BBC: Media ponder ‘energy chess game’

2009/07/16

From left: European Commission President Jose Manuel Barroso, prime ministers Gordon Bajnai (Hungary), Werner Faymann (Austria), Recep Tayyip Erdogan (Turkey), Sergei Stanishev (Bulgaria), Emil Boc (Romania)

Turkish writers were pleased about the Nabucco gas pipeline deal signed by Turkey, Austria, Hungary, Bulgaria and Romania on Monday in Ankara. They saw it as placing their country in an excellent position strategically, particularly with regard to Europe.

Proposed route of Nabucco gas pipeline

Proposed route of Nabucco gas pipeline

But a commentator in one Turkish paper, as well as writers in several Romanian dailies, wanted to know from where the gas for the pipeline would come. This point was also not lost on Iran’s hard-line daily Hezbollah, which believes Europe will have to approach Iran.

Further east, commentators wondered whether Russia’s rival pipeline project, South Stream, would now be scrapped.

SAMI KOHEN IN TURKEY’S MILLIYET

The inter-governmental agreement on Nabucco that was signed in Ankara yesterday deals a new “strategic card” to Turkey… through this project Turkey once again shows that it acts as a bridge between the East and West… This strengthens Turkey’s hand in international relations, particularly regarding Europe.

ISMAIL KUCUKKAYA IN TURKEY’S AKSAM

If the Nabucco project is realised and the gas to be carried by this pipeline can be found, our country will further strengthen its “strategic importance” in the eyes of the West. This “new move” by the European Union and US against Russia in the “energy chess game” will bring very important developments politically in terms of the Middle East and Caucasus.

FATIH ALTAYLI IN TURKEY’S HABERTURK

A big pipeline is being built in order to reduce Europe’s dependency on Russian gas. But it is not clear who will provide gas for this pipeline. Iran has gas, but the US has prevented Tehran from joining Nabucco. Russia does not permit the countries in its backyard to participate. In the current situation, it seems that only half of the capacity of the pipeline will be used.

IRAN’S HEZBOLLAH

Many experts believe that the gas sources of Central Asia, the Caucasus and even Iraq are not enough to fulfil the demands of the European countries and Turkey for a year, and that sooner or later they must use Iran’s gas sources. That’s why the Turkish prime minister emphasised Iran’s presence during the signing ceremony.

IRAN’S HAMSHAHRI

Why should the situation be such that the head of a country, which is merely on the gas pipeline route, is at the focal point of the project; managing and hosting the contract and more importantly, feeling sorry for the second largest holder of gas reserves of the world, i.e. Iran and talking about lobbying to include Iran?

RAZVAN CIUBOTARU IN ROMANIA’S COTIDIANUL

Politically, the deal is an indisputable success. However, beyond the jubilation of a good start, the Ankara deal is still only just on paper and does not eliminate the competition represented by the rival South Stream plan initiated by Russia.

ELIZA FRANCU IN ROMANIA’S GANDUL

Russia controls all the resources in the region – not only its own but also those of its former satellite states. Or, when it does not have this control, it has the money to buy it. By overpaying for Azeri gas, Russia left this project without any supplier.

FLORENTINA CIOACA IN ROMANIA’S ADEVARUL

The fact that Nabucco project is a priority for the European Union does not solve the main problem: the lack of gas supply.

UKRAINE’S GAZETA PO-KIYEVSKI

It is all too obvious that Europe and Asia want an end to threats with the “gas club”. What can you expect? Moscow should not have displayed it so insistently.

UKRAINE’S EKONOMICHESKIYE IZVESTIYA

Observers suggest that Azerbaijan will blackmail Europe with gas sales to Russia, and Russia with co-operation with Europe.

UKRAINE’S DELO

There is still a high likelihood that Russia, which is not interested in alternative supplies, will have an influence on Turkmenistan’s decision to co-operate with Nabucco.

AZERBAIJANI’S ZERKALO

Moscow’s attempts to hinder the implementation of this project… have failed. Baku expressing its readiness to participate in the Nabucco project, and also Turkmenistan’s statement that it is ready to consider this project as a way to diversify supply routes for its gas, can be viewed as the failure of Moscow’s plans to hinder the construction of this gas pipeline.

AZERBAIJAN’S YENI MUSAVAT

The signing ceremony in Ankara can be viewed as the start of a new stage in the years-long geostrategic struggle for Caspian energy.

COMMENTARY ON BELARUSIAN RADIO

The latest major foreign policy failure – and the re-orientation of Azerbaijan and Turkmenistan towards Nabucco cannot be described in any other way – is entirely due to the short-sightedness of the Russian gas monopolist, which aims only at making immediate profits.

RUSSIA’S VEDOMOSTI

In the game between Nabucco and South Stream, the EU team has gone forward into the next round. The state of play might still change, but Gazprom’s goals seem less realistic than those of the European Union.

MIKHAIL ZYGAR IN RUSSIA’S KOMMERSANT

The US and Europe believe that the signing of the agreement will force Russia to give up South Stream… After the agreement was signed, it has become clear that Nabucco is significantly ahead of South Stream, owing to the fact that the project has the consolidated political support of practically the whole of Europe… Gazprom’s brainchild, South Stream, cannot boast such consolidated support.

MIKHAIL SERGEYEV IN RUSSIA’S NEZAVISIMAYA GAZETA

Gazprom’s refusal to purchase Turkmen gas in the amount agreed upon last year and the current total suspension of purchasing has forced Ashgabat to look for a substitute for Russia as the major buyer… Analysts say that the Turkmen-Iranian deals are bad news for Gazprom, which is losing its monopolistic position in the transit of gas from Central Asia.

PAVEL ARABOV IN RUSSIA’S IZVESTIYA

Nabucco has been officially launched in Ankara. If everything goes as planned, Europe will get a long-awaited gas pipeline bypassing Russia in four years’ time.

Europe gas pipeline deal agreed

A natural gas pipeline in Kiev (file image)

The Nabucco line has no guaranteed supply of gas

Four European Union countries and Turkey have signed an agreement to construct the long-planned 3,300km Nabucco natural gas pipeline.

Once completed, the line will bring up to 31 billion cubic metres of gas a year from the Caspian and the Middle East across Turkey and into Europe.

It will give an important alternative energy supply to Russia, which already meets 30% of Europe’s gas needs.

But much still remains to be agreed on, not least where the gas will come from.

Turkey’s Prime Minister Recep Tayyip Erdogan said deal was an “historic moment”.

Long-running project

The five countries – Turkey, Romania, Bulgaria, Hungary and Austria – have been working on the Nabucco project with the European Commission for seven years now.

But Monday’s decision to sign the deal has still come as a surprise, said the BBC’s David O’Byrne in Ankara.

He said that Turkey and the European Commission were still at loggerheads over how much gas Turkey would be able to take from the pipeline.

Our correspondent also said that it remained uncertain which countries would supply gas to the Nabucco scheme.

Following the signing, Mr Erdogan said that the legal framework for the construction of the pipeline would now be agreed within six months.

“The more steps we take [on realising the project], the more the interest of supplier countries will grow,” he said.

Supply issues

Azerbaijan will be the main source of Nabucco’s gas when the pipeline is opened, due by 2014.

However, two weeks ago, the country agreed to sell some of its gas to Russia, a move many understood as a warning to the Nabucco partners to sort out their differences or look elsewhere.

Iran, Iraq, Kazakhstan, Turkmenistan and Egypt are all considered potential suppliers to Nabucco in the longer term.

Meanwhile, Russia is planning two of its own new gas pipelines to Europe, the Nord Stream, which will run direct from Russia to Germany under the Baltic Sea, and the South Stream, which will run from southern Russia under the Black Sea to Bulgaria.

European Union states are keen to reduce their dependence upon Russian gas following cuts to their supplies in recent winters.

The disruptions have been caused by Russia cutting supplies to Ukraine following a number of disputes over how much Ukraine must pay for its gas.

This has had a knock-on impact on suppliers to western Europe, as most of the pipelines from Russia currently run through Ukraine.

PROJECTED ROUTES OF NORD STREAM, NABUCCO AND SOUTH STREAM PIPELINES

Europe’s pipeline politics

By Vafa Fakhri
BBC Azeri Service

Pipe laying from ship

Pipes are already being laid into the sea for the Nord Stream project

On the shores of the Baltic Sea, among the sea birds and sand dunes, a quiet energy revolution is taking place.

If all goes to plan, the island of Ruegen, off the coast of Northern Germany, will host the terminal for the massive new Nord Stream gas pipeline connecting Russia with the heart of Western Europe.

After years of unstable relations between Moscow and its former satellite states, Nord Stream is designed to circumvent regional politics by cutting out transit countries.

If it wins final approval, the 1200km (745 mile) pipeline will run under the Baltic Sea from the Russian port of Vyborg.

It could mark a significant change in Europe’s energy security.

At present, 80% of Russian gas delivered to the EU has to cross Ukraine.

In the past three years, disputes between Russia and its neighbour over gas prices have led to occasional shutdowns of supplies to much of Europe for weeks, causing severe shortages for millions.

Avoiding disputes

Europe’s policy makers are looking for ways to take the politics out of pipelines.

A man looks through an ice-covered tram window in Sofia (12 January 2009)

Millions were left without heat during the last Russia-Ukraine gas dispute

Alexander Rahr from the German Council on Foreign Relations says that Europe’s dependence on only two existing pipelines makes it a hostage to disputes.

“If a country like Ukraine gets a problem with Russia and doesn’t pay its gas bill and Russian supplies are cut off, then the whole of Europe suffers in the middle of winter,” he says.

“Last time we didn’t get the gas in winter that we bought from Russia, and also we paid Ukraine for the transit of our goods.”

The Nord Stream company says that its pipeline will deliver up to 55bn cubic metres of gas every year straight to Western Europe.

Ready to roll

About 300km (185 miles) north of the German capital, Berlin, is Sassnitz, a holiday resort with beautiful chalk cliffs. Set in the Jasmund national park, it is a haven for wildlife and walkers.

Sassnitz’s ferry terminal is a key transit point for travellers to Scandinavia and the Baltic states. Now the area is becoming a key logistics site for the Nord Stream project.

More than 19,400 pipeline sections will be processed here, reinforced with a layer of concrete. Most have already been delivered and are kept in storage.

Once the green light is given they will be laid along the bottom of the Baltic Sea all the way to the coast of Russia.

Map of pipeline routes

The pipeline project is mostly popular here – in the past few months it has created 200 new jobs.

But environmentalists and holidaymakers express concern about the potential impact of such a massive scheme.

Jochen Lamp of the conservation group WWF in Germany says the Baltic Sea is an important habitat for migrant birds and mammals such as sea lions. He also says that mines left from the World War II could create serious problems.

Nord Stream says its studies show the environmental impact will be negligible, and that it is more than able to handle the technical and engineering challenges. It hopes gas from Nord Stream could flow as early as 2011.

Rivals

Some 800km (500 miles) to the south lies Baumgarten, a tiny hamlet in eastern Austria.

A third of all exports from Russia are pumped through here to Western European consumers.

Baumgarten gas terminal (2006)

A third of all gas exports from Russia are pumped through Baumgarten

The station is equipped with the latest technology and is controlled remotely from offices in Vienna.

It could also become the end point for another major pipeline project, pursued by the European Union, called Nabucco.

Named after an opera by Verdi, this pipeline would bring gas from Central Asia and the Middle East to Europe, bypassing Russia completely.

It is planned to take a 3000km (1,865 mile) overland route through Turkey, Bulgaria, Romania, Hungary and Austria and will deliver 30bn cubic metres of gas a year to Europe.

But with so many countries involved, the political jigsaw is complex.

And critics of the project say it’s not clear where the gas to fill the pipeline will come from.

Six major European energy companies are shareholders in the Nabucco pipeline consortium, including the Austrian energy giant, OMV, which also runs the Baumgarten facility.

Werner Auli, a member of OMV’s executive board, says there is no issue about supplying Nabucco.

“There will be enough gas in Azerbaijan, Iraq, Egypt and in the long term even Iran to make the pipeline viable,” he says.

“What is needed now is a plan to win political agreement and begin work on the network of supply pipes which will eventually feed into the Nabucco line.”

Maybe there is not enough gas to pump into the Nabucco pipeline… Secondly, we are old friends with Russia
Axel Berg
German Social Democratic Party

As for the political will, Nabucco features highly in the EU’s energy strategy. But not all member states seem to be behind the project with the same vigour.

Axel Berg, energy spokesman for the governing German Social Democrats (SPD), insists that his country’s government is interested in both pipelines, but admits that Nord Stream is the favourite.

“Maybe there is not enough gas to pump into the Nabucco pipeline. But there are reserves in the Caspian region,” he says. “Secondly, we are old friends with Russia.”

Yet the two projects – driven by the same need for secure energy supplies – may in the end be complementary schemes, not rivals.

Paul Sampson, an analyst for Energy Intelligence, says that in the long term, the Nabucco project – with its diverse sourcing of gas – may deliver the goods.

But at this stage much of the work is theoretical. For the nearer future, he says, Europe will look to the Nord Stream project to deliver gas to its industry and homes.

Balkan boost for Russian gas plan

Gas pipe in northern Russia

Russia currently supplies most of the gas for Europe

Bulgaria has agreed to a gas pipeline deal with Russia that is expected to strengthen Moscow’s grip over energy supplies to Europe. The Bulgarian cabinet has agreed to allow the planned South Stream pipeline to pass through the country on its way from the Black Sea to southern Europe.

The South Stream project is seen as a rival to the planned Nabucco pipeline, which is backed by the EU and the US.

A top EU official says the South Stream deal will not harm Nabucco’s prospects.

Russian President Vladimir Putin is currently on a state visit to Bulgaria.

He is accompanied by Dmitry Medvedev, the head of Russian gas giant Gazprom and Mr Putin’s nominee to succeed him this year as president.

The pipeline deal was signed by Mr Putin and the Bulgarian President, Georgy Parvanov, at a ceremony in Sofia.

Russian clout

The South Stream gas scheme, said to be worth 10bn euros ($14.66bn; £7.4bn), is being jointly developed by Gazprom and the Italian firm, ENI.

The 900km (550-mile) pipeline is expected to take Russian gas under the Black Sea and overland across Bulgaria to markets in southern Europe. Russia has offered to site a major gas hub in Serbia, a traditional ally.

In the worst case scenario, the two pipelines will be complementary… Nabucco is going to continue as planned
Ferran Tarradellas
European Commission

Bulgaria had also received an offer from the US and EU to join the rival Nabucco project.

Nabucco envisages bringing Central Asian gas through Bulgaria to Europe, in a move intended to reduce Europe’s reliance on Russian resources.

Bulgaria was allied to the Soviet Union during the Cold War and joined the EU in 2007.

Mr Putin’s visit has seen Sofia sign additional agreements with Moscow on the construction of an oil pipeline and a nuclear power station.

The BBC correspondent Nick Thorpe says the energy deals reveal Russia’s growing influence in the Balkans.

‘Diversifying supply’

According to the European Commission’s spokesman on energy issues, the South Stream deal will not dent Nabucco’s prospects.

“In the worst case scenario, the two pipelines will be complementary,” Ferran Tarradellas told the BBC News website.

Gas flare in northern Russia

Russia has vast deposits of natural gas it is keen to export

“They will certainly not contradict each other. Nabucco is going to continue as planned.”

A spokesman for Nabucco echoed this, saying the firm did not believe its plans overlapped with South Stream’s.

However, an energy expert based in Moscow says the South Stream deal will be seen as a setback for Nabucco.

“Nabucco is in trouble for the short term,” Konstantin Batunin, an oil and gas analyst with Alfa Bank, told the BBC News website.

He says the main question for the Nabucco project concerns its supply, rather than its route.

The chief source of Central Asian gas, Turkmenistan, recently agreed a major gas deal with Russia and according to Mr Batunin, it is now unclear if there will be enough gas left to sell to Europe.

“Turkmenistan has been using the negotiations with Nabucco as a bargaining chip against Russia,” he says.

However, Mr Tarradellas of the European Commission says governments in Central Asia have been enthusiastic about Nabucco.

With the pipeline due to be completed in 2011, Mr Tarradellas says Nabucco will diversify Europe’s gas supply by bringing access to fields in Central Asia as well, potentially, as the Caspian Sea region, Iraq and Egypt.


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