Balkans and central and east Europe. Also, Iran is keen to develop a new LNG industry. Over and above, Iran could well end up competing with Russia as a major oil and gas route connecting the Caspian and Central Asian energy producing countries.
Cooperation with Iran is no less important for Russia in terms of Caspian Sea issues. True, the two countries have divergent views on how the Caspian Sea should be divided. Russia prefers a median line solution, whereas Iran has insisted on an equal share (20%) solution for each littoral state regardless of the length of coastline. All the same, Russia and Iran are in profound agreement in their opposition to the US-led trans-Caspian pipeline projects. ...
Over and above, Moscow would be pleased at the present orientation of Iranian energy exports toward the Asian market. On the one hand, this would ease the competition from China for gaining access to Central Asian energy producers and on the other, it reduces the likelihood of Iranian energy flows to Europe, which may otherwise cut into Russia's market share.
The emergence of Central Asian energy sources will mean a prolonged struggle between Russia, Europe, China, Islamists and the US for the control of its production and distribution. Contrary to the public morality espoused by liberals, neither Russia, Europe, Islamism nor China may see anything wrong with making economic "war for oil" at least. John Robb suggests the Caspian sea area may become an actual theater of operations for terrorism and disruption. Describing the spiderweb of pipelines, he wrote: "Given this sparse and undefendable network, the potential for GG [global guerilla] control of oil production from the Caspian region is extremely likely. There is also the potential for cascading failures with the right analysis."
However that may be, the rivalry for Central Asian energy may spell an end to the purely utopian aspects of the transnationalism and the revival of Great Power politics. Issues like "climate change" and World Government may be less important in a 21st century where the US is perceived less as a hegemon than as an arbiter of the balance of power.