Caspian Energy: Washington Trying New Tack on Nabucco Project
The United States wants to "depoliticize" the proposed Nabucco pipeline project, and might welcome Russia's participation in the pipeline, Washington's Eurasian energy envoy, Richard Morningstar, recently announced. The Kremlin, however, is likely to interpret this outwardly magnanimous gesture as a sign of Nabucco's weakness, some experts say.
Speaking at a late January forum sponsored by the Washington, DC,-based Center for American Progress, Morningstar indicated that the United States would not necessarily object if Europeans ultimately chose to build the Russian-backed Nord Stream or South Stream pipelines. Morningstar's appearance at the forum was billed as the first comprehensive exposition of the Obama administration's Caspian energy strategy. While continuing to back the same basic principles as the Bush and Clinton administrations, it was clear from the talk that the Obama administration has much more modest goals regarding Caspian energy than its predecessors.
Morningstar said Washington had three primary energy objectives in the region: to help to develop new oil and natural gas deposits; to support European energy security by making sure EU states have access to energy from a variety of sources; and to promote the economic development of the countries of the Caucasus and Central Asia by developing as many markets as possible for their hydrocarbon resources. "All we want to see is that the countries of the Caucasus and Central Asia be able to make their own decisions, as they see their own interests, with respect to the production and export of their resources," he said.
The focal point for that strategy is what Morningstar called the "southern corridor," a means of transporting natural gas to Europe via either the Nabucco pipeline (from Turkey to Austria) or the Interconnector Turkey-Greece-Italy pipeline. While this route is usually defined in terms of avoiding Russia, Morningstar went out of his way to argue that the US approach was not "anti-Russian." And he even appeared to step back from previous strong American opposition to proposed Russian gas pipeline projects that could compete with Nabucco. [For background see the Eurasia Insight archive].
"We've tried to depoliticize the pipeline issue," he said. "If the Europeans decide that they want Nord Stream or South Stream, that's ultimately their issue. The Nord Stream project - the train is out of that station and it's very likely that that'll happen. At the same time, it's important for Russia to understand that what we would be doing with respect to the southern corridor ? is still going to supply a very small part of European demand. It might help some Central and Eastern European countries in case of shutoffs and so on. So it's not something that should become a huge issue. [For background see the Eurasia Insight archive].
"It could be an opportunity for Russia to participate in the [Nabucco] project, not as a controlling partner but as a participant. And given the present global financial situation, it might be the most rational way of moving forward," Morningstar continued. "Whether that will ever happen, I don't know. It's certainly not going to happen today. Maybe there are other solutions. But these are the kind of things we need to talk about. If we talk about it openly, maybe we can ultimately come up with some different answers."
Morningstar emphasized that the southern corridor did not have to mean the Nabucco pipeline. He said the Interconnector Turkey-Greece-Italy pipeline could offer the same benefits, and suggested that its backers ought to play up the strategic benefits of the pipeline to Central European governments.
"One of the reasons Nabucco gets talked about more than the Italy-Turkey-Greece Interconnector (ITGI) is that, at least politically ? today, Nabucco would do more for the countries of Central and Eastern Europe," Morningstar said. "What I've encouraged the principle countries involved in that [ITGI] project to do is to catch up politically and come up with a plan that would do more for the vulnerable countries of Central and Eastern Europe."
"If, in fact, ITGI could do strategically what Nabucco is doing, then it becomes purely a commercial issue as to which ultimately makes the most sense," Morningstar continued. "Maybe ITGI and Nabucco have to talk together about how things can be sequenced in order to most effectively supply Central and Eastern Europe. I think we need to see some creativity among the participants in the process."
Don't expect Russia to respond positively to Morningstar's olive branch on Nabucco participation, said Samuel Charap, a scholar in the Russia and Eurasia Program at the Center for American Progress. "Even if it were technically feasible, Russia's - or rather Gazprom's - conviction that Nabucco is exclusively a means of undermining [its] export monopoly would stop them [Russian officials] from signing on," he said.
Even Washington should be wary of supporting the Nabucco project until it's proven that it is commercially viable, and that isn't yet clear, Charap added. "It's good that Morningstar's position is that the United States supports the southern corridor as a principle, but his open support for Nabucco at this stage in its development seems to be somewhat at odds with that," he said. [For background see the Eurasia Insight archive].
Washington still believes that Turkmenistan can supply gas to the southern corridor, Morningstar said, in spite of the recent opening of a pipeline to China that many experts believe could accommodate so much gas that there would be none to ship West.
"All we can say is, President [Gurbanguly] Berdymuhkamedov has continually voiced his desire for gas to go to the Caspian," he said. "As far as supply, we think there would be supply. There is offshore production being developed on the eastern side of the Caspian, and if the pipeline structure was set up ? could go West." [For background see the Eurasia Insight archive].
The main barriers to Turkmenistan's participation, he said, were the fact that the Caspian Sea has not yet formally been delineated between its littoral states, and the lack of an agreement between Turkey and Azerbaijan on a pipeline. [For background see the Eurasia Insight archive].
"Turkmen gas crossing the Caspian would be dependent on Turkey and Azerbaijan reaching suitable transit agreements. And if I were Turkmenistan, I wouldn't be making any major plans to cross the Caspian until that Turkey-Azerbaijan agreement were made," he said. "The failure of Turkey and Azerbaijan to conclude an agreement on pricing and gas transit relating to Shah Deniz gas is somewhat disappointing. Both countries are good friends of the United States, and we do not take sides in their negotiations. But significant further delays could see the window of opportunity for putting in place this key piece of the southern corridor close. And it's hard to see how that would serve the interests of either side."
The ongoing rapprochement between Turkey and Armenia need not be an obstacle to the negotiations between Turkey and Azerbaijan, Morningstar added. "Why I don't think they're mutually exclusive is that the southern corridor is in the interest of both Turkey and Azerbaijan, and what we say to both countries is: 'Whatever your issues are with each other, whatever your issues are with respect to Armenia, whatever issues you have with Europe, or have with us, look - this is in your interest,'" he said.
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