Escalation of the Global Gas War, Part II


By a twist of fate, Middle Eastern countries turned out to be the world’s “oil and gas El Dorado.” There is a unique supergiant gas field in the Persian Gulf, with reserves of about 28 trillion cubic meters of gas, which roughly equally belongs to Qatar and Iran


A new stage in competition for the European gas market

Particular interest in the Russian gas pipeline project South Stream was expressed by Bulgaria, Serbia, Romania, Hungary, Greece, and Italy. The reasons are obvious — they are the countries most dependent on gas transit supplies from Russia through Ukraine.

In October 2011, there was incorporated an international company, operator of gas pipeline construction  South Stream Transport, a joint company of Gazprom (50% of shares), Italian Eni (20%), French EDF Group (15%) and the German Wintershall AG (15%). So Russia started construction of the ground infrastructure of new pipes on our territory — the main gas pipeline, gas-pumping compressor stations and Russkaya onshore terminal.

However, already during the negotiation stage of the construction contract, the pipeline faced growing opposition from a number of influential EU officials and their US advisers, partners and patrons.

The USA and pro-American Europeans cited “growing danger of Europe’s dependence on gas supplies from unpredictable Russia” as the main reason for this opposition.

The real reason, which have long been pointed out by many European experts and politicians, is different. Under no circumstances do the USA want to give up the ability to control, at least indirectly, the energy relations between Europe and Russia. Which can be done only by firmly tying these relations to the transit of Russian gas through Ukraine, managed by Americans. The USA, appointing Ukraine to act as a sort of an unstable and troubled buffer zone between Russia and Europe, categorically rejected everything that undermined the monopoly of Ukraine in the transit of our gas to Europe.

The formal way to stop the South Stream was the introduction of new and increasingly sophisticated EU laws (directives) on “security of energy supply.” According to some directives, if a company supplies gas to Europe, then it cannot simultaneously own both this gas and means of delivery. That is, the gas pipelines or gas terminals.

According to other directives, if a company owns the gas pipeline, it is obliged to pump gas from other suppliers (not less than half of the transit) freely through it.

It essentially meant that Gazprom was offered to build and maintain for Russian money gas infrastructure in Europe which would be used on a priority basis not by Russia, but by the interested European or other companies. From an economic point of view, it made South Stream meaningless.

The most cynical aspect of these European “gas directives” was that they were openly anti-market and simultaneously specifically anti-Gazprom.

First, they grossly violated the fundamental principles of economic law — the inadmissibility of retrospective application of the law (their fulfillment was required in respect of the contracts signed by Gazprom BEFORE the adoption of the directives). Secondly, the implementation of these directives allowed exceptions for European companies. For example, they could own terminals for liquefied natural gas (LNG), which they supplied to the European market.

Then negotiations with Azerbaijan about the possibility to at least partially revive the Nabucco project, that is, increase supplies of gas to Europe bypassing Russia from the south, intensified dramatically. Тew projects appeared: Trans-Anatolian Gas Pipeline (TANAP) from Baku (from the Shah Deniz gas field) through Georgia and Turkey to Greece and prolongation of the TANAP into Europe — Trans Adriatic Pipeline (TAP) from Greece through Albania and the Adriatic Sea to Italy.

Shah Deniz gas field, the route of the South Caucasus Pipeline (SCP), the Trans-Anatolian gas pipeline (TANAP) and the planned Trans Adriatic Pipeline (TAP), as well as Nabucco pipeline. CC 2.0 (click for better resolution)

Shah Deniz gas field, the route of the South Caucasus Pipeline (SCP), the Trans-Anatolian gas pipeline (TANAP) and the planned Trans Adriatic Pipeline (TAP), as well as Nabucco pipeline. CC 2.0 (click for better resolution)

Of course, Europe knew perfectly well that Azeri gas could not replace Russian South Stream. The design capacity of South Stream is 63 billion cubic meters of gas per year, while Shah Deniz will be able to give only 10 billion cubic meters a year through TANAP and TAP, with a long-term increase in supply due to the commissioning of other fields up to 20 billion cubic meters per year.

However, TANAP and TAP were — unlike the South Stream — quickly agreed upon and approved by European officials. In addition, the European Commission again made an exception for TAP to the principle of “separation of assets”, mandatory under the terms of the third energy package directives. As a result, the developers of the Shah Deniz, the Azerbaijan state company SOCAR and British BP are allowed to simultaneously control not only TANAP (outside the territory of the EU), but also TAP, passing through the territories of EU members Greece and Italy.

At the same time, South Stream got stuck in persistent (and ever increasing) EU requirements to comply fully with the third energy package directives of the European Commission. Because, again, the USA has long set the stage for weakening economic and political ties between Europe and Russia. One of the mechanisms of such weakening of the bonds was to drive the Russian gas out of the European market and replace it with the gas from other sources.

What kind of sources are we talking about?

First of all, it is about Middle Eastern gas. Also, in the future, liquefied gas from the USA, the extraction of which at the time was already growing rapidly because of the commissioning of the new “shale” deposits.

However, we will discuss the topic of the US shale gas in detail later. Now let us talk about the project “Middle Eastern Gas to Europe.”

Middle Eastern Gas Hub

By a twist of fate, Middle Eastern countries turned out to be the world’s “oil and gas El Dorado.” If we talk about gas, in particular, in the Persian Gulf there is a unique supergiant gas field with reserves of about 28 trillion cubic meters of gas, which equally belongs to Qatar (it calls its part “North Field”) and Iran (its part is called “South Pars”). There are also considerable gas reserves in Saudi Arabia, the United Arab Emirates, and Egypt.


“North Field” and “South Pars”

The main gas exporter in the region is currently Qatar. Iran could export at least as much, but it has been under international sanctions for decades. In addition, Qatar, with the participation and support of Exxon Mobil and BP oil and gas companies, has built not only modern gas production infrastructure, but also powerful liquefaction terminals. Qatar also owns the world’s second largest (second to Japan) fleet of LNG tankers, providing the minimal cost of LNG shipping to consumers anywhere on the planet.

In 2013, Qatar produced about 420 billion cubic meters of gas and sold about 90 million tons of liquefied natural gas on global markets, 31% of its global export.

Qatar has long wanted to start large-scale deliveries of gas to the very capacious and solvent European market. However, so far sales of Qatari LNG in the EU are relatively low. It is because the Qatari LNG tankers to Europe have to bypass the Arabian Peninsula through the “not quite safe” Strait of Hormuz, the Arabian Sea and the Suez Canal. The other reason is that, currently, there is still a steady supply of relatively cheap Russian gas to Europe.

In the middle of the last decade, when Europe started to discuss the Nabucco gas pipeline from the Caspian Sea region to Turkey and further to Europe, Qatar very actively joined the discussion and immediately offered to send its gas to Nabucco. The estimated amount was up 70 billion cubic meters a year. It should be noted, that this Qatar’s idea, which meant driving Russian gas out of Europe, was immediately warmly supported by the United States.

However, how could one pump Qatari gas to the Nabucco pipe line, Turkey and further to Europe?

The shortest path is to the North through Iran to Azerbaijan. The problem was that this route meant including Iran with its own huge gas reserves to the Nabucco scheme. Which was, first, unacceptable to the Sunni Arab “colleagues” of Qatar in the Cooperation Council for the Arab States of the Gulf (GC), which considered Shiite Iran a constant formidable competitor for leadership in the Islamic world. Secondly, it was unacceptable for the USA, which from the period of the Islamic revolution of 1979 have considered Iran their enemy and passed tough anti-Iranian economic sanctions through the UN Security Council resolutions.

In 2008, discussions began about the gas pipeline route from Qatar to Turkey through Iraq. However, Turkey opposed this, because the pipe had to pass through virtually autonomous Iraqi Kurdistan and the Kurdish areas of the Turkish Anatolia. Which meant serious political problems for Ankara. Because such a “pipe connection” could not help raising hopes of Iraqi, Iranian, Syrian and Turkish Kurds about the unified ׅ“Great Kurdistan.” However, even if Qatar were able to “force” such a pipeline, the political and military risks of the actual civil war in Iraq remained an insurmountable obstacle.

Then the third route for the “Qatari pipeline” was proposed: along the coast of the Persian Gulf through the territory of Saudi Arabia, then through Jordan to Syria and after that, to Turkey. This option, which was actively discussed in 2009, suited the Saudis, as well as Jordan, and Turkey. All of them would get transit control and transit fees — the kind of advantages that is always nice to have.

However, the Alawite (Shiite and Pro-Iranian) minority holding key positions in Syria and its leader, President Bashar al-Assad, had the most serious reasons to see a threat to the political security of the country and its territorial integrity in this initiative.

Too obvious was the fact that for the USA, NATO, and Sunni States of the GCC, Syria was as much a military target as Iraq, and that, after wreaking havoc by their military actions in Iraq, they would soon begin to wreak it in a similar manner in Syria. And the “Qatari gas pipeline” might well contribute to such a turn of events.

This prediction was fully confirmed by the actual course of events.

Since March 2011 in Syria the first “popular uprising” of another “orange revolution” began, and it was in those South-Eastern and Eastern Sunni provinces, through which the Qatari gas pipeline was supposed to pass (Daraa, Baniyas, Homs, Latakia, Aleppo, etc.). Al-Assad, who had good intelligence services, knew the actual “driving forces” behind these “popular uprisings.” He also understood that with such a turn of events he needed much stronger support of Iran and Shiite power in Iraq than before.

At the end of June 2011 the Memorandum of Understanding was signed in Iranian Bushehr, declaring the alternative project of a gas pipeline Iran — Iraq — Syria, with the prospect of it reaching the Mediterranean sea in Syria or Lebanon and further extension across the sea to Greece. The declared design capacity of this “pipe” amounted to 110 billion cubic meters of Iranian gas per year.

The Sunni countries led by Qatar and Saudi Arabia indignantly declared this project “the Shiite gas pipeline.” They claimed that the Bushehr Memorandum was a “hostile act.” Next – together with the USA and its NATO allies, they have dramatically increased support for the “Syrian opposition” with weapons, intelligence and mercenaries. At the same time, they accused Syrian President al-Assad of “genocide of his own people”, openly called for his overthrowing as their objective and by the autumn of 2011 started a full-scale armed rebellion virtually all over Syria.

To be continued.

Source (for copy):


This is the translation of the second article (first published in “Essence of Time” newspaper issue 109 on December 24, 2014) by Yury Byaly of a series on the new round of global economic warfare. The ultimate goal of this war, of which gas wars is a part, is the weakening and dissolution of Russia. But disruption of Russian supply of gas will lead to lack of gas and rise of prices and some European economies might just not handle this. Since all of the global economy is intertwined, those who started this war want to make not just Russia, but many other countries become weaker in the end.


We encourage republishing of our translations and articles, but ONLY with mentioning the original article page at (link above).
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