Escalation of the Global Gas War. Part VII

 

The possible success of the US-Iranian negotiations on the nuclear program will open the doors to connecting Iranian gas shipments to the “Southern Gas Corridor.” This gas, along with gas from Turkmenistan, would allow the EU to “get Europe off of the Russian gas needle” entirely over just a few years.

The Southern gas corridor for Europe

The “Southern gas corridor”, which European Commissioner Maroš Šefčovič declared an infrastructure priority for European natural gas supply in early 2015, has been under discussion for, at the very least, the last 20 years.

Initially, plans were being considered to lay pipelines from Iran and Northern Iraq through Turkey. However, international sanctions against Iran and the beginning of the war in Iraq after the September 11, 2001, terrorist attacks led these plans to be postponed.

Following this, the main gas wager was made on the natural gas resources of Azerbaijan and Turkmenistan. So, in 2004, the project emerged of the “Nabucco” gas pipeline, with a capacity of 31 billion cubic meters of gas per year from Turkmenistan and Azerbaijan, through Georgia, Turkey, Bulgaria, Romania, Hungary, and Austria to Germany. “Nabucco” could supposedly offer Europe a potential substitute for Russian gas.

Those interested, including politicians and the managers of those western petroleum corporations who were establishing themselves in the former Soviet Republics, started actively marketing “Nabucco”, speaking of the gigantic gas reserves found in Azerbaijan an Turkmenistan. Meanwhile, politicians from the countries interested in the project explained that Russia, being politically and economically weak, would not be able to oppose the construction of “Nabucco.”

The pilot stage of “Nabucco” was even completed; July 2007 saw the official opening of the South Caucasus Pipeline (SCP) Baku-Tbilisi-Erzurum with a capacity of 4.5 billion cubic meters of gas per year, allowing for the transit of Azerbaijani gas to Georgia and Turkey. Back in 2010-2012, both the Azerbaijani Minister of Energy, Natig Aliev, and the leadership of British Petroleum announced that, as production grows of the Shah Deniz gas field, the SCP’s capacity would be increased to 25 billion cubic meters per year. After the construction of the Trans-Caspian Pipeline (TCP) from Turkmenistan, the SCP would be able to transport no less than 45 billion cubic meters of gas per year.

In actuality, however, the “Nabucco” project was encountering increasing difficulties by 2009-2011.

The first was the emergence of serious geological and technological problems with increasing production on the Azerbaijani Shah Deniz gas field.

The second was that in the situation when the Caspian countries (Russia, Kazakhstan, Turkmenistan, Iran, and Azerbaijan) had not reached an agreement regarding the political status of the Caspian Sea, there was a lack of the necessary legal basis for the construction of any sort of pipelines across this sea-lake.

The third was that there was no reliable technology of constructing pipelines in an ecologically safe manner for the Caspian Sea, where sea level can change by several meters over the course of a few years, and the shoreline can shift by kilometers.

The fourth issue was serious doubt regarding whether the two main potential suppliers of gas for “Nabucco” could reach an agreement. This is because of the active dispute, which is nowhere near resolution, between Azerbaijan and Turkmenistan over who owns the large shelf gas field, which Turkmenistan calls Serdar, and Azerbaijan calls Kyapaz.

The fifth problem was the unwillingness of Azerbaijan and Turkmenistan to ruin relations with their northern neighbor. Azerbaijan depends largely on Russia to solve its age-old Nagorno-Karabakh problem. Meanwhile, Turkmenistan sells large volumes of gas to Russia using the Soviet “Central Asia-Center” pipeline, and it has no desire to lose this source of revenue.

Furthermore, it turned out that China has placed its eye on Turkmenistan’s key gas fields. It has not only invested in their development, but it is building pipelines from Turkmenistan to its own territory, Xinjiang.

In June of 2013, the European Commission officially announced the shutdown of the “Nabucco” project. The reasons were the lack of sufficient gas sources and high political risks. Therefore, potential investors refused to put their money into this project.

However, the European Commission simultaneously announced that instead of “Nabucco”, it would move forward with construction of two pipelines we previously discussed in this article, the Trans-Anatolian gas pipeline (TANAP) from Baku, fed by the Shah Deniz-2 gas field, through Georgia and Turkey to Greece, as well as TANAP’s extension into Europe, the Trans Adriatic Pipeline (TAP) from Greece through Albania and the Adriatic Sea to Italy.

Reanimating “Nabucco?”

After Russian President Vladimir Putin announced that negotiations between Russia and the EU over the “South Stream” through the Black Sea to Bulgaria had reached a dead end, and he referred to the “Turkish Stream” through Turkey to Greece as an alternative, the European Commission briefly went into a state of shock. There were even declarations that Russia’s unilateral termination of the negotiations was illegal; therefore, negotiations over the “South Stream” are still in progress.

Subsequently, the European Commission announced (as was previously discussed in this article) the creation of the Energy Union, as well as that the “Southern Gas Corridor” will become its priority in terms of infrastructure. Now, since the EC’s statements regarding the “Southern Gas Corridor” name Iran, Iraq, and Turkmenistan as its chief gas suppliers, it became clear that the topic of discussion was, in one form or another, an attempt to reanimate “Nabucco”, which had been buried two years before.

This was confirmed by the negotiations held at the end of February 2015 between European Commissioner Maroš Šefčovič and Turkmenistan’s ambassador to the EU, Kakadjan Mommadov, as well as by Reuters’ report stating that shipments of Turkmen gas to Europe in volumes of 10 to 30 billion cubic meters per year were being discussed.

This was further confirmed by the March talks in Sofia between the Bulgarian Prime Minister Boyko Borissov and Azerbaijani President Ilham Aliyev, where the clearly stated topic of discussion was the completion of the European segment of Nabucco, the “Nabucco-West” gas pipeline system.

Finally, this was confirmed by publications in European and American media stating that the possible success of the US-Iranian negotiations on the nuclear program will open the doors to connecting Iranian gas shipments to the “Southern Gas Corridor.” This gas, along with gas from Turkmenistan via the TCP, would allow the EU to “get Europe off of the Russian gas needle” entirely over just a few years.

However, the above-listed problems plaguing the “buried ‘Nabucco’” haven’t gone anywhere. Moreover, they have been exacerbated.

For example, despite the prognoses of western analysts, the September 2014 IV Caspian Summit in Astrakhan’ did not lead to the signing of a convention on the legal status of the Caspian Sea. It led to merely a declaration that “the positions of the parties involved have grown significantly closer.” Furthermore, speeches during the Summit made pipeline disputes public. The President of Turkmenistan, Gurbanguly Berdimuhamedow, stated that the question of building pipelines across the Caspian Sea “is the sovereign right of those countries, whose territorial waters they cross.” The President of Iran, Hassan Rouhani, conversely, stressed that “the Caspian Sea is a closed sea. Therefore, decision-making… regarding this sea is possible only by consensus.”

On February 3, 2015, Azizollah Ramezani, the Director of International Affairs for the National Iranian Gas Company (NIGC) announced that Tehran has a much more lucrative offer for the EU instead of building TANAP and the TCP, “We propose that gas be transferred from Azerbaijan and Turkmenistan to Iran and then be exported from there to Europe through Turkey. This is the most economical and cost-effective way of transferring gas to Europe.

In Europe, this proposal was met both with obvious interest and with serious doubts.

On the one had, completing this project would allow for significant savings on investments, because the already existing pipelines from Turkmenistan to Iran and from Iran to Turkey (each with a capacity of 10 billion cubic meters of gas per year) would just need to be expanded, and it is much cheaper to lay pipes across land than it is to do so under the sea. Apart from this, a pipeline through Iran rids the EU of all the political problems stemming from the legally ambiguous status of the Caspian Sea and for Turkmen-Azerbaijani disputes over gas fields, and it rids Moscow of its reasons to torpedo the project. Finally, including Tehran into the project means the prospect of massive Iranian gas shipments to Europe, in other words, an opportunity for Europe to free itself entirely of “Russia’s gas dictate.”

On the other hand, and this is paramount, implementing the “Iranian version” depends directly on the success of the Iranian nuclear program negotiations and on the lifting of international sanctions off Tehran. And, it looks like, despite regular assurances that the participants are “moving closer to mutual understanding,” these negotiations are far from a successful conclusion.

Moreover, on March 11, 2015, US President B. Obama renewed American sanctions against Iran for another year. On March 26, Obama instructed his military and intelligence to “provide logistics and intelligence support” to Operation “Decisive Storm” started by Saudi Arabia and other League of Arab States (LAS) countries against Houthi rebels in Yemen. Those very rebels, who took control of more than half of the country, and of supporting whom LAS countries accuse Iran.

After this, Iran’s Foreign Ministry harshly condemned Saudi Arabia’s decision to bomb Houthi positions, calling this decision a “dangerous step” and a “violation of international responsibilities and national sovereignty.” Saudi Arabia responded with stating that it intends to war against Houthis in Yemen “until a victorious end.” As a result, experts began saying that the issue of lifting sanctions (and thus including Iran into the European “Southern Gas Corridor” project) has most likely been put off into the distant future.

If these predictions are fair, then the only remaining large-scale potential supplier of gas for “Southern Gas Corridor” is Turkmenistan. However, Turkmenistan’s readiness to be a stable and long-term supplier of large volumes of gas for Europe is increasingly more doubtful.

First and foremost, this is because China is gaining an increasingly firmer grip on Turkmenistan’s largest gas fields.

For example, China has long ago started importing Turkmen gas from fields on the right shore of the Amu Darya river via pipelines that China itself has built. Several years ago, China became the principal investor in the system of the “super-giant” South Yoloten-Osman gas field (renamed Galkynysh in 2011), the reserves of which British auditing firm Gaffney Cline & Associates estimates to be 21 trillion cubic meters of gas.

In August 2013, PRC Chairman Xi Jinping paid an official visit to Turkmenistan, during which he, together with President Gurbanguly Berdimuhamedow, carried out an official launch ceremony for commercial-grade gas production facility at Galkynysh. In turn, the chief the Turkmengaz state concern K. Abdullaev specified that the world’s second-largest gas field “will be used to build up Turkmen gas exports to China... The field is expected to produce 25 billion cubic meters of natural gas per year for China.”

(To be continued)

 

Source (for copy): http://eu.eot.su/?p=7925

 

This is the translation of the seventh article (first published in “Essence of Time” newspaper issue 120 on March 25, 2015) 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 eu.eot.su (link above).
 
 
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