Transatlantic Politics

The Nabucco project is one feeble EU attempt to build an alternative to the Gazprom-controlled, already-built natural gas pipeline-network. 

It is supposed to bring gas from Azerbaijan and/or Iran, through Turkey, Bulgaria and Romania to the huge gas-hub in Austria, at Baumgarten. Russia tried first to discourage the Azerbaijan government from moving forward with the project.  Instead, Russia built its own direct pipeline through the Black Sea via Turkey (entitled Bluestream), all the while openly dismissing the Nabucco pipeline, by saying that Russia needs to protect and expand its own pipelines in order to ensure an uninterrupted gas flow to its European clients.  Given Russia's recent history towards energy policy, some might view this sequence of events as disturbing.

But Russia's ultimate strategy came to life 10 days ago, during Putin's visit to Vienna. The gas hub in Baumgarten, where the Nabucco pipeline would be connected to other Western European pipelines is now a shared venture between OMV (the Austrian gas corporate) and..Gazprom - the Kremlin-controlled Russian oil conglomerate!

Can't own the pipeline? No big deal, we'll own the faucet.

This might just be the beginning of a "beautiful friendship" with the Austrians, similar to the Gerhard Schroeder affair.  The former German chancellor struck a deal with Putin just weeks before the election he lost that called for building a direct pipeline through the Baltic Sea linking Germany directly to the gas fields in Siberia.  Doing so conveniently reduces the gas flow through the Baltic states and Poland - who have openly criticized Russia. Punishment and reward in its most basic form.  Since signing this deal on behalf of the German government he no longer leads, Schroeder has been rewarded with a seat on the executive board of Gazprom and he is now actively lobbying for the continuation of this and other projects of the Russian state-controlled giant.

Pictured above is the map of the Nabucco-project. The construction of the pipeline is due to start next year and be ready by 2011. It is not clear yet which branches will be developed first. With Russia having also struck a deal with Kazakhstan and Turkmenistan regarding their Caspian Sea reserves, and with Iran being the second gas producer, there is only Azerbaijan left to feed the pipeline. And Azerbaijan's reserves are not sufficient. With Gazprom waiting patiently at the other end of the pipeline, one might ask if it really matters anymore.

As Ed Lucas puts it in this week's Europe view column -

"Russia has largely won the gas wars before most Europeans even noticed they were being fought. So far this year the Kremlin has stitched up the Caspian (by striking a pipeline deal with Turkmenistan and Kazakhstan). It has nobbled Austria, Belgium and Hungary (to add to its powerful position in Germany, France and Italy). By schmoozing other producers it has begun to form a gas cartel. Russia has also built a strong pro-Kremlin camp elsewhere in the European Union (Greece, and Cyprus chiefly; Hungary, Latvia and Slovakia increasingly; and probably Bulgaria too if anybody looked closely). Its banks and businesses have created a fifth column in the City of London and other world financial centres."

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