GAZPROM THROWS GAUNTLET TO U.S.-BACKED TRANS-CASPIAN PIPELINE.
Publication: Monitor Volume: 5 Issue: 55
Gazprom chairman Rem Vyakhirev asserted on March 16 that construction work on the Russian “Blue Stream” gas pipeline to Turkey, along the bottom of the Black Sea, should start this year. Gazprom’s partner in this project, the Italian government-controlled ENI corporation, will provide the technology and is also raising the investment capital from European banks. Vyakhirev claimed that Blue Stream has a “head start” on its competitor, the American PSG (Bechtel and General Electric). consortium’s project for a gas pipeline from Turkmenistan to Turkey via the Caspian seabed and the South Caucasus. Both projects are designed to supply Turkey with 16 billion cubic meters of gas annually, leaving no significant free niche on that market. Using a Russian colloquial phrase famous from Lenin’s works on class warfare, Vyakhirev described the competition between Blue Stream and the American project as a “struggle onto elimination” (“kto-kogo”).
Vyakhirev spoke at the conclusion of a regular meeting of the Russian-Italian economic cooperation council, co-chaired in Moscow by First Deputy Prime Minister Vadim Gustov and Foreign Minister Lamberto Dini. The same session covered Italian technical assistance and financing for a project to modernize and expand the oil terminal at the Russian Caspian port Makhachkala (Dagestan), with a view to routing Turkmen oil exports via Russia, rather than via Turkey (Itar-Tass, February 16).
Vyakhirev’s claim of a “head start” for Blue Stream seems designed to discourage investor support to the American-planned trans-Caspian pipeline from Turkmenistan to Turkey, a project for which these countries have just signed construction and commercial agreements (see the Monitor, February 23, March 15; Fortnight in Review, February 26). Turkey, while committed to the trans-Caspian project, will have to go with Blue Stream if the latter preempts the former.
The Moscow joint session and ensuing statements stand out in several respects. First, they underscore the validity of PSG president Edward Smith’s and the Clinton administration’s point that the trans-Caspian project faces a winner-take-all clock race with Blue Stream in terms of raising the investment capital. Second, they highlight the Russian government’s apparent resolve to maintain its stranglehold on Turkmen gas exports by denying or manipulating transit through Russia–which Gazprom has done in recent years–while opposing plans to open alternative routes. Third, this situation reveals the true state of relations among CIS partners, an aspect dramatized by the prominent role of Gustov–the first deputy prime minister responsible for CIS affairs–in promoting a project whose effect would be to ruin a CIS country. Fourth, it adversely affects the outlook for the Baku-Ceyhan (Turkey) oil pipeline project, which requires East Caspian–for example, Turkmen–oil inputs and needs to be paired with the gas pipeline. And fifth, it illustrates the apparent willingness of Italy’s left-leaning government to work at cross purposes with its allies on issues fraught with far-reaching implications for international security.
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