Viktoriya Panfilova, who frequently writes on Central Asia for Russia's daily Nezavisimaya gazeta ("Independent Newspaper"), has an article posted this week quoting Azeri and Russian sceptics about the European Union reaching any kind of gas deal with Turkmenistan. Of course, Russians have every reason to be skeptical of the Europe-bound pipelines -- they will circumvent Russia.
Pierre Morel had an upbeat takeon his trip to Ashgabat last month, but as we noted, President Gurbanguly Berdymukhamedov had little comment beyond saying that the EU's proposals "would be studied" and that cooperation was "a strategic priority" for Turkmen foreign policy. As Panfilova notes, Morel's goal of getting a firm agreement from the Turkmen president to supply gas to the EU, and getting Turkmenistan and Azerbaijan to resolve their differences, has still not been met. The Polish newspaper Gazeta Wyborcza has said that negotiations will take place in Warsaw in September -- Poland currently holds the rotating presidency of the EU.
The West hasn't exactly been waiting for Turkmenistan to sign up for Nabucco, or for that matter, Azerbaijan, and hints that the new fracking technology available to access shale gas in Europe and America will shift some attention away from Central Asia. Even so, Nabucco chugs on, despite postponements. On June 8, an agreement was signed in Turkey by the Nabucco consortium among ministers of the five transit countries: Austria, Bulgaria, Hungary, Romania and Turkey. The 3,900-kilometer pipeline's escalating costs are currently estimated at €12 to €15 billion and it will pump only 31 billion cubic meters a year -- less than the 50 bcm Turkmenistan used to pump to Russia at its peak period, and about what is planned to pump through its Chinese-funded pipeline.
Azerbaijani political scientist Ilgar Velizade told Nezavisimaya gazeta that the lack of a coherent marketing strategy has prevented the signing of the Nabucco agreement until now.
To this day, the gas buyers have still not set a specific price, and have not formulated clear terms for the transit. Turkey had earlier indicated its intentions not only to be a transit state, but also a re-seller of gas. In addition, Azerbaijan has demanded a higher price for its gas than buyers are prepared to pay.
Baku and Ankara have signed an agreement to develop the Shah Deniz II fields starting in 2016-2017, but this is just a general guideline for Europe, says Velizade; such development would require about $22 billion in investments to achieve. Azerbaijan's President Ilham Aliev and Turkey's Prime Minister Recep Tayyip Erdogan have agreed to study the investment issues in a joint Azeri-Turkmen commission.
But what's really stalling Nabucco, says Velizade, is the explicit challenge to Russia inherent in the project -- and the need for Russia's help in resolving the long-standing Nagorno-Karabakh conflict:
With [Nabucco's] implementation, to a significant extent Russia loses the initiative in strategic issues of regional politics. Baku is not prepared to openly go up against the interests of Moscow under circumstances where the Karabakh conflict is not yet resolved, while there are chances to settle it peacefully.
Analysts have said that Ashgabat, too, is reluctant to go up against Russia. Sergei Zhiltsov, head of the Moscow-based CIS Center of the Institute for Current International Issues, says that Turkmenistan, as a state that depends on the sale of its hydrocarbons, is more likely to lean toward a burgeoning China than a geographically-distant Europe. He discounts Morel's agreement with Berdymukhamedov, as the Turkmen leader is willing to appear as if he is accepting any offer, to keep his options open.
While the EU fiddles with agreements with Baku and Ashgabat, Panfilova points out that meanwhile, Iran and Syria have signed a preliminary agreement to build a 5,000-kilometer $10 billion pipeline from the South Pars fields -- and anticipate their customers will be European countries, and that they will run the pipeline through Libya to the Mediterrean region. Yet that project, while cheaper, would involve not only ending sanctions against Iran but running pipelines through conflict areas, and seems to have as many obstacles as Nabucco.