Nov 20, 2018 in Political

Geopolitics and Gas Pipelines with an Emphasis on the Nabucco Pipeline Project

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It would be wise to start by briefly discussing the concept of geopolitics. Thus, geopolitics is a dynamic approach that explains how geography affects people politically. Such factors as the size of a country's territory, access to rivers and seas, and fertility of soil determine every country's geopolitical strategy. In other words, a country's geopolitics and, hence, its international power are heavily dependent on its geographical setting. Although, as Charles de Gaulle once famously said, a country cannot change its geography, it can change its geopolitics (Jackson, 2003). In academic circles, there is no contradiction with regard to the fact that gas and geopolitics are inextricably linked. Indeed, by discovering a new gas field or by building a new gas pipeline, a country would change not only its own geopolitical strategy but also that of the entire region and, perhaps, world. Historically, Europe and Central Asia have been the locus of gas geopolitics. Russia had been the largest natural gas producer on the planet until 2009, when it was surpassed by the United States. Nevertheless, with the longest natural gas pipeline grid in the world and vast untapped gas reserves, it still enjoys an untrammeled freedom of shaping gas geopolitics in the region. The neighboring Ukraine controls a lion's share of Russian gas exports to Europe, as the majority of Russian pipelines run through its territory. However, many pipelines that will deliver Russian energy resources to Europe bypassing Ukraine are now under construction. European countries, dissatisfied with the pricing policy of Russia, also seek more frugal and economically viable variants to deliver gas from the Caspian region circumventing the territory of Russia. The Nabucco Pipeline project with a proposed transport capacity of 31 billion cubic meters per year was one of such hypothetical options (Cambini & Rubino, 2014). The present paper offers a review of the current situation around gas geopolitics in Europe and segues into a disquisition of the Nabucco Pipeline project.

Current Situation around Gas Geopolitics in the Region

A quick look at the map of gas pipelines (Figure 1) on the European continent offers several valuable insights. First, it shows that Russia's tentacles are visible in every nook and cranny of the European Union. Second, and perhaps much more important, it sets one thinking about the geopolitical strategy of the now-defunct Soviet Union. Even though Turkmenistan, Uzbekistan, Kazakhstan, and Azerbaijan were all parts of the USSR, the Kremlin was chary of letting them build their own pipelines that would connect them to Europe. Interestingly, it spent great sums of money to connect the gas fields of these republics to the Russia-centered network so that all gas exports to Europe would flow through the territory of Russia, even though it could save much money by building direct pipelines through the territory of Armenia and Georgia, which were also republics of the Soviet Union. A layman's explanation for this would be that Soviet leaders anticipated the dissemination of the USSR at some point in the future and tried to help independent Russia to maintain its dominance in the post-Soviet area.

Whether or not Soviet leaders predicted the dissolution of the USSR, their cautiousness in the energy sector immensely helped today's Russia. The viability of many European and several post-Soviet economies in dependent on gas supplies from Russia, as shown in Figure 2. It appears that European countries situated in the immediate vicinity of Russia are most dependent on Russia's natural gas supplies. It also seems reasonable to say that the closer a state is to Russia, the more contingent it is on the Russian gas (Kaplan & Chausovsky, 2013). Thus, no less than 90% of natural gas consumed by the Baltic counties, Belarus and Bulgaria come from Russia. Similarly, Central and East European counties export 60-70% of their natural gas from Russia. Russia uses its hegemony in the gas market as a leverage to wring concessions from the EU and post-Soviet republics. As Kaplan and Chausovsky (2013) put it, "this translates into real geopolitical power, even if the Warsaw Pact no longer exists". The country reached an enduring plateau of 677 billion cubic meters of gas per year in 2007 and has been pursuing very aggressive gas policies ever since (Shoemaker, 2014). Essentially, abundant natural resources, including natural gas, are "the lifeblood of the Russian economy", while its pipelines are the veins that deliver it to the customer (Wright, 2009).

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Figure 1 shows that Russia has a very multi-branch gas transmission system. Among the major gas pipelines are the Yamal Pipeline, the Brotherhood Pipeline, the Soyuz Pipeline, the Blue Stream and the Nord Stream Offshore Pipeline. The Yamal Pipeline system carries natural gas from Russia to Poland and Germany through the territory of Belarus (Wright, 2009). The Brotherhood Pipeline, the largest gas transportation route to date, has the capacity to carry more than 100 billion cubic meters of gas to the Czech Republic and Austria and further into Europe via Ukraine. The Blue Stream bound for Turkey traverses the Black Sea and delivers natural gas to Ankara, bypassing transit countries. The Nord Stream Offshore Pipeline, completed in 2011, delivers Russia's natural gas to clients in Western Europe, "cutting out the need for a Belarus-Poland land route", and has a throughput capacity of 55 billion cubic meters of gas per year (Kaplan & Chausovsky, 2013).

When in November 2012, Gazprom put into operation the second run of the Nord Stream natural gas conduit, the move elicited thunderous ovations in and around Western Europe and raised hackles in some-post-Soviet republics like Ukraine and Belarus. The thing is, Wright (2009) explains, "Ukraine retains ownership and operating rights over gas pipelines domestically, therefore limiting Russia's ability to sell gas to Western Europe unilaterally" (p. 87). Shorn of the leverage to influence Russia's decision-making that it had previously possessed, Ukraine started worrying more about their future as transit states. Ukraine and Belarus still ship a significant share of Russia's gas exports bound for Europe, but their influence has certainly waned. Approximately at the same time, in October 2012, another watershed event in the history of Russia's gas industry took place. Gazprom commissioned one of its largest gas deposits on the Yamal Peninsula, namely the Bovanenkovo gas field (Godzimirski, 2013). Although the project is still beset with challenges, it has the potential to bolster Russia's already dominant positions in the regional energy market. Similarly, if Russia has serious intentions to develop the project, it will further improve its gas pipeline grid. According to Godzimirski (2013),

In order to deliver gas from Gazprom's Bovanenkovo oilfield, it will be necessary to build a 2,450 km gas transmission system, including the Bovanenkovo-Ukhta gas transmission corridor linking the field with the Russian pipeline grid and further with Europe via the Yamal-Europe pipeline and Nord Stream (p. 146).

Russia will need $90 billion investment to develop the transport system in the Yamal region (Godzimirski, 2013). However, the history shows that Russia is ready to sacrifice almost everything at the altar of geopolitical leadership. It is also necessary to note that Russia's upper echelons take cognizance of the global changes in the energy market caused by the shale-gas revolution and realize that it is fraught with perils for their hegemony in the region. In order to tackle the problem, President Putin ordered the Ministry of Energy to devise a comprehensive scheme, which would make modernization of the Russian gas industry possible by 2030 (Godzimirski, 2013). In December 2012, Gazprom started to mine the earth for shale gas in remote areas of Russia. However, engineers working for Gazprom agree that shale gas production is not a very palatable option for the country (Balmaceda, 2013). Therefore, Russia is determined to keep its stranglehold on the European energy market by means of increasing volumes of gas production and building new gas pipelines that would bypass transit states. Many projects are on the anvil, with the South Stream project being the most heatedly debated. Just like the Nord Stream, this offshore gas trunk line is poised to bring natural gas to European customers without the risks associated with transit countries. Russia's official pretext for building new gas pipelines, when the existing ones have the capacity to supply enough gas to satisfy the European demand, is that it wants to increase flexibility of supplies and eliminate risks attending transit countries (Balmaceda, 2013). In fact, it only wants to consolidate its grip on the European energy market.

Even though shale gas is starting to billow the sails of many Western economies, Europe remains largely dependent on Russia's gas supplies. As long as a rupture with the status remains a distant option, the Kremlin will continue using oil and gas supplies as the vehicle for strengthening its influence in the region. Nowadays, Europe's heavy reliance on Russia's natural gas supplies has proved to be a very climacteric weapon in the hands of the Putin regime. Judging by the highest standards, due to Russia's gas supplies, most of Europe blithely ignores Russia's aggression against Ukraine. While the U.S. insists on sapping sanctions against Russia, the E.U. is divided over the issue. Those countries that import only small amounts of Russian gas or do not purchase it at all such as the UK tend to be more willing to punish the Kremlin economically, while those that import huge quantities of gas such as Germany and the Vicegrad Group are loath to sanction the violator of international law (Lopez, 2014). Lopez further argues, "All of that disagreement between major European powers has led to slow, messy negotiations" (Lopez, 2014). As the debate is wearing the West asunder, Russia uses its enormous gas profits to sponsor separatists in Ukraine's east and frightens Europe by bullying tactics. Ukraine will need to cease using Russian gas and reinforce the cordon sanitaire around its heartland to get rid of Russia's pernicious influence. However, that could spell disaster for the regional energy security situation. Overall, the EU needs to diversify its gas routes to be able to deal with Russia on a par and suppress its imperialist ambitions in Ukraine.

Alternatives to Russia's Gas Pipelines

The fact that the EU remains in thrall to Russia's gas dependency does not mean that it has not tried to remedy the situation. In fact, it has tried to switch to alternative sources of energy and build storage facilities and terminals for liquefied natural gas. What is more important, it has tried forging closer ties in the energy sphere with the Caucasus and Central Asian nations. Although the EU has elaborated a variety of projects, most of them have been relegated to the dust of official pigeonholes because of Russia's meddling (Balmaceda, 2013). Likewise, with a looming potential for energy resources to be exploited in the Black Sea, littoral states such as Bulgaria, Hungary, Ukraine, as well as other European nations should take concerted efforts to develop these resources, thereby diversifying their energy supplies. However, they need to withstand the pressure of Russia, which has attempted to confront independent European access to energy sources in the Caspian-Black Sea Region in several ways. First, it has clinched long-term gas deals with Kazakh and Turkmen firms for export of their gas resources through the Russian pipeline grid (Cain, Ibrahimov & Bilgin, 2012). Curiously enough, Russian citizens consume cheap energy from Central Asia, thereby freeing up Russian gas exports to Europe. Second, Gazprom buys majority shares in many European energy companies and signs seemingly mutually beneficial contracts with individual European states (Cain, Ibrahimov & Bilgin, 2012).

Nevertheless, there have been several projects designed to bring Caspian oil to Europe circumventing Russia. For instance, the Trans-Caspian Gas Pipeline would have supplied gas extracted from the bowels of Turkmenistan and Azerbaijan to Central Europe, bypassing the two rough states of Iran and Russia (Godzimirski, 2013). The project has long been inhibited by the simmering Turkmen-Azerbaijani dispute over the demarcation of the Caspian Sea. Currently, as the states are gradually reconciling their differences, the prospects for this pipeline are becoming persistently positive. The now abandoned White Stream Pipeline project was expected to bifurcate from the currently operating South Caucasus Pipeline, run nearly 100 kilometers to the Black Sea coast of Georgia and flow to Ukraine's coast through a seabed pipeline (Godzimirski, 2013). However, now when Russia has annexed Crimea, this project is no more feasible. In addition to Russia's pressure, prospects of building a gas pipeline that would connect Central Asia and Europe deteriorate because of EU's concerns over undemocratic practices in the Central Asia countries. At the same time, Russia and China remain oblivious to the lack of democracy and willingly cooperate with Central Asia. Talking about Europe, it could also try and avail itself of the proposed gas pipeline that would connect Israel and Turkey (Levine, 2013). If it is completed, it will trigger regional geopolitics turmoil by undermining Russia's influence in the region (Levine, 2013). However, Iran is the only natural gas producer capable of breaking Russia's energy supply monopoly in the region. Thus, it is unlikely that the EU will manage to negotiate any deal with the country because of the sanctions imposed on it.

The Nabucco Pipeline Project

The Nabucco Pipeline project dates to the early 2000s, when it was planned that the pipeline would transport gas from the countries of the Caspian Sea basin to Central Europe, circumventing Russia. Initially, the architects of the project expected that the pipeline's maximum capacity would be 31 billion cubic meters per year (Cambini & Rubino, 2014). Figure 3 shows that it was set to run from the easternmost border of Turkey to Bulgaria, Romania, Hungary and Austria, where it was set to bifurcate. However, due to the lack of strong commitments from the supplying states in Central Asia and "scant financial support" (Wright, 2009), it was reduced in length from the proposed 3,300 kilometers to 1,300 kilometers in 2012. Officials in charge of the project decided to abandon the eastern section running from the eastern border of Turkey to the frontiers of Bulgaria.

According to Cambini and Rubino (2014), "From a technical standpoint, the project never progressed very far". The biggest problem was the reluctance of the Central Asian countries to participate in it. Thus, "Iran, Turkmenistan, Egypt and Iraq all pulled out, and Azerbaijan finally rejected the idea" (Cambini & Rubino, 2014). The role of this factor cannot be denied, but there were several other important aspects that precipitated the fiasco of the Nabucco Pipeline project. In fact, Russia's political scheming was one of the most salient among them. Indeed, Russia exercised its political clout to persuade the EU to opt for the Trans-Adriatic Pipeline, a Nabucco's rival. Even though the Trans-Adriatic Pipeline will somewhat decrease Europe's dependence on Russia's natural gas, it can only carry 10 billion cubic meters of gas annually (Kaplan & Chausovsky, 2013).

The current paper has shown that gas and geopolitics are inextricably tied together. As Kaplan and Chausovsky (2013) claimed, "At this juncture of history, the fate of Europe is wound up not in ideas but in geopolitics". In the geopolitical game for control over Europe's gas market, Russia remains the most redoubtable player. Nearly 36% of all gas consumed in Europe comes from Russia, with Central and Eastern Europe being the most dependent regions. Russia has an extensive gas pipeline network and constantly continues to expand it. Its main priority is to build gas pipelines that would bypass transit countries such as Ukraine and Belarus. Likewise, it endeavors to stultify Europe's efforts to diversify its supply routes. The Trans-Caspian Gas Pipeline and the White Stream Pipeline projects failed because of Russia's aggressive policies. The Nabucco Pipeline project, which was blinding in its promised effectiveness, foundered on the same treacherous shoals as its predecessors. In conclusion, it would be illustrative to use the words of Wright (2009), "Russia's systematic and resolute effort to diversify its customer base is impressive; Europe's inability to diversify its supply source is dangerous."

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