War Casts Cloud Over Pipeline Route

The Oil Drum ^ | August 15, 2008 - 10:08am | Gail the Actuary

[JerseyHighlander]

Georgia Conflict - Open Thread #4

Posted by Gail the Actuary on August 15, 2008 - 10:08am
Topic: Policy/Politics
Tags: georgia, pipelines, russia [list all tags]

Russia has won in the conflict in Georgia, and we are in the process of sorting out what happens next. Various ones have written what they see happening.

GEORGIA-RUSSIA CONFLICT SHOWS EU'S ENERGY VULNERABILITY

But this week's offensive, during which British Petroleum shut down an oil pipeline and temporarily stopped pumping gas through Georgia, has called into question plans for a Eurasian corridor free from Russian interference.

"The Caspian region is wondering what this means for the future," says Giorgi Vashakmadze, an energy executive in Georgia. "Russia is showing it controls this corridor."

War Casts Cloud Over Pipeline Route

Now, Georgia's vulnerability may have dealt a lethal blow to Nabucco and plans for a trans-Caspian pipeline.

"A trans-Caspian gas pipeline can be considered a forever buried chimera," said Pavel Baev, an energy expert at the International Peace Research Institute in Oslo. "It became clear for all the participants of these energy games that nothing will go through the Caspian Sea."

Europe was "shocked" by the instability and realized that "hardly anyone would invest money in new projects" associated with Georgia, said Konstantin Simonov, director of the Fund for National Energy Security.

Georgia: A Blow to US Energy by Steve LeVine

What about the White House's plans for a pipeline to ship natural gas to Europe? The proposed pipeline's success depends on Turkmenistan, which has the fourth-largest natural gas reserves on the planet, an estimated 3 trillion cubic meters. The Turkmen are cautious: Under former President Saparmurat Niyazov, they refused to defy the Russians and support the construction of the Baku-Ceyhan pipeline. "[Niyazov] thought about it and probably decided he didn't want to wake up dead," says former U.S. diplomat Wolf.

The assault on Georgia may make the Turkmen even more wary of the new pipeline. Instead, they may end up cutting a deal with the Russians, who are vigorously pursuing new gas pipelines of their own in a bid to dominate energy in the region. "A new Iron Curtain," says analyst Ruppel, "is descending around the periphery of Russia."

After war in Georgia, what does Russia want?

"This is not about oil," said Kimberly Marten, an expert on Russian defense and foreign policy at Barnard College. "The only oil at stake is what's flowing through the BTC pipeline to Turkey, something that involves many big Western oil companies; and if Russia were to do anything to disrupt that, it would become a pariah in Europe." . . .

The war may have weakened Ukraine's bid to enter NATO, some experts predicted, because of European concerns about antagonizing Russia. The defeat of Georgia, an ally of Washington, also could reduce the influence of the United States in the former Soviet Union — particularly among the rulers of Central Asia.

Rice says draft truce protects Georgia

TBILISI, Georgia (AP) — Secretary of State Condoleezza Rice says a proposed cease-fire she wants Georgia to sign with Russia protects Georgia's interests despite concessions to Moscow.

Russian soldiers continue to occupy Georgian towns

Russian soldiers are still occupying three towns in Georgia today as international efforts continue to resolve the crisis in the country.

Russia is vowing to remain in control of the towns until it is satisfied that the Georgian military is no longer capable of attacking the breakaway provinces of South Ossetia and Abkhazia.

Russia and Georgia have both accepted a French-brokered peace plan that requires them to return to the positions they held before Georgia launched an asault on South Ossetia last week.

Dmitry Orlov gives his view of what is happening in his blog:

The Trouble with Georgia

It may be difficult for some people to grasp why it is that the Abkhaz or the Ossetians do not much fancy suddenly becoming Georgian, so let me offer you a precise analogy. Suppose Los Angeles, California, were to collapse as the USSR once did, and East L.A. quickly moved to declare its independence. Suppose, further, that the 88% of its population that is Hispanic/Latino voted that the other 12% were free to stay on as "guests," provided they only spoke Spanish. The teaching of English were to be forbidden. After some bloody skirmishes, East L.A. split up into ethnic enclaves. Then some foreign government (say, Russian, or Chinese) stepped in and started shipping in weapons and providing training to the Latino faction, in support of their efforts to restore East L.A.'s "territorial integrity." As a non-Hispanic resident of East L.A., would you then (1) run and hide, (2) stay and fight, or (3) pick up a copy of "Spanish for Dummies" and start cramming?

[JerseyHighlander]

Interesting round up of Georgia related news with an energy sector slant from The Oil Drum website. And one comment that puts it in perspective:

 

It's easy to find multiple causes, motivations, pretexts and drivers for this little war. Sakashvili is a bellicose loose cannon, (sort of a local version of John McCain, though half his age) and after a strategic blunder of such magnitude, should logically resign or be removed.

On thing is clear : it was not "all about oil". However, I'm thinking it may have been all about gas.

Just recently, Gazprom signed a deal with Turkmenistan to buy all their gas at market prices. They are working on a similar deal with Azerbaijan... which is currently connected to the non-Russian world by pipelines that pass through Georgia. (The Russians apparently either tried to bomb the pipelines and missed -- unlikely -- or deliberately missed as a warning to all concerned.

So : this little war sends the following messages :

* To the Azeris : hurry up and sign your gas over to us. You don't want to depend on those flaky Georgians, or their so-called allies, the US and Europe.

* To Europe : forget about the Nabucco project; forget about sourcing Central Asian gas without our participation. We will give you security of supply; but don't try to deal with the competition.

The end of the modern Great Game (set, and match).