Pipeline Cements Russia’s Hold on Europe’s Gas Supply - January, 2008

An even more significant development coming out of Moscow was a major natural gas pipeline deal finalized between Russia and Bulgaria. The pipeline in question will be used to transport Russian gas from the Bulgarian Black Sea port of Burgas to the Greek Aegean port of Alexandroupolis. This pipeline will be an alternative route for Russian gas exports and, more significantly, it will be designed to bypass Turkey. The pipeline's construction is set to begin in 2008 and is estimated to be completed by 2011. The geopolitical ramifications of this pipeline is quite significant. With this pipeline, Moscow is not only engaging EU members Greece and Bulgaria directly, it is also bypassing Turkey, Russia's major regional competitor. Moreover, the pipeline deal has left the vulnerable Baku-Tbilisi-Ceyhan pipeline as essentially the only Caspian Sea region energy source that is still under Western control.

This is the continuation of Russia's multi-pronged thrust aimed at directly impacting the politics and economy of the European continent by empowering nations of the region that have traditionally had healthy relationships with Moscow. And, of course, Russia is naturally seeking to monopolize the energy distribution networks of the entire Eurasian continent in the process.  

In my opinion, these pipeline deals between Moscow and various nations have been geostrategically more significant than the recent "nuclear" comment made by General Yuri Baluyevsky. During that past several years the Russian Federation has managed to cleverly outmaneuver and undermined Western interests in the Caucasus, Eastern Europe and Central Asia by reaching strategic agreements with various regional governments. These major intergovernmental agreements serve to more-or-less divert major energy transportation routes through the Russian Federation for subsequent redistribution Westward (see relevant articles below).

These agreements have served to severely undermine Western plans for the region as they also serve to weaken the fledgling role the Turkish state had begun to play as a regional hub for oil and gas distribution. As with the Caspian pipeline networks, the geopolitical ramifications of the Bulgarian pipeline agreement is quite significant in that it serves to further strengthen Moscow's monopoly of Eurasia's energy distribution. Moreover, according to various sources, Moscow is poised to takeover control of Serbia's energy market as well. With these actions Russia has been able to place itself into a firm strategic position, one that will enable it to directly and forcefully impact European affairs.  

Arevordi

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Pipeline Cements Russia’s Hold on Europe’s Gas Supply

January, 2008

Russia strengthened its grip on Europe’s energy supplies on Friday as it signed a major gas deal with Bulgaria that analysts said would further undermine the European Union’s attempts to diversify its energy sources. Under the agreement, the $15 billion South Stream pipeline will be built under the Black Sea, allowing Russia to send natural gas directly to Europe through Bulgaria and bypassing Turkey, which has been a crucial transit route for Russia’s gas exports to European markets. The pact, signed by President Vladimir V. Putin of Russia and his Bulgarian counterpart, Georgi Parvanov, was sealed after late-night negotiations with Gazprom, Russia’s state-owned energy monopoly. Mr. Putin and Mr. Parvanov also signed an agreement for the construction of a nuclear power plant, the first Russian one to be built in a European Union country. Construction began in the 1980s but was halted in 1990. Planning for the project was revived in 2003.

The agreement on the South Stream pipeline dealt another blow to Nabucco, a major European Union gas pipeline project designed to diversify energy sources and reduce dependence on Russia. The union intends to buy gas from Iran and Azerbaijan and ship it through Turkey in pipelines that are run to Southern and Western Europe. But disputes over the routes, financing and how to deal with Iran’s nuclear program have delayed the project. Bulgaria, which joined the European Union a year ago, is also a member of the Nabucco consortium. The other countries are Austria, Turkey, Hungary and Romania. Russia has an almost complete monopoly over Bulgaria’s energy market, said Ognyan Minchev, director of the Bulgarian office of the European Council on Foreign Relations. “The E.U., shockingly, acts like a naïve bystander, completely blind to the major strategic reconfiguration that is taking place in the Balkans,” Mr. Minchev said. Under the terms of the South Stream deal, Russia and Bulgaria will each have a 50 percent stake in the Bulgarian portion of the pipeline.

The 560-mile pipeline will cross Bulgarian territory, transporting around 1 billion cubic feet of Russian gas a year. In Bulgaria, it will branch into two spurs: one going west to Italy, the other going north into Austria or Hungary. Analysts said the deal could undermine Bulgaria if it later sought alternative energy sources. “The 50-50 deal is not enough to defend Bulgaria’s national interests,” Mr. Minchev said. Russia is poised to take over the state-owned Petroleum Industry of Serbia, which would increase Gazprom’s influence in the Balkans, analysts said. “What the E.U. lacks is political will in dealing with these energy issues and pushing Nabucco forward,” said Borut Grgic, director of the Institute for Strategic Studies, an independent policy center in Ljubljana, Slovenia.

Source: http://www.nytimes.com/2008/01/19/wo...l?ref=business

Russia's Pre-Caspian pipeline a blow to EU and U.S.

President Putin has signed an agreement with his Kazakh and Turkmen counterparts to build the Pre-Caspian Sea gas pipeline. The U.S. and EU have been pushing for the alternative Trans-Caspian pipeline which would bypass Russia. Russia's Caspian project, known as the Pre-Caspian pipeline is designed to provide huge reserves of gas from Kazakhstan and Turkmenistan with a route through Russia to European markets. “This pipeline will provide long-term large supplies of gas to our partners. It will also become a considerable contribution to energy stability in Europe. In a telephone conversation with the President of Turkmenistan we have confirmed our common intention to carry out existing agreements and develop our partnership,” said Putin. “We also discussed our co-operation in atomic energy, in particular the joint construction of an atomic energy station in Kazakhstan and the further integration of the nuclear industrial facilities of our countries.

Source: http://www.russiatoday.ru/news/news/18749

Russian bonds reinforced

Prime Minister Costas Karamanlis yesterday threw his weight firmly behind Russian President Vladimir Putin during an exceptionally cordial meeting in Moscow where the two leaders agreed to boost bilateral ties, particularly in the crucial energy sector. Karamanlis heaped praise on Putin whom he referred to as «a friend» and congratulated him three times for his landslide victory in parliamentary elections in Russia earlier this month. Karamanlis appeared to plant Greece firmly in Moscow's camp, describing Russia as a «strategic partner.» «The historic ties between our countries are strengthening, particularly in the sphere of energy,» Karamanlis said. His comments followed the signature of a protocol - by Greek, Russian and Bulgarian officials - for the creation of a company to oversee the construction of the much-awaited Burgas-Alexandroupolis oil pipeline. Construction is to begin in the summer.

Source: http://www.ekathimerini.com/4dcgi/_w.../12/2007_91334

Pre-Caspian Pipeline Angers U.S. Because It Does Not Fit Its Policy

Russia's agreements with Central Asian countries to build a pre-Caspian gas pipeline "are getting on Washington's nerves" because they do not fit its energy transportation strategy, Russian First Deputy Foreign Minister Andrei Denisov told Interfax. "The U.S. has been lobbying the idea of an East-West energy corridor for a long time. Its aim is to arrange the transportation of hydrocarbons from the Caspian region bypassing the territories of Russia and Iran," he said. The Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzerum pipelines have already been built, the deputy minister said, adding that "this notorious trans-Caspian gas pipeline is intended to support them". "The political motives behind all of these projects are evident. The pre-Caspian pipeline clearly does not fit this concept, which has caused (Washington's) nervous reaction," he said. However, he refrained from commenting on statements by several U.S. officials on the pre-Caspian pipeline. "The decision to build the pre-Caspian pipeline was reached based on a careful calculation both of the benefit to the participants from the implementation of this project, and the conditions required to bring it into existence," Denisov said. He said that possible technical and ecological risks of the project have been reduced to nothing, because the pipeline will follow an existing route along the Caspian shore. "As regards the trans-Caspian pipeline, which is mainly being supported by players outside the region, this route is still primarily virtual," he said.

Source: http://www.cdi.org/russia/johnson/2007-150-23.cfm

Russian government approves Caspian gas pipeline agreement

Russia's government has approved a Caspian gas pipeline cooperation agreement with Kazakhstan and Turkmenistan, a senior government official told the president's conference with the Cabinet on Monday. The natural gas pipeline will run from Turkmenistan along the Caspian coast of Kazakhstan and onto Russia, and will pump 10-20 billion cubic meters of gas to Europe via Russia's pipeline network. Deputy Prime Minister Sergei Naryshkin said President Vladimir Putin had instructed the government to make the most of a planned working visit by Kazakh leader Nursultan Nazarbayev in order to move ahead with the implementation of the project. The deputy premier said the agreement also involved a provision on a feasibility study of the project, the implementation of which will begin in the second half of 2008. The document remains to be ratified. ""The agreement is ready for signing,"" Naryshkin said. Russia, Turkmenistan, and Kazakhstan agreed to build the pipeline in May 2007 and were to finalize it in September, but had failed to agree on the price of supplies...

Source: http://www.tehrantimes.com/index_View.asp?code=158930

Caspian Pipeline Deal Close

Turkmenistan, Russia and Kazakhstan will sign an agreement Thursday to build a natural gas pipeline along the Caspian Sea coast, the Turkmen government said Tuesday. The statement, on the Central Asian nation's official state Web site, came after months of uncertainty. After a preliminary agreement was formalized at a signing ceremony attended by the presidents of the ex-Soviet republics in May, the deal was stalled by disagreements on the price of gas supplies. Late last month, Russia gave in to Turkmen price demands and agreed to pay $130 per 1,000 cubic meters of natural gas in the first half of 2008 and $150 in the second half. Turkmen President Gurbanguli Berdymukhamedov and Russian Industry and Energy Minister Viktor Khristenko discussed the pipeline during talks in the Turkmen capital Ashgabat, the Turkmen state Web site said Tuesday. News that the deal will soon be sealed will likely disappoint the U.S. and the European Union, which have been lobbying for a rival pipeline to be built under the Caspian Sea, bypassing Russia...

Source: http://www.chron.com/disp/story.mpl/ap/fn/5387312.html