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."
If you enjoyed this post, make sure you subscribe to my RSS feed!
Other posts of interest
Jun 2nd, 2007
Loading ...
I think you can count Romania out of any pro-Russia group. PEOP is already under construction and in a great surprise will also have a parallel gas line. They currently say it’s going to ship gas east so that Romania will have an alternate supplier in case of Russian network problems but I wouldn’t be surprised if there were gas interconnects with Nabucco and quiet plans to reverse the flow. If Gazprom refuses to ship gas based on political orders from Moscow, it’s going to lose it’s investment anywhere they try that garbage in Europe.
Can someone explain to me why:
1) Hiking natural gas prices on countries that expect cheap gas simply because pipelines cross their territory is “energy imperialism”. Wasn’t promoting conservation supposed to be a good thing? And how do these critics propose that Russia get higher prices without threatening to shut off the taps? Have EU envoys ask pretty please on their behalf?
2) If senior politicians in neighboring countries like Ukraine have nicknames like “the Gas Princess” (Tymoshenko) wouldn’t you want to get direct routes to your best customers (i.e. Germany)?
http://www.russiablog.org/2007/01/money_not_geopolitics_drives_r.php
My thoughts on the subject here.
“It is clear to the Russians that they can no longer afford to subsidize their neighbors with cheap natural gas while continuing to meet Russiaŕ€™s export obligations to the rest of the world. For months, the Russian state-owned gas monopoly Gazprom has telegraphed its resolve to make every former Soviet republic ŕ€“ whether they are Russian allies, like Armenia, or less friendly states, like Georgia ŕ€“ start paying higher prices. The price Belarus reluctantly agreed to on New Yearŕ€™s Eve, $105 per thousand cubic meters, is still just half of what Western Europeans pay. After experiencing a similar price hike last New Year, Ukraineŕ€™s economy still grew at more than 6% in 2006.”
“Gazpromŕ€™s critics can point to the fact that the Russians are raising rates on their neighbors while still subsidizing their own industries at home. However, Gazprom is restricted by Russian law from raising domestic gas rates above one quarter of the export price. Furthermore, Russia is hardly the only major energy producer in the world to subsidize its people with cheaper electricity and heat. Nonetheless, Gazprom is planning gradual price increases beginning next year with the goal of doubling domestic natural gas rates by 2010.”
“Arguing that Moscowŕ€™s neighbors should avoid relying on Russia as an energy supplier at all costs often leads commentators to ignore economic reality. For example, one commentator recently wrote in Newsweek International that Azerbaijan can easily purchase gas from Iran instead of agreeing to Moscowŕ€™s exorbitant price ($200 per thousand cubic meters - about what Gazprom customers in Germany and Poland pay).”
“Unfortunately, the author of the Newsweek piece forgot to mention that last month Iran had to suspend its already meager natural gas exports to Turkey. The Iranian Oil Ministry blamed a cold winter for an unexpected spike in domestic natural gas demand ŕ€“ but everywhere else in the Northern Hemisphere, oil and gas prices are falling due to one of the warmest winters on record. Yet somehow, in spite of the increasingly evident decay of Iranŕ€™s oil and gas infrastructure, the Islamic Republic is still viewed by some commentators as a more reliable supplier to the Caucuses republics than Russia.”
“In North America, the equivalent to this absurd position would be insisting that Mexico seek energy independence from the U.S. by relying instead on Hugo Chavezŕ€™s Venezuela. Like Iran, Venezuelaŕ€™s oil production has declined in recent years due to political instability and neglect. Meanwhile, last summer Russia quietly surpassed Saudi Arabia to become the worldŕ€™s largest oil producer and is currently investing tens of billions into developing vast gas fields in the Arctic.”
“When it comes to Russian energy, why do so many American politicians and certain editorial boards in Washington engage in wishful thinking to support their position of ŕ€śanybody but Moscowŕ€ť? Could it be that the politics of Russian energy in the West are still tied to the mental baggage leftover from the Cold War?”
Here in California, we’re seeing the same setup to make us dependent on Russian gas in LNG form.
We had two solid proposals for importation terminals. One is now working and is planning on doubling it’s capacity. However, it was across the border in Mexico and would import Saklin Island gas, the same stuff that Putin effectively naturalized.
The alternative was to be an offshore terminal off Malibu. It was to import Austrialian LNG but was demonstrated against by all the Hollywood liberal celebrities.
With state politicians preventing any alternative fuel for electricity but natural gas, we will soon be in the situation where the Russian government will determine whether or not the lights stay on it California.
The hell with Putin, sombody kill that motherfucker!
[…] Politics writes about the news of Gazprom’s involvement in the Nabucco gas pipeline project - which was originally supposed to be the EU’s “attempt to build an alternative to the […]