Janusz Bugajski, director of the Center for Strategic and International Studies New European Democracies Project and chair of the South Central Europe Area Studies program for U.S. Foreign Service Officers at the Foreign Service Institute speaks in an interview for the Romanian daily newspaper "Romania libera" about the recent takeover of the Romanian oil company Rompetrol by the Kazakh state company KazMunayGaz.
Q: “Better the Kazakhs than the Russians” seems to be the general view regarding the Rompetrol-KazMunayGaz deal. Do you share this view?
A: Let’s put it this way: on paper it looks like a good idea for Romania or for any other country to diversify its energy links with countries other than Russia. And I’m sure that the Europeans will approve it. The question is what lies behind it. I don’t know exactly KazMunayGaz’s structure or relation with the Russians. What I do know though is that the Kazakhs are very much dependent on transit through Russia – either they go through Russia or they ship it across the Caspian. They have to go across Russian territory in order to get to Novorossiisk, the Black Sea and into Romania. There is always some susceptibility, even if there is no Russian backing behind this, that Russians will cut off the supply. So if it crosses Russian territory and uses a Russian port, it is still susceptible to Russian political pressure.
Q: So you wouldn’t believe Dinu Patriciu’s (the CEO of Rompetrol) theory that the deal is building a “Nabucco of oil”, an alternative route to Russia?
A: It would be an alternative to Russia, if it bypassed Russia. The Nabucco pipeline was supposed to bypass Russia, but there seem to be problems with it – lack of investments, Russia’s preemptive pipelines like the one across the Baltic Sea, or the Black Sea. Russia is also trying to tie in the Central Asian countries, to buy most of their oil and gas at a cheap, but a guaranteed price. In other words, locking them in over a long period. This is classic colonialism: buy resources very cheap in your colony and sell them elsewhere – this is exactly what Russia is doing – now it’s trying to raise the prices with Germany and other Western European consumers and at the same time it keeps the prices extremly low for Kazakh and Turkmen oil and gas. So I hope the Central Asians are beginning to wake up. The question is how do they get out of it, because they’re landlocked. There are two possibilities: one would be across the Caspian Sea to Azerbaijan and then across Georgia, Turkey and so forth. The other one would be across Iran, which is sanctioned by the US. So that’s a huge problem. That’s why I think Russia is playing the Iranians. They don’t want Iran to have good relationships with the West, if not for anything else, then for its energy interests.
Q: The Western oil companies that are developing the Kashagan oil field in the Caspian Sea are trying to build a trans-Caspian pipeline to connect with the Baku-Tbilisi-Ceyhan pipe that bypasses Russia. But somehow there is very little progress there.
A: That’s the problem. There’s a lot on paper during these grand schemes, but there is no progress if the Europeans and the Americans can’t get their act together on this. And Russia of course exploits the situation. The question is whether this will help Kazakhstan to get the money to develop an alternative route to bypass Russia. I can’t predict that at the moment.
Q: On the deal itself, there are numerous question marks. It’s not clear why he had to sell, he bought it for 615 million dollars and sold it for over two billion. A great profit, but then the question is what’s the price for it and if Romania is actually winning or losing from this deal?
A: For a company this size, it is important for these details to be disclosed. It may be a private deal, but if this is going to affect so many people in so many jobs, in taxation, political, strategic as well as economic matters – I think we need to see exactly what this deal was. With all the articles, the clauses, all these sorts of things are very important. This has to be an open process. Even if this is absolutely clean, one suspects that there is something behind it.
Q: Can this deal also be read in the context of the Russia-US row over the military bases and the anti-missile shield in Eastern Europe?
A:That is why it is so important to know who is behind KazMunayGaz. Remember the case with the Ukrainians, the person who was put in charge over the gas supply company – I think a similar process of clarification has to be taken here. Who stands behind KazMunayGaz? I know it’s a state owned company, but what are the other interests in it. And then to look at the deal, what happens in terms of supply – is it going to increase, how much is there going to be invested in modernizing, in new pipelines, in shipping – all these things have to be investigated.
Q:The Russians are pressuring full speed on the Burgas-Alexandroupolis pipeline. Could KazMunayGaz-Petromidia be linked to the latter pipe?
A:The pipeline Burgas-Alexandroupolis designed to bypass the Bosphorus can be built pretty quickly and is surely on. Both Bulgaria and Greece signed up to this. It’s a very good question if Romania might plug into what will be a Russian controlled transportation network. Even though it might be a Kazakh-Romanian bilateral deal. It’s a very good point – again, one has to look on what the plans on transportation will be. This pipeline will be put together much more quickly than anything else across the Balkans and link up with Italy. There are so many dotted lines and competing interests, particullarly Russians against the alternatives.
Q: And the Russians are pressuring the Bulgarians and Greeks to sell their participation in the Burgas-Alexandroupolis pipeline, although Russia owns 51% of this pipeline.
A: That’s grand strategy. Not only do they want to control the supplies, including the supplies from Central Asia they’re trying to monopolize, but also the transportation, distribution and refinery network in different parts of Europe. Particullary in key-points and on the functioning of the whole economy. That’s what it amounts to.
Q: The EU is issuing a package of measures on September 19, set to restrict the access of non-EU companies on the energy market. Is this move coming too late?
A: One thing is to write the package, another to implement it. There are so many diverse country interests. The Russians have been trying to play with different countries – Germany, Austria, France, Italy – there are all sorts of deals going on that bypass the EU channels. So there’s no EU policy on this and Russia is exploiting it.
Q: Russia called the initiative a “hysterical reaction”.
A: (Laughs) then the EU is on the right track. If Russia criticizes something, they’re worried. If they’re ignoring it, then it doesn’t matter. It’s a positive sign.
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