Energy politics in the black sea region the geopolitics of natural gas projects (2012), (radu dudau with me), in new regionalism or no regionalism

Radu Dudău, Dr Phil., University of Bucharest1 Armando Marques Guedes, PhD, New University of Lisbon Energy Politics in the Black Sea Region Abstract: The chapter discusses the development prospects of the major gas projects of the Black Sea Region, planned to create European outlets for the gas producers of the Caspian Basin The political and economic problems that beset Nabucco’s progress, as well as its recent advances, receive extended attention Its rival, the South Stream project, is debunked as a political gambit, politically operated by Moscow to undermine Nabucco and bring the transit states into its charge The analysis is carried out against the background of a global energy environment characterized by price volatility and a gas glut Our overall framework is geopolitical throughout Keywords: Energy security, Southern Gas Corridor, Nabucco, South Stream, ITGI, TAP, AGRI Introduction The Black Sea Region3 is an important part of the East-West energy corridor About 80 percent of the Russian natural gas exports to Europe transit Ukraine Also, the Caspian Basin states, turned into independent hydrocarbon producers in the early 1990s, are striving to access the Western markets through conduits crossing – or which are designed to cross – the region While the former aspect largely denotes the status quo, the latter stands for a complex process, at odds with the extant arrangements Russia has been for decades the prime provider of hydrocarbons to Western Europe Over time, this has turned into a balanced, mutually advantageous, relationship Indeed, when observed from a distance, the relation of energy interdependence between Europe and Russia seems straightforward: the world’s largest natural gas market rallies to the world’s largest gas producer More than 40% of EU’s natural gas imports are coming from Russia (and the figure is expected to rise to about 60% by 2030) – which comes to about two thirds of the Russian Associate Professor in International Relations at the University of Bucharest Beneficiary of the project Doctoral Scholarships for a Sustainable Society, co-funded by the European Union through the European Social Fund – the Sectoral Operational Program for Human Resources Development 2007-2013 Professor at the Law School of the Universidade Nova de Lisboa In EU parlance, the Black Sea Region refers to the six littoral countries (Romania, Ukraine, Russia, Georgia, Turkey, and Bulgaria, going clockwise) plus Moldova and the South Caucasus (Armenia and Azerbaijan) overall exports of natural gas Also, since the average price in the EU is much higher than in the Russian internal market, European imports of hydrocarbons bring Moscow about two thirds of its export revenues However, a more granular approach exposes smaller-scale asymmetries The states of Central and Eastern Europe (CEE) exhibit a much higher degree of dependence on Moscow than Western European ones, as they rely on Russian imports for virtually their entire gas needs.4 Accordingly, the very meaning of ‘energy security’ differs in these two cases: while Western Europe is primarily worried about sufficient supplies of gas, CEE has come to cherish the diversity of its supply sources For Russia, instead, ‘energy security’ primarily refers to unhindered access to markets and to its market share preservation Thus, conditions for a competitive geopolitical “game” of pipeline projects emerged after the end of the Cold War – one in which the Black Sea Region states have seen their geography enhanced to a strategic level in light of the efforts of the Caspian, but also of some Middle Eastern states to access the cash-rich European gas markets Georgia, Turkey, Bulgaria and Romania have not only contemplated the prospect of increasing their energy security, but also looked for gains to come with the flows of merchandise on a reconstructed modern-day Silk Road With Western political, technical, and financial support, two major non-Russian pipelines were completed in 2005 and 2006, respectively: the Baku-Tbilisi-Ceyhan oil pipe, transporting Azeri oil to the Mediterranean port of Ceyhan (Turkey), bypassing the Turkish straits; and the Baku-Tbilisi-Erzurum gas pipeline – better known as the South Caucasus Pipeline – running to Erzurum parallel to the former, in eastern Anatolia Upping the stakes, the idea of a major pipeline that would ship natural gas from the Caspian Basin all the way to Austria was born in 2002, and it was given a boost in the second half of the decade: Nabucco Russia responded with the counter-proposal of a mega-pipeline to be laid along the bottom of the Black Sea: South Stream The current chapter is mainly a political analysis of the competitive game for control over the south-eastern route of gas supply to Europe to which these moves gave rise Whereas France, Italy, the Netherlands and Belgium depend on Gazprom’s deliveries for less than percent of their needs, Finland, Slovakia, and Bulgaria all import over 90 percent of their gas from Russia, with several other EU member states’ dependence exceeding 60 percent (Mitrova, 2008: 7) We argue, along with Abdelal (2011), that a few powerful West European energy companies – from the so-called group of energy ‘majors’ – have largely driven EU energy policy vis-à-vis Russia, effectively creating new non-trivial geopolitical facts on the ground – such as the soon-to-be-finished Nord Stream pipeline, laid on the Baltic seabed Our main point is that what looks as a predictable, profit maximizing behaviour of Gazprom and some European energy majors, is actually a source of political uncertainty, if and when looked at from the vantage point of the CEE We want to argue that to bring this uncertainty to the fore various sets of constraining factors must be taken into account: (a) the business interests of the European energy majors in question (along with the political support of their respective governments) and Gazprom; (b) the energy policies of the EU, defining strategic priorities for energy security, imposing continental rules for a competitive energy business environment, and issuing a demanding package of environmental regulations; and (c) the structural changes which have taken place over the last couple of years in the global energy relations, inadvertently compounded by the economic slump of 2008 and 2009 We shall consider these factors in turn, before attempting to portray the new emergent “pipeline geopolitics” of the Black Sea Region The business factor in the EU-Russia energy equation The asymmetries mentioned above were best displayed on the occasion of the last two gas spats between Russia and Ukraine The first of them took place during the first four days of January 2006 and had disturbing, yet limited, downstream effects: Russian gas supplies dropped 40% in Hungary, 30% in Austria, France, Romania and Slovakia, and 24% in Italy (BBC News, 2006) The second one was the outright “gas war” of January 2009, when deliveries were cut off in twenty EU countries – and parts of South-East Europe were left in the cold for two mid-winter weeks It is beyond our purview to decipher the intricate commercial and political roots of those Russo-Ukrainian economic conflicts We are rather interested in their consequences As a matter of public perception, both have affected Russia’s image of a reliable supplier of gas and have correspondingly raised civic pressure upon European decision-makers in bids to improve energy security But “energy security” does not stand for the same throughout the EU On the one hand, CEE states tend to emphasize the need for source diversification, and also the diversification of delivery routes – both with the aim of avoiding overdependence on a single monopolistic supplier which weakens them Their concern is mostly political Instead, West European states tend to be concerned with overall levels of supply, showing few qualms about how the needed gas reaches them or about increases in Gazprom’s regional market share Their concern is above all economic and rather about Russia’s capacity to export sufficient quantities of natural gas They do, of course, have a point: the fact of the matter is that, without redirecting significant financial and technological resources to it, Moscow cannot maintain its current export levels over the longer term According to the World Bank’s 2010 Energy Outlook for Eastern Europe and the former Soviet Union, “for gas, unless Russia, the dominant producer, mobilizes the needed funding and technology to develop its known gas deposits and associated infrastructure, production is likely to plateau in the next 15-20 years” (World Bank, 2010: xix) In numbers, “just to maintain gas production levels, Gazprom would need to invest about $15 billion a year; to meet potential increases in demand, capital investment would have to increase to $20 billion a year” (p xx) – something which is hard to fathom So, contrary to what tends to be the case with CEE public and private perceptions, West Europeans decision-makers tend to show no real political apprehension about Gazprom’s rise In good truth, there is more to it than is spelled by mere differences in structurally-induced focal points, as the main drivers of Europe’s energy relations with Russia are, in reality, a handful of European large energy firms, with a decade-long experience of cooperation with Gazprom – in fact, since the latter was the Soviet Ministry of Natural Gas As observed by Rawi Abdelal (2011: 2): Two private German firms, E.ON (through subsidiary Ruhrgas) and BASF (through subsidiary Wintershall); two mostly private Italian firms, Enel and Eni; and three French firms, Total, Electricité de France (EDF), and GDF Suez are de facto producing the energy strategy – and thus the Russia policy – for all of Europe The political outcome is a consequence of decisions by business executives who share relatively benign, primarily commercial interpretations of their Russian partner, Gazprom In a strong sense this is quite understandable Abdelal documents how the German, French and Italian CEOs have consistently perceived Gazprom as a reliable gas provider: The Germans and Italians have the longest-standing relationships Eni and Gazprom concluded their first contract in 1969 The first Rurhgas-Gazprom contract dates to 1973, and Burckhard Bergmann, the CEO of Ruhrgas between 2001 and 2008, has served on Gazprom’s board of directors since 2000 Wintershall and Gazprom established their first of several joint ventures in 1993 with the creation of WINGAS, with the German firm owning fifty percent plus one share For these firms, Russia is not a threat, but a long-standing partner (2011: 29) Thus their overall outlook largely depends on their actual experience of things, and this has wide-ranging implications Convinced that Russia depends on Europe at least as much as Europe depends on Russia, those CEOs, but also many key political decision-makers in their states, view the overall energy relation with Gazprom as stable, beneficial and mostly predictable, based on commercial interests They are therefore inclined to see as a liability the dependence of Russia’s westward gas transit on Ukraine, and tend to look favourably at the pipeline projects promising to simplify and stabilize the profit-driven energy relation between Russia and Western Europe In 2005, Gazprom formed the Nord Stream consortium with BASF’s Wintershall and E.ON’s Ruhrgas, later on joined by N.V Nederlandse Gasunie and GDF Suez The construction of the offshore Nord Stream pipeline was begun in April 2010 and it is due to finish linking Russia’s Vyborg to Germany’s Greifswald in the fall 2011 The total cost will exceed €7 billion, with Gazprom set to invest an additional €1.3 billion in the onshore section (Smith, 2011: 121).5 For Russia’s southern flank, Gazprom and ENI formed in 2008 the South Stream consortium, responsible for the Black Sea offshore section of a pipeline project designed to connect Russia to Bulgaria underneath the Black Sea and from there to ship gas further into Southern and Central Europe Through their eyes, both Nord Stream and South Stream were conceived as means to ‘disintermediate’ transit states – Ukraine in the first place Noticeably, Nord Stream will be linked through two pipelines to the Central European network The first one, OPAL (Ostsee-Pipeline-Anbindungs-Leitung), which is already under construction, will extend 470 km to link Nord Stream to JAGAL, which is the German segment of the Yamal pipeline The second one, NEL (Norddeutsche Erdgasleitung) is planned to link Nord Stream to STEGAL, at the Czech border, through MIDAL (Mitte-Deutschland Anbindungsleitung) Both belong to Wingas, the joint venture of Wintershall and Gazprom, and are due to come on stream in 2011 These projects confirm corroborate our point that European energy security is largely driven from West to East by business interests of European energy majors in joint ventures with Gazprom But most of the new EU members have qualms about a possible Russian use of energy as a means for political coercion They worriedly observed Moscow’s heavy hand in recent energy quarrels with Georgia, Belarus, Moldova and Ukraine Bulgaria and Slovakia were worst hit by the January 2009 “gas war” Lithuania and Poland have felt threatened by the vagaries of Moscow’s energy supply practices, which they have never perceived as purely economic in motivation – as in 2006, when Transneft stopped deliveries of oil into the Mazeikiu Nafta refinery through the Druzhba pipeline Rather graphically, in 2006 Radoslaw Sikorski, back then Polish defence minister, labelled Nord Stream the “Molotov-Ribbentrop pipeline” All in all, most CEE states tend to see a risk of being squeezed – financially and in terms of energy access – between Western Europe and Russia (World Bank, 2010: 7-8) EU’s energy policy The EU framework for energy policy is three-pronged: it was designed (i) “aiming for ‘markets, competition and efficiency’, (ii) equally focusing on ‘a sustainable energy economy’, and (iii) [wanting to] ‘secure the EU’s energy supply’” (de Jong et al, 2010: 2) Each dimension is delineated in dedicated strategic “packages”, some of them wide in scope Aiming at creating a liberalized and competitive utility market, the Third Energy Market Package6 regulates the access conditions to European gas and electricity networks It has as a core objective the unbundling of ownership, i.e the “structural separation between transmission activities and production/supply activities of vertically integrated companies” For the purpose of curbing global warming, the Climate and Energy Package of January 2008 launched the celebrated “20-20-20” slogan, which embodies a threefold promise: a reduction in EU greenhouse gas emissions of at least 20% below 1990 levels, a commitment to a target of 20% of the EU energy consumption to come from renewable resources, and a 20% reduction in primary energy use compared with projected levels, this Proposed by the CE in September 2007 and approved by the European Parliament in September 2009, the Third Energy Package was due to be implemented into national legislation in the member states by March 3, 2011 7ec.europa.eu/energy/gas_electricity/legislation/doc/20110302_entry_into_force_third_package.pdf The elaboration of this legislative package was influenced by the discontents of the German and French energy giants (E.ON and RWE, and EDF) about a prospective loss of competitiveness as compared to the non-European energy majors Threatened with a veto from Germany and France, the Commission granted the possibility to energy companies of choosing between dismantling their asset ownership and retaining it while delegating all commercial and investment decisions to an independent managing company (an independent system operator) latter to be achieved by improving energy efficiency (EC, 2008a) The stated goals have been reiterated in the ambitious Europe 2020 growth strategy of 2010 and, as a practical matter, they give special weight to natural gas consumption, all across Europe, as the “cleanest” of all hydrocarbons Grappling with the security of its energy supply, the European Commission (EC) came out in November 2008 with the Second Strategic Energy Review (EC, 2008b), titled “An EU Energy Security and Solidarity Action Plan” The document lays out a five-point plan, focusing on developing the sought for energy infrastructure and energy supplies diversification, building stocks of hydrocarbons, and increasing energy efficiency For natural gas, the security of supply injunction translates into the embedded aim of achieving a level of geographical diversification away from Russian sources and pipelines Indeed, regarding infrastructure, one of the goals prioritized by the EC is the creation of a Southern Gas Corridor “for the supply of gas from Caspian and Middle Eastern sources” (EC, 2008b: 5) Analysing the ensuing development of a Southern Gas Corridor will occupy sections 5, 6, and of the present chapter The current global energy environment For better or for worse, our global energy business environment is currently unsettled, with unpredictable price variations and less reliable supply chains Again, this breeds different perspectives Whereas the major consumer nations worry about the reliability of energy supply, the major producers worry about uncertain patterns of demand and are thus hesitant about the gigantic financial efforts needed to develop new fields and transport infrastructures Certainly, the global economic crisis of 2008, contributed to this recasting But there are other causes too A couple of them are identified by Victor and Yueh (2010) as structural shifts in the global energy system The first one is “a shift in the sources of consumption”, a transfer of weight in the demand for fossil fuels from the industrial countries of the West to the emerging powers of Asia – notably China and India Along with that has come a statecentred approach to energy security, embraced especially by China Beijing secures its energy supplies mostly through bilateral, government-to-government deals with producing countries, The scope of which could be hardly overstressed According to the International Energy Agency, global consumption fell in 2009 by 3%, while the drop in Europe amounted to no less than 7% thus largely circumventing markets This type of behaviour, emulated by such a dominant supplier as Russia, affects supply chains in the entire world and enjoins a reconfiguration of energy security mechanisms everywhere The second shift relates to the increasing concerns about the greenhouse gas emissions which result from the use of fossil fuels Indeed, “green energy” has become a priority in the strategies of the world’s largest consumer countries and it has been allotted around 15 percent of the global fiscal stimulus package A new game is thus afoot, as the developmental thrust toward green technologies and energy efficiency will likely lead producers and consumers alike to new approaches to energy security In Europe, the crisis is compounded by a gas glut with systemic roots The main one is the market-shaking success in North America of a new extraction technology for natural gas called “hydraulic fracturing” This has made available huge quantities of “unconventional” gas, locked in shale-rock formations – i.e., gas previously deemed unexploitable for technological and economic reasons The rapid surge in the American production of shalerock gas diverted towards Europe large quantities of liquefied natural gas (LNG), originally earmarked for U.S consumers; massive investments worldwide in LNG infrastructure in the recent growth years led to increased availability just when global demand dropped significantly In the EU, this new abundant offer adds to “an overhang of supplies, contracted through take-or-pay agreements signed [with Gazprom] in the dash for gas of the past decade” (Economist, 2010) In bringing the consequences of all this to the fore, we restrict ourselves to one casestudy only: an analysis of the commercially and politically competing projects of pipelines – Russian and non-Russian – planned to bring natural gas from the Caspian Basin to the EU market While the EU is fundamentally interested in securing a sufficient supply, and the CEE states are mostly concerned about overdependence, Gazprom is above all interested in securing demand and precluding competitors from taking natural gas from what it regards as its own “backyard”, and retaining (and perhaps even increasing) its market share in Europe We want to argue that this has become an uphill climb for Moscow, as against the economic and technological background factors depicted above the dynamics of the large pipeline projects have steadily become less predictable Gazprom’s hand in dealing with European governments has lost strength compared to the pre-crisis years For instance, while in 2007 Gazprom officials flashed the prospect of an increase in exports to Europe to 250 billion cubic meter per year (bcm/a), the reality was that in 2008 the Russian giant delivered only a bit more than of half that amount (Mitrova, 2008: 13-15) By 2010, not even a significantly scaled-down target could be met: instead of the proposed 145-160 bcm, deliveries to Europe amounted to 139 bcm (Oxford Analytica, 2011) In terms of prices, “in 2008 the company forecast that its gas prices in Europe would triple, to around $1,500 per thousand cubic meters, on the back of rising oil prices, which help set prices in long-term contracts But the price dropped to about $350 [in 2009]”, instead, as shown in the Economist (2010) Consequently, contrary to its usual practices, Gazprom has had to introduce elements of spot-market pricing just in order to stay competitive The causes for this are structural The spot-price system dominant in the U.S has gradually entered European markets through Great Britain and has been also influencing the prices for pipeline gas, “because following liberalization of the European natural gas market consumers are at liberty to choose the suppliers from whom they want to purchase their gas” (Auer and Nguyen, 2010: 6) As a result, since the imminence of an energy security breakdown dwindled, the pressure to speed up investments in new and expensive infrastructure projects also diminished This bears direct consequences upon the fate of the rivalling Nabucco and South Stream Such mega-projects can only be realized if full and not easy to meet complexes of political and financial factors are in place: sufficiently abundant contracted supplies; a proper international legal framework; and efficient and secure business models Yet, several variables render the outcome of the “pipelines game” uncertain Against the background of those three sets of constraints, the following steps of our analysis endeavour to assess the odds for such a synchronized conjunction of factors Nabucco Nabucco is the main Western-backed gas pipeline project able to reduce the growing European energy dependence on Russia Its main trunk will start from Turkey’s Ahiboz, south of Ankara, and the planned conduit will carry on westwards through Bulgaria, Romania, and Hungary, till the terminus hub, Baumgarten, near Vienna The total length of the projected pipeline has been recently put to 3,900 km The construction work of the first phase is expected to start in 2012 and, if so, should be completed in 2015,9 with initial gas supplies of up to bcm/a The second phase of the construction is set to end by 2018, raising the pipeline’s capacity to its maximum output of 31 bcm/a The estimated cost of the endeavour is €7.9 billion – though Reinhard Mitschek, the managing director of the consortium, admits that the final costs may be raised due to a rerouting of feeder lines from Northern Iraq and to the rising cost of steel (Andre, 2011) Although the protocol of intention for the construction of the pipeline was signed in 2002 by OMV (Austria), MOL (Hungary), Bulgargas (Bulgaria), Transgaz (Romania) and Botas (Turkey), early progress has become both slow and mined by setbacks The jointventure agreement was signed by its five consortium members in June 2005 Thereafter, no noticeable progress had been registered until February 2008, when the German public utility RWE joined the group.10 Politics with a Cold War ring has all along accompanied the development of the Nabucco project It was especially the Russo-Ukrainian gas spat of January 2009 which triggered a renewed wave of political interest for Nabucco And it rose speedily.11 From a commercial standpoint, Nabucco will introduce a novel system of gas sales, worthwhile explaining The traditional logic of the natural gas trade has been to rely on longterm (typically 20 years) “take-or-pay” supply contracts, with yearly purchase obligations and a set pricing formula Such contracts of course amount to financial guarantees for the heavy infrastructure investments demanded by the gas trade, but given the new uncertainty The beginning of operations were delayed from 2014 to 2015, as the final investment decision has been postponed from 2010 to 2011 (Energy in East Europe, 2010) and then again to 2012 (Socor, 2011c) 10 The shareholders of the Nabucco Gas Pipeline International GmbH are, according to the official website, Botaș AS, Bulgarian Energy Holding EAD, MOL Plc, OMV Gas & Power GmbH, RWE AG, and Transgaz SA, each owning an equal share of 16.67% 11 On January 27, 2009, a Nabucco Summit took place in Budapest, at which the heads of the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) pledged to offer financial support for the project (Deutsche Welle, 2009) The next day, the EC announced the allocation of €250 million through EIB, “to jumpstart construction” (Harrison, 2009) Another major step was the “Southern Corridor Prague Summit” of May 2009, which brought together representatives of Kazakhstan, Turkmenistan, Azerbaijan, Georgia and Turkey, together with EU officials In the Joint Declaration, the “Southern Corridor countries” committed explicitly to complete a Trans-Caspian gas pipeline, to sign by the end of 2009 an IGA for the Turkey-Greece-Italy Interconnector (ITGI), and to sign memoranda of understanding with Iraq and Egypt, respectively, regarding their inclusion in the projected Southern Corridor The defining step came in July 2009, when Ankara hosted the signing ceremony of the IGA of the five transit states of Nabucco, laying down the rules that will govern the shipment of gas through the pipeline if and when it is built The ratification process of the IGA ended on March 4, 2010, with its approval by the Turkish parliament 10 increase granted to Azerbaijan was even greater.” “Disastrous”, because the low prices in Europe in the 2009 economic slump had Gazprom pay Turkmenistan more for gas than it was selling it for in Europe Gazprom honoured its commitments for a few months, after which it tried to renegotiate the price and supply terms Perceptions hardened, as in April 8, 2009, an explosion of the Central Asia-Center (CAC) gas pipeline took place near the Uzbek border 18 The incident brought to a halt all deliveries of Turkmen gas to Russia for the next eight months On January 1, 2010, a limited intake of 10 Bcm was resumed, but President Berdimukhammedov saw himself supported by events in his option for diversifying export routes and opening Turkmenistan up to the interests of any international oil companies concerned with exploring and producing hydrocarbons In terms of diversification, the landmark event was the opening of the Central AsiaChina gas pipeline in December 2009 The pipeline has a planned total capacity of 40 Bcm/a (30 Bcm from Turkmenistan and 10 from Kazakhstan) and consists of two parallel lines It starts from Turkmenistan’s Bagtyarlik gas field, on the right side of the Amu Darya River, and runs for more than 1,800 km over Uzbekistan and Kazakhstan to China’s Xinjiang region (Socor, 2009a) The framework agreement on construction and gas supplies was signed by China and Turkmenistan in April 2006 The project developed at a comparatively improbable speed: China National Petroleum Corporation (CNPC) began construction at the first line in August 2007 and completed it in 28 months The strategic and symbolic significance of this achievement can hardly be overstated Russia’s monopsony on Turkmen gas was broken The Central Asia-China pipeline has begun shipping Bcm of Turkmen gas in 2010, an amount due to reach 30 Bcm/a by 2013 China’s State Development Bank opened a $4 billion line of credit to Turkmengas, earmarked for exploration and production in the South Yolotan and Osman gas fields All in all, China’s imports of Turkmen gas could surpass the purchases by Russia in the near future.19 As a geopolitical aside, it is worthwhile noticing how the new 18 The CAC system is the principal export line from Central Asia to Russia, running south to north from Turkmenistan via Uzbekistan and Kazakhstan The Turkmen authorities squarely blamed Gazprom for the incident, chastising Moscow for failing to give adequate notice of its intention to curtail off-takes – thus leading to a build-up of pressure in the Turkmen section and causing the blow up (IHS, 2009) 19 Also, at the margins of the Shanghai Cooperation Organization annual summit of June 10-11, 2010, in Tashkent, two significant agreements were signed: first, CNPC and Uzbekistan’s Uzbekneftegaz convened that the latter will provide 10 Bcm/a to China and that the Uzbek transmission system will connect to the Central Asia-China pipeline Second, China and Kazakhstan agreed formally upon the construction terms for the second phase of the pipeline on the Kazakh territory (Hydrocarbons-technology.com, 2010) 15 pipeline – along with other major infrastructure projects, such as China-KyrgyzstanUzbekistan highway and railway – significantly increase the influence of Beijing in Central Asia, turning it into a strong contender of Russia, the West, Turkey, and Iran By gathering gas from the three Central Asian producers – Turkmenistan, Uzbekistan and Kazakhstan – China not only provides them with a first non-Russian export outlet, but also gains a key role in the gas deliveries to Kyrgyzstan, Tajikistan and southern Kazakhstan itself China became a bona fide player And, again, Beijing gained significant leverage in negotiating the price of future acquisitions of Russian gas The inauguration of yet another Turkmen pipeline in January 2010, running from the Dauletabad field to Iran’s Khangiran refinery (BBC, 2010), raises Ashgabat’s overall exports to Iran to 20 Bcm/a, which further reduces the proportion of Turkmen gas sales to Russia Ashgabat has thus increased its bargaining power in negotiating the price of gas sales with Gazprom But implications not end here, as the changes also have an impact upon Russia’s ability to achieve its diversification projects for the European market – namely, Nord Stream and South Stream South Stream can no longer count on substantial amounts of Turkmen gas And, albeit indirectly, there is also an impact upon Nord Stream’s second phase: the lack of sufficient Turkmen imports will confine to the Russian market significant volumes of West Siberian gas otherwise destined for Germany Finally, China gets a stronger hand in the negotiations with Russia over the purchase of gas from eastern Siberia However, Turkmenistan’s income losses since April 2009 have been dramatic, slashing its GDP nearly in half (Stratfor, 2010a) The country had to shut down more than 200 wells, with about $1 billion in lost revenues per month (IHS, 2009) As no major boost in exports is likely to occur earlier than 2012 (when the Central Asia-China pipeline will have reached peak capacity) Ashgabat may again be forced to look toward Moscow, with corresponding concessions in the price level For the future, though, the European market is certainly going to be seen as an appealing alternative – not only over Russia, but also over China, as the European netback is likely to remain significantly higher The name of that promise is Nabucco After repeated statements of mutual interest, a concrete step toward the inclusion of Ashgabat in the Nabucco enterprise was the beginning, in May 2010, of construction work on 16 Turkmenistan’s East-West 30 Bcm/a pipeline, planned to link the country’s large gas fields in the south-east to the Caspian coast Socor rightly notices that Turkmenistan’s East-West pipeline can decisively boost the EU-backed Nabucco and other pipeline projects within the EU-planned Southern Corridor This assumes a Trans-Caspian transportation solution to be developed organically, by connecting the elements of existing offshore infrastructure from Turkmenistan to Azerbaijan (Socor, 2010b) Indeed, the crux of Turkmenistan’s participation in Nabucco is the construction of a Trans-Caspian pipeline, endeavouring to connect the eastern and western shores of the Caspian Sea The same feat is conditioning Kazakhstan’s entrée into Nabucco But will this come about? Although the plans for a Trans-Caspian gas pipeline are more than a decade old, the notion has been revived after the 2006 gas spat between Moscow and Kiev In December 2008, two energy companies of the Nabucco consortium, OMV and RWE, started a joint venture called Caspian Energy Company to explore technical options for the construction of a pipeline connection across the Caspian Sea (DownstreamToday.com, 2008) Besides, a host of official statements of interest for the project were made by Baku and Ashgabat – as well as, significantly, by EU officials Yet both Moscow and Tehran claim that the legal status of the Caspian Sea (which they see as a “condominium”, as opposed to a proper sea, thus regulated by the UN Convention of the Law of the Sea) gives them a veto on that matter The postSoviet history of the Caspian Basin has been fraught with conflicts among all of the five littoral states about the ownership and exploitation of hydrocarbon fields there.20 Non-Russian Alternatives to Nabucco: ITGI, TAP, and AGRI In the face of the political, economic and legal complexity of a project of Nabucco’s magnitude, some analysts argue that a more affordable alternative is to “build incremental elements of infrastructure that add to existing capacity, thereby providing new or expanded linkages between customers and suppliers These are typically pipeline interconnectors 20 In 2001, for example, the dispute between Azerbaijan and Iran regarding the exploration of the Alov/Alborz oil field took on a military aspect, when Tehran sent one warship and military two aircrafts to chase away the Azerbaijani vessels that had been carrying on seismic surveys on behalf of BP Legally, all five Caspian states are skirmishing for a jurally convened formula for exploiting the seabed that would maximize their access to reserves 17 between existing networks and LNG terminals” (Oxford Analytica, 2010) Gas exports from Azerbaijan are reaching Greece through the Turkey-Greece gas pipeline, commissioned in 2007 The line was built by a joint venture of Turkey’s Botas and Greece’s Depa gas companies and transports Bcm/a (planned to grow to 11 Bcm/a by 2012) across the Marmara Sea The ITGI (Turkey-Greece-Italy Interconnector) project endeavours to continue the Turkey-Greece line to Italy, from Komotini to the Thesprotia western coast of Greece, and further to Italy’s Otranto, through a 217 km-long offshore interconnector, across the Ionian Sea – a joint venture of Italy’s Edison SpA and Depa The conduit is due to deliver Bcm/a by 2017, at a cost of €1.1 billion Another “interconnector” is the Swiss-Norwegian-German 21 TAP (Trans-Adriatic Pipeline) joint venture planned to transport 10 Bmc/a of gas (to be doubled in a second phase) from Turkey to Italy through Greece and Albania, underneath the Adriatic Sea It is also expected to be completed in 2017, at a cost of €1.8 billion ITGI and TAP compete with each other – and both of them with Nabucco – for gas resources from SD2, but also for Middle Eastern supplies Both of these interconnectors are included in the EU’s Southern Corridor, and ITGI has already received EU funding through the TEN-E (Trans-European Energy Network) program Now, along with Nabucco, ITGI and TAP are components of the Southern Gas Corridor, all competing for the SD2’s supplies But the two interconnectors, while conceived as strictly commercial enterprises, lack strategic significance in any politically substantive sense related to Europe’s energy security: ITGI and TAP would ship relatively minor volumes to the “Italian gas market, which is already saturated with supplies from well-diversified sources” (Socor, 2011a) Nabucco, on the other hand, has an inherent strategic value for Europe’s energy security, especially for CEE countries already deeply dependent on Russian imports Through geography, size and operating model, Nabucco will deliver to those most in need and will ensure a large-volume interconnectivity of CEE and the West Still, other contenders keep coming out, bidding for SD2’s limited resources In September 2009, Presidents Alyev and Băsescu discussed in Bucharest the possibility of developing an LNG system for the export of Azerbaijani gas via the Black Sea The project envisions piping around Bcm/a of gas from Baku’s Sangachal terminal to the Georgian port 21 TAP’s shareholders are Swiss EGL (42.5%), Norwegian Statoil (45.5%) and German E.ON (15%) 18 of Kulevi, liquefying and then shipping it with LNG takers to Romania’s port of Constanta Dubbed AGRI (Azerbaijan-Georgia-Romania Interconnector), this project took a more concrete shape through a MoU signed in Bucharest in April 2010 Then, the ministers of energy of the three states, joined by the Hungarian one, signed in Bucharest on February 14, 2011 a resolution through which Hungary’s state-owned power holding MVM joined the venture.22 Scope and price parameters involved are still vague: the transport capacity is put anywhere between and 12 bcm/a at a cost of €2-4 billion (Watkins, 2010) Hungary’s participation in the project has been made possible with the opening of the Arad-Szeged gas interconnector between Romania and Hungary, at the end of 2010 Nevertheless, we are rather doubtful as to the commercial and political viability of a small scale LNG system in the Black Sea, absent the involvement of some Western energy champion and the support of Turkey In any event, with so the Southern Corridor becoming really crowded, why the EU should grant simultaneous political and financial support to ostensibly rival projects – especially as they undermine Nabucco, the corridor’s flagship project An answer might be found in the explanation put forward by Jozias van Aartsen, an ex-Southern Corridor coordinator: the EU “cannot accept a Nabucco-unique regime (or one unique to any other pipeline) or policy: we must strive for a general regime, a general policy and a general strategic aim, independent of any particular company/pipeline involved” He explains EU simultaneous support for several projects as a matter of “scheduling the pipelines to come onstream when gas is available, rather than competing for a finite initial resource” (van Aartsen, 2008: 4) Thus, the Southern Corridor should rather be conceived as a “general regime” for energy transport, a regime to which the principles of free-market competition are intrinsic Perhaps so; but we are not too convinced, since this is likely to conflict with the “scheduling” method, i.e with attempts to order the development rate and supply access order for individual projects The risk that they cannibalize each other is ever-present and seems ineradicable The Russian Alternative to Nabucco: South Stream South Stream AG is a joint venture of OAO Gazprom and Italian company Eni SpA (each holding 50% of the shares), a mammoth project whose central piece would be a 900 22 The four companies – Romgaz, Socar, GOGC and MVM – will each hold 25 percent of the shares 19 km-long pipeline on the Black Sea’s seabed, running from Beregovaya (Russia) to Varna (Bulgaria) From there it would branch out: according to the consortium’s official website, two possible routes are under consideration for the European onshore route: a northwestbound branch running from Bulgaria to Serbia, Hungary, Slovenia and Austria, and a southwest-bound one to Greece and southern Italy, via a marine interconnector However, as shown below, the precise “geography” of these routes has been vacillating along with the political shifts which keep upsetting the very feasibility of the project Technically- and financially-wise, South Stream is a hugely difficult venture The planned volume was boosted from an initial 31 Bcm/a to no less than 63 Bcm/a (dpa, 2009) – at a prohibiting cost of €24 billion, according to Gazprom’s own estimate This would make it the world’s most expensive energy project We think it is unlikely that this kind of investment will ever be made In 2007, at the time of South Stream’s inception, Russia benefitted from large inflows of money, thanks to high hydrocarbon prices and to Moscow’s monopsony position over the Central Asian gas This may have justified Gazprom’s and Eni’s belief that their joint venture made economic sense But the current context has decoupled the new economic reality settling down on us from the flurry of political and business negotiations surrounding South Stream Furthermore, we infer that Moscow has known the inevitability of all this from day one According to the project’s website,23 South Stream is “aimed at strengthening European energy security” by eliminating “transit risk”, as “another real step toward executing the Gazprom strategy to diversify the Russian natural gas supply routes” (Euractiv, 2011a) Indeed, Gazprom presents it as the most competitive project of the EU’s Southern Gas Corridor This, however, is not only unlikely, but also ironic As a matter of fact, we see South Stream as little more than a ‘paper tiger’, whose true tactical objectives are the following: (1) To discourage political support for, and private investment in, Nabucco Given Russia’s declining output of natural gas and diminishing access to the Caspian states’ reserves, Gazprom would be better off if no pipeline at all connected the Caspian Basin to world markets (2) To serve as a lever of coercion in Gazprom’s cyclical spats with Naftohaz Ukrainy over debts, gas prices, and costs of transit and storage Indeed, the main public argument for 23 http://south-stream.info/index.php?id=9&L=1, accessed March 1, 2011 20 the construction of South Stream is the need to bypass the “unreliable” Ukraine Now, Ukraine’s sidestepping has been in the making since April 2010, with the beginning of construction works at the Nord Stream pipeline But doing the same on Ukraine’s southern flank has become both economically unrealistic and politically unnecessary; after the 2010 election of Moscow-friendly Viktor Yanukovych as Ukraine’s new president, a merger formula between Gazprom and Naftogaz has been seriously considered (Socor, 2010a) – although Kiev’s decision-makers and business circles fully realize that the country’s autonomy is at stake here Kiev has advanced the notion of offering Gazprom a substantive share in Ukraine’s gas transit system under the guise of a Ukrainian-Russian-European consortium, in return for a price-cut in its massive gas imports (Socor, 2010b) With the April 21, 2010 barter agreement signed by Presidents Yanukovych and Medvedev in Kharkov, Ukraine agreed to extend the lease of the Russian Black Sea Fleet in Sevastopol (Crimea) for 25 years after 2017 (plus an automatic extension of five years) in exchange of a 30 percent cut in the price of Russian gas imported by Ukraine for the next ten years – a discount estimated to amount to $40 billion (Felgenhauer, 2010).24 (3) Finally, the South Stream idea is waved to save an important European market share by blocking Nabucco, and also to deprive the major Caspian gas producers of a European outlet for their exports In order to achieve these goals, Moscow has engaged in a vast politico-diplomatic campaign of enrolling Central and South-East European states into what it has show-cased as its pet project Since the formal inception announcement in June 2007, South Stream has taken several important steps toward curbing all it can of present and potential investors’ appetite for its archrival.25 24 The agreement has been vehemently denounced by the opposition in the Supreme Rada as unconstitutional, as the Ukrainian constitution forbids the presence of foreign military bases on the national territory Be it as it may, the agreement is extremely consequential for the security complex of the region, giving Moscow the possibility to extend and modernize its Black Sea Fleet (BSF) The August 2008 Russo-Georgian war, in which the BSF was massively involved, attests to the strategic importance of this agreement On the other hand, the $3 to billion per annum that Ukraine will gain or the coming decade through the Russian gas price discount will rather serve the oligarchic interests of its energy-guzzling industries 25 On January 25, 2008, Serbia and Hungary ratified IGAs with Russia meant to frame the building of their sections of the pipeline The Bulgarian Parliament ratified the agreement in July 2008 – right after Greece and Russia signed one in April 2008 On November 14, 2009, Slovenia joined South Stream, thus providing it with the link missing for a northern branch On November 11, 2009, in Moscow, the Austrian Chancellor Werner Faymann and the Russian PM Vladimir Putin emphasized the need for Austria to join South Stream ( upi, 2009) On June 19, 2010, EDF signed in St Petersburg a MoU regarding its participation in the consortium, enabling it 21 The summer months of 2010 have seen a flurry of activity on South Stream’s politicodiplomatic front, in which Gazprom ably played Bucharest against Sophia The series was started with a surprising opening: the pronouncement by the Bulgarian PM Boyko Borisov on June 11, that his government prioritizes Nabucco, and that South Stream “raises many questions” (Socor, 2010b); he also announced the withdrawal of his country from participation with Russia in the Burgas-Alexadroupolis oil pipeline project, and from the construction of the planned Belene nuclear power plant (Stratfor, 2010b) The statement came against the backdrop of the suspension by Borisov, in 2009, of Bulgaria’s earlier announced participation in South Stream (pending a revision of the contractual terms) in response to the January 2009 cut-off of Russian gas deliveries But apparently not all was lost, as on the other hand, already in the fall of 2009, Gazprom advanced the notion that Romania might come to join South Stream in Bulgaria’s stead (HotNews, 2009) Indeed, Adriean Videanu, back then Romanian Economy Minister, proved to be a relentless pursuer of a pro-South Stream policy On June 16, 2010 he discussed in Moscow with Gazprom’s CEO, Alexei Miller, the sequence of steps needed to bring Romania into the South Stream undertaking The actions agreed upon included the commitment to prepare, until October 2010, a draft feasibility study for the Romanian section of the line and for an underground gas storage site, as well as the creation of a joint company for gas exploration and production The move departed from Romania’s erstwhile steady pro-Nabucco stance as repeatedly articulated by Băsescu and included in the National Energy Strategy (NES) Moreover, Bucharest’s energy ministry officials hastened to propose South Stream and AGRI for inclusion into NES In the event, though, the outspoken Romanian president made on July 24, 2010 a renewed unequivocal statement in favour of Nabucco 26 But South Stream’s to acquire a 10 percent stake Also significant, immediately after the signing of Nabucco’s IGA in Ankara, in July 2009, Turkey initially agreed that Gazprom lay down the South Stream pipeline on the Turkish seabed – thus avoiding Ukrainian-controlled economic zones – probably in return for a planned development of an oil transport system connecting Novorossiysk to Samsun and for a new oil pipeline across Anatolia from Samsun to Ceyhan – all this cast as part of Ankara’s strategy of turning Ceyhan into a world class energy hub (Socor, 2009b) However, as recently as March 16, 2011, talks in Moscow on these issues between Russian PM Putin and Turkish PM Erdogan ended inconclusively; the Turkish part demanded additional technical documentation for an environmental impact study Finally, after meeting with Vladimir Putin in Moscow, the Croatian PM Jadranka Kosor stated that her country will join the South Stream project 26 “I am convinced that in the near future the EU-backed energy projects will become reality… Right now, when we talk about European energy projects, we talk about South Stream and Nabucco Romania will remain a firm supporter of Nabucco and will not vacillate between South Stream and Nabucco, because Nabucco is the choice that creates alternatives in the energy supplies” (Romania Liberă, 2010) 22 summer 2010 saga has kept taking unexpected political turns On July 16, 2010, upon the visit to Varna of the Russian energy minister, Sofia resumed its commitment by signing a “road map for the technical and economic assessment of Bulgaria’s section of the South Stream pipeline” (RIA Novosti, 2010) The possibility of Gazprom’s reduction of gas prices for Bulgaria was also mentioned Changes like these have been sapping South Stream’s credibility, because the drawing-board configuration of the conduit had to be shifted with each new announcement of a re-routing Diplomatically, though, they are indicative of Gazprom’s tactics of playing pro-Nabucco governments against each other – and also of the mix of posturing, seducing and arm-twisting used in the relentless bargaining processes Moscow insists in conducting Eventually, on November 13, 2010, Gazprom and Bulgarian Energy Holding signed in Sofia the agreement grounding a fifty-fifty joint venture South Stream Bulgaria, the Bulgarian component of the South Stream project Thus, Gazprom finally got what it had been after all along – and what in fact did motivate the entire diplomatic Bulgaro-Romanian kerfuffle: a 50% stake in the Bulgarian component, faithful to its policy of keeping decisional control over all segments of the project The line’s path is still undetermined, yet a deadline for finishing the construction was set for 2015 On the occasion, Gazprom’s CEO Alexei Miller emphasized that “Bulgaria can no longer be replaced by Romania as the European hub of the Russian-sponsored South Stream gas transit pipeline (Novinite, 2010b) But why have all the Nabucco member governments consented to undermine their common endeavour by also joining the Russian competing project – one not only vastly more expensive, but also contrary to the very rationale of enhancing energy security through diversification? And why have three of the Nabucco consortium members (OMV, MOL, and Bulgargaz) joined a rival project, putting in doubt their commitment to Nabucco and indeed its viability? To simply take the official line of Gazprom – i.e., that South Stream and Nabucco are not competing projects – would spell being oblivious to the multitude of political steps actively taken by Russia to stop the EU-backed project A persuasive answer has to involve a mix – blended in variable doses for different actors – of opportunism, diplomatic compliance, reversals, and denial Gazprom has cajoled each one of the Nabucco governments into joining or supporting its own proposal with the prospect of cutting down gas prices and of turning their countries into “energy hubs” But, 23 again, those promises were made in 2007, when Gazprom’s political and economic influence in Europe was at its peak, due to record energy prices Their odds look very different today Moreover, for the CEE states, the example of the West European powers that have supported the lucrative deals of their energy majors with Gazprom revived a “commercial Realpolitik” (Abdelal, 2011) kind of attitude, opportunistic, “bilateral and sentiment-free” Yet it seems that some decision-makers have simply taken South Stream at face value This, for example, appears to be the case with planners in the Romanian ministry of energy Clinging to the flattering depiction of Romania as a future “gas hub” crossed by a multitude of energy projects – Nabucco, South Stream, and AGRI – they seemingly have failed to grasp both South Stream’s true nature (a politico-economic bluff) and the economic incompatibility between Nabucco and AGRI.27 Certainly, Nabucco’s putative supplies are also eyed by Gazprom Assuming that South Stream is not a mere ‘paper tiger’, its planned capacity will wipe off the additional resources of the Caspian producers It is actually hard to grasp how Nabucco and South Stream could not stand in competition to each other, both for gas supplies and for downstream customers On February 24, 2011 Vladimir Putin participated in Brussels in the European Commission-Russia meeting, heading a large delegation of Muscovite ministers One of the main topics, apart from the new Russia-EU partnership agreement and Russia’s accession to the World Trade Organization, was energy cooperation The tenor of the latter was the Russian discontent with EU’s Third Energy Package, which collides with Gazprom’s business model A number of arguments were mounted by the Russian side for why the Package should be toned down, arguments revolving around the idea that the EU undermines its own energy security, because it demotivates Gazprom to invest in pipeline infrastructure (Euractiv, 2011a) It was highlighted that the spot-pricing system, currently gaining ground in Europe, disincentivizes the needed investments both in upstream field development and in midstream pipeline infrastructure.28 Indeed, Putin advocated the notion of a ‘roadmap’ for Russia’s energy relations with Europe until 2050, based on the old-style long-term contracts favoured by Gazprom 27 In spite of some decisional inconsistencies, it is also possible that Bucharest simply hedged its bets for the possibility of Nabucco’s indefinite stagnation Indeed, as stated in a recent WikiLeaks disclosure of a 2008 cable summing up the conversation between U.S Deputy Secretary of State Matt Bryza and Romanian governmental officials, the latter worried about “the stability” of other Nabucco partners and asked for continued American support for the project (Euractiv, 2011c) 24 Concerning South Stream, the most significant and surprising move was the demand by PM Putin to energy minister Shmatko, on March 9, 2011, to consider replacing South Stream’s offshore section with an LNG project that would transport liquefied gas from the Russian Black Sea coast to Bulgaria On the one hand, this certainly adds to the scepticism of those who have all along doubted Russia’s commitment to such an exorbitant undertaking On the other hand, though, it again achieves several political advances in one shot: first, it downsizes considerably the projected capacity from 63 to just 12 Bcm/a – the average size of a large LNG facility Second, it has managed to create confusion around the LNG-based AGRI, entering in direct competition to it It is questionable that the Black Sea Basin has the scale to absorb commercially and financially one costly LNG project, let alone two at the same time Conclusions The gas pipeline projects discussed play a defining role in shaping the current energy security environment in the Black Sea Region In effect, as emphasized by Dubien and Vaquer I Fanés (2010: 4), “the race for control over the south-eastern route of gas supply into Europe” is truly one of the “main drivers of change in the Black Sea security environment” 29 Energy politics is a key factor in Moscow’s foreign policy It is not only indexed into securing demand for Russia’s most valuable exports; it also addresses Moscow’s objective to achieve political and economic control of a number of strategically important states in its vicinity It was the discovery and development of oil and gas fields in the Caspian Basin in the 1990s that sparked off a competitive geopolitical game in the Black Sea Region for the control of those resources Capitalizing on EU’s Southern Gas Corridor, the Nabucco project is the Western-backed attempt to achieve a degree of independence of supply from Russia, 28 An example was given by Valeri Yazev, president of Russia’s Gas Society and deputy chairman of Russia’s State Duma, with the suspension of the plan to lay Nord Stream’s second line Also, prompted by Lithuania’s plan to split its gas company Lietuvos Dujos (in which Gazprom is a shareholder) into a transport and a trade component, with the later to remain under governmental control, Yazev complained about de facto nationalization and “direct economic prejudice” caused to Gazprom under a strict implementation of the Third Package (Euractiv, 2011a) 29 It is certainly useful to enumerate the others, as well: “[T]he radical change in the radical change in relations between Russia and Ukraine under Viktor Yanukovych’s presidency, the new Turkish foreign policy and its objective of good relations with the country’s neighbours (including Russia), a more active phase in all of the formerly-dubbed ‘frozen’ conflicts, [and] a renewed focus on naval balance and maritime security.” (2010: 4) 25 benefiting especially CEE Moscow’s response has been South Stream, an exceedingly costly enterprise with uncertain sources of gas, whose apparent role is to undermine Nabucco and discourage Ukraine, the key transit state, from leveraging its geographic advantage Gazprom adopted a strategy of building pipelines in “surplus capacity”, in order to avoid dependence on any particular transit country – although, nowadays, hit by the economic crisis, Gazprom can ill afford them Notwithstanding the strategic guidelines laid down by Brussels to increase EU’s overall energy security, the various interests and perceptions of the EU member states regarding the “pipelines game” have led to a ‘collectively dissociated’ energy policy, to put it mildly We see the profit-driven behaviour of a handful of European energy majors as a vector of Europe’s energy relations with Russia; their states act rather as political and legislative enablers and facilitators of those companies’ deals with Gazprom New technologies for extracting and delivering natural gas (e.g., via hydraulic fracturing of shale rocks) as well as and significant investments in LNG facilities have the potential to change the structure of the EU’s natural gas market Considering also the difficulties of sustaining large investments in times of economic crisis, and the price volatility caused by the current gas glut – but also by the political and social crisis of the Middle Eastern producers of oil, in the spring of 2011 – the entire pipelines competition may well fall behind the curve in the coming years This is hardly a good recipe for a stable security architecture References Abdelal, Rawi, 2011 “The Profits of Power: Commercial Realpolitik in Europe and Eurasia”, Working Paper 11-028, Harvard Business School, March Andre, Luc, 2011 “Nabucco Pipeline Still in Limbo”, AFP, 19 February Auer, Joseph and Thu-Lan Nguyen, 2010 “Gas Glut Reaches Europe Major Impact on Prices, Security and Market Structure,” Deutsche Bank Research, EU Monitor, No 75, July Barysch, Katinka, 2010 “Should the Nabucco Pipeline Project Be Shelved?”, Policy Brief, London: Center for European Reform BBC News, 2006 “Ukraine ‘Stealing Europe’s Gas’”, January BBC News, 2010 “Turkmenistan Opens Iran Gas Link,” January 26 BP (British Petroleum), 2010 Statistical Review of World Energy, www.bp.com/statisticalreview, June 2010, accessed 15 June 2010 EC (European Commission), 2008a “20 20 by 2020 Europe’s Climate Change Opportunity,” 23 January EC (European Commission), 2008b “Second Strategic Energy Review An EU Energy Security and Solidarity Action Plan,” 13 November Deutche Welle, 2009 “Proposed Nabucco Pipeline Gets European Bank Backing,” 27 January dpa (Deutsche Presse Agentur), 2009 “Gazprom Agrees to Boost Pipeline Capacity,” 15 May DownstreamToday.com, 2008 “OMV, RWE Launch Caspian Pipeline JV,” 22 December Dubien, Arnaud and Jordi Vaquer I Fanés, 2010 “Security and Energy Security in the Black Sea Region,” Directorate General of External Policies of the Union – Standard Briefing, European Parliament, 27 September Economist, 2010 “An Unconventional Gas Glut,” 11 March Elliott, Stuart, 2011 “Azerbaijan to Double Gas Output”, Energy in East Europe, No 209, 25 February, pp 114-115 Energy in East Europe, 2010 “Final decision on Nabucco delayed”, 19 November EurActiv, 2010 “Nabucco Pipeline Confirms Feeder Lines to Iraq, Georgia,” 23 August Euractiv, 2011a “Putin to seek 2050 gas ‘roadmap’ on Brussels visit”, February22 Euractiv, 2011b “Russia Considers LNG Alternative to South Stream”, March 10 Euractiv, 2011c “România, ỵngrijorată că proiectele energetice europene ‘diluează abilitatea UE de a forma un front comun ỵmpotriva abordării agresive a Gazprom’”, March 21 Felgenhauer, Pavel, 2010 “Jubilant Medvedev Praises Yanukovych and Threatens Lukashenka,” Eurasian Daily Monitor, Vol 7, Issue 78, 22 April Flauger, Juergen and Klauss Stratmann, 2010 “Gazprom koedert RWE mit unmoralischem Angebot”, Handelsblatt, 11 July Guardian, 2010 “U.S Embassy Cables: Azerbaijan Leader in the Soup”, 28 November Hall, Siobhan and John Roberts, 2011 “EU Secures Southern Corridor Breakthrough” Energy in East Europe, No 207, January 28, pp 5-6 Harrison, Pete, 2009 “EU Energy Funding Seeks to Kick-start Nabucco Project,” Reuters, 28 February Hydrocarbons-technology.com, 2010 “Central Asia-China Gas Pipeline, Turkmenistan to China,” accessed 15 August 2010 HotNews.ro, 2009 “Videanu: South Stream ar urma să treacă prin România,” 30 November 27 IHS Global Insight, 2009 “Turkmenistan, Russia Agree to Resume Gas Supplies in 2010, Ending Impasse,” 23 December Jensen, James T, 2010 “Market Changes Vex Russian Gas Policies”, Oil & Gas Journal, August 2, pp 24-28 de Jong, Jacques, Jean-Michel Glachant, and Manfred Hafner, 2010 A Smart EU Energy Policy A Final Report, Clingendael International Energy Programme – European University Institute – Fondazione Eni Enrico Mattei – Wilton Park, April Mediafax, 2010 “Gazprom: Studiul de fezabilitate pentru South Stream va lua în calcul înlocuirea Bulgariei cu România,” 19 June Mitrova, Tatiana, 2008 “Gazprom’s Perspective on International Markets,” Russian Analytical Digest (Gazprom’s Foreign Energy Policy), No 41, 20 May New Europe, 2010 „Azerbaijan to double gas exports to Russia”, Issue 209, September, http://www.neurope.eu/articles/102512.php, accessed March 2011 Novinite, 2010a “EU Spokesperson: South Stream Cannot Be EU Priority,” 30 July Novinite, 2010b “Gazprom CEO: Bulgaria Now Safe from Romanian Competition for South Stream”, November 13 Oxford Analytica, 2010a “EU/Turkey: Nabucco to Pilot New Gas Sales System,” May Oxford Analytica, 2010b “Turkmenistan: Upstream Inertia May Hinder Gas Growth,” 14 June Oxford Analytica, 2010c “Europe/CIS: Incremental Projects May Outpace Nabucco,” July Oxford Analytica, 2011 “Russia: Gas Sector Looks to China for Growth”, March 11 Petersen, Alexandros, 2009 “Will Azerbaijani Gas Exports to China Scuttle South Stream?”, Central Asia-Caucasus Institute Analyst, 12 September RIA Novosti, 2010 “Russia, Bulgaria Sign Road Map for Bulgarian Section of South Stream,” 17 July România Liberă, 2010 “Băsescu: România rămâne susținătorul proiectului Nabucco,” 24 July Socor, Vladimir, 2009a “Samsun-Ceyhan Pipeline Project Designed to Divert Kazakhstani Oil,” Eurasia Daily Monitor, Vol 6, Issue 196, 23 September Socor, Vladimir, 2009b “Three Central Asian Countries Inaugurate Gas Export Pipeline to China,” Eurasia Daily Monitor, Vol 6, Issue 230, 15 December Socor, Vladimir, 2010a “Turkmenistan Starts Construction of East Pipeline,” Eurasia Daily Monitor, Vol 7, Issue 110, June Socor, Vladimir, 2010b “Bulgarian Government Disavows Three Russian Energy Projects,” Eurasia Daily Monitor, Vol 7, Issue 114, 14 June 28 Socor, Vladimir, 2011a “Two Non-Strategic Projects Compete With Nabucco Over Azerbaijani Gas”, Eurasia Daily Monitor Volume, Vol 8, Issue 10, 14 January Socor, Vladimir, 2011b “Cost and Supply Issues Delay the Nabucco Project”, Eurasia Daily Monitor, Vol 8, Issue 38, 24 February Socor, Vladimir, 2011c “Turkmenistan Demonstrates Commitment to Trans-Caspian Pipeline”, Eurasia Daily Monitor, Vol 8, Issue 46, March Smith, Christopher E., 2011 “Pipeline Construction Plans Continue Slide Despite Growth in Natural Gas”, Oil and Gas Journal, February, pp 110-124 Stratfor, 2010a “Turkmenistan: Desperate for a Gas Market”, 29 April Stratfor, 2010b “Bulgaria: Sofia’s Choice between Moscow and Washington,” 14 June Stratfor, 2010c “Russia: Moscow’s Military Position in the Caucasus,” 11 August upi.com, 2009 “South Stream Focus on Moscow-Vienna Talks,” 10 November van Aartsen, Jozias, 2009 Activity Report: September 2007-February 2009 – Project of European Interest NG3, Brussels, February Victor, G David and Linda Yueh, 2010 “The New Energy Order,” Foreign Affairs, Vol 89, Issue 1, January/February, pp 61-74 Watkins, Erik, 2010 “Black Sea LNG Accord Could ‘Torpedo’ Nabucco Natural Gas Pipeline”, Oil & Gas Journal, April 26, pp 33-34 Watkins, Erik, 2011 “New USGS Report Confirms Big Caspian Stakes”, Oil & Gas Journal, January, pp 72-74 World Bank, 2010 “Lights Out? The Outlook for Energy in Eastern Europe and the Former Soviet Union,” Washington DC: IBRD/World Bank 29 ... consider these factors in turn, before attempting to portray the new emergent “pipeline geopolitics? ?? of the Black Sea Region The business factor in the EU-Russia energy equation The asymmetries... “unreliable” Ukraine Now, Ukraine’s sidestepping has been in the making since April 2010, with the beginning of construction works at the Nord Stream pipeline But doing the same on Ukraine’s southern flank... viability of a small scale LNG system in the Black Sea, absent the involvement of some Western energy champion and the support of Turkey In any event, with so the Southern Corridor becoming really