SCRAMBLE FOR EURASIAN ENERGY RESOURCES INTENSIFIES

As their perspectives on energy security continue to diverge, the Kremlin and Western powers appear to be engaged in a fierce competition over Eurasia’s enormous hydrocarbon resources. At the heart of the great energy game lies Moscow’s intent to preserve its monopoly over fuel transit and the West’s attempts to break Russia’s stranglehold over energy transportation routes.

Last week, the Gazprom board of directors discussed the outlines of the Russian energy giant’s “external economic strategy” in Turkey, as this country is increasingly becoming an important energy transit hub. A report posted on Gazprom’s official website curtly says that the company’s management “took into account” information on the fuel export plans and ordered analysts to “continue work aimed at exploring the possibilities of expanding Russian gas exports to Europe via Turkish territory.”

The wooden language of the Gazprom press release needs clarification. Well-informed sources say that the energy monopoly’s board of directors actually endorsed the decision to launch feasibility studies of the new gas pipelines, which would run across Turkey, with the aim of tripling fuel supplies through the existing Blue Stream pipeline under the Black Sea. According to analysts, with this move, Gazprom seeks to block any alternative gas deliveries to Europe from Iran, the South Caucasus, and Central Asia. Gazprom and its Kremlin handlers appear to be justifiably apprehensive: Turkey will start receiving Azerbaijani gas via the Baku-Tbilisi-Erzurum pipeline within two weeks.

Turkey is already the third-largest consumer of Russian natural gas, after Germany and Italy. Now, Gazprom strategists are contemplating the creation of a “South European export corridor” that would be an extension of the Blue Stream. According to Gazprom spokesman, Sergei Kupriyanov, the two new pipeline projects are currently being explored. The first pipeline would cross Turkey from east to west and go further on to southern Europe to carry Russian gas as far as Italy. The second pipeline would run from northern Turkey southward, connecting the two port cities of Samsun and Ceyhan on the Black Sea and the Mediterranean, respectively. This pipeline would make it possible for Gazprom to start gas deliveries to Israel.

Along with Gazprom’s aggressive export strategy, representatives of Russia’s powerful energy lobby appear to have revived the idea of forming a Moscow-led “gas OPEC.” Valery Yazev, who heads the State Duma Energy, Transport, and Communications Committee, told the board of the Russian Gas Association on October 30 that producers and transporters in the former Soviet republics should form an International Alliance of National Nonprofit Gas Organizations. Yazev, whom some commentators describe as “Gazprom’s chief lobbyist in the State Duma” and an “unofficial mouthpiece of the Russian authorities,” suggested that Russian President Vladimir Putin stands behind the idea, but that he placed it “on the back burner” at the time of the July G-8 summit in St. Petersburg.

Yazev argued that the concept has become relevant again because of the recent appeal by European Union leaders for a joint European energy market and the bloc’s demands that Moscow ratify the Energy Charter, which would require Russia to open access to its pipelines. Yazev stressed that the EU is a “cartel of consumers” that regulates access to pipelines. He argued that Russia should take the lead in setting up its own gas alliance, which would “shift the balance of forces” in favor of producers. This gas cartel, the lawmaker said, would seek to coordinate legislation to standardize gas prices and transport tariffs among Russia, Belarus, Kazakhstan, Uzbekistan, and Tajikistan, as well as with “gas associations” in Turkmenistan, Ukraine, and Moldova. Iran, he suggested, might also joint the gas alliance when the tension over its nuclear program subsides.

In fact, regardless of whether the “gas cartel” idea is implemented, Gazprom, the principal agent of Russian energy diplomacy, has long built “special relations” with key holders of large hydrocarbon reserves. Central Asian gas, for example, can now reach Europe only via Gazprom or its subsidiaries such as RosUkrEnergo. Last spring, the Russian monopoly signed a memorandum on cooperation with Algeria, the second-largest gas exporter to the EU. Furthermore, the Russian and Iranian presidents agreed to coordinate policies on global gas markets.

These developments cannot fail to aggravate the atmosphere of mistrust that currently dominates EU-Russia energy relations. To remedy the situation, the EU appears to be pursuing a two-pronged strategy. While the bloc will likely continue to press Moscow to make it accept the rules of the game based on the principles of a market economy, openness, and transparency, it will also actively seek to expand its import base, focusing in particular on the South Caucasus and Central Asia’s energy riches.

This week saw German Foreign Minister Frank Walter Steinmeier touring all five of the post-Soviet Central Asian states. This visit has likely made the Kremlin wary, with some Russian analysts asserting that the main reason for Berlin’s interest in the region is the German and EU desire to cut deals with local regimes that would allow Europe to “get deliveries of cheap Asian gas bypassing Russia.”

For its part, the U.S. government appears to be increasing its critical rhetoric decrying Russia’s reluctance to loosen its tight grip over energy transportation routes. Speaking at a recent energy conference at the University of Haifa, U.S. Ambassador to Israel Richard Jones stressed the importance of multiple energy routes to help secure the supply of gas and oil to the Middle East and Europe. Jones described the current situation whereby Russia is exercising monopoly over much of the gas supply in the Caspian region as “unhealthy.”

(Nezavisimaya gazeta, Jerusalem Post, November 2; RBK Daily, Gazeta, Vremya novostei, October 31; Kommersant, October 30; Gazprom.ru, October 27)