Pipeline politics is heating up — all around.
As the perception of an impending energy scarcity in the not too distant future seems to be growing, energy thirsty nations are eagerly competing to secure their future supplies. A race is definitely on. Pipelines carrying oil and gas from the fields to the consuming countries, bypassing some others, are in fashion - despite being a costly affair - both politically and economically.
Russia and Germany signed an agreement last week to build the north European gas pipeline carrying gas from Russia to Germany. This pipeline will also allow Russia to bypass “unfriendly” states such as Ukraine and Poland. And this fact has already started to generate ripples.
Oil and gas deals are currently a key instrument of Russian foreign policy as the Kremlin seeks to expand into European energy markets. About a quarter of Europe’s gas is currently provided by Russia. The pipeline will carry gas 600 miles under the Baltic Sea to the German port of Greifswald and from there to other countries. It is expected to come on stream by 2010.
However, the Polish president, Alexander Kwasniewski, spoke out against the project saying the deal had been struck “over our heads”.
Analysts say the pipeline is a sign of the Kremlin’s desire to punish neighbors that it believes are trying to forge a rival power base. Analysts said it would be a blow to “countries which are attempting to create an alternative centre of influence on the post-Soviet territory”.
Russia and Ukraine have been at daggers drawn since the “orange revolution” that swept Viktor Yushchenko to power last year. Yushchenko angered Kremlin further when he joined forces with the Georgian president, Mikhail Saakashvili, to announce a new pro-democratic alliance.
Moscow and Kiev have clashed repeatedly over transit of gas supplies. Consequently Russian energy giant Gazprom is threatening to triple the price Kiev pays for its supplies. Ukraine said last week that it could also retaliate by quadrupling transit tariffs. In the meantime, a trans-Siberian oil pipeline is also being considered that will export oil to China.
Construction of the pipeline is to begin later this year, with the first stage capable of carrying 30 million metric tons of crude oil annually from the Siberian city of Taishet to Skovorodino near the Chinese border.
From there, the pipeline is expected to take two-thirds of the oil south to Daqing in China, while the remaining 10 million metric tons would be shipped by rail to a new port to be built on the Pacific coast near Nakhodka. The project is expected to be completed around 2008.
Plans are also in to expand the pipeline’s capacity to 50 million metric tons a year, or roughly 1.2 million barrels per day, and to extend the line all the way to the Pacific coast at some time in the future, press reports said.
In the meantime, despite US pressure, Pakistan and India are apparently pushing ahead with the $7.4 billion Iran-Pakistan-India gas pipeline. In their last secretary level meeting the two countries reportedly also discussed gas from Turkmenistan and Qatar, the Iran gas pipeline seems to be the nearest to reality and the most economical of all. However, there seems to be serious pressure falling on both India and Pakistan to shelve the Iranian pipeline project.
During a House International Relations hearing on the recent agreement between the US and India on the recent nuclear cooperation deal with India, US Congressman Tom Lantos clearly and bluntly said, “India must decide where it will stand: With the ayatollahs of terror in Tehran or with the United States.” He emphasized that anything less than full support of the US would imperil the US nuclear and security cooperation with New Delhi. There thus seems to be a price tag for the agreement to go ahead and despite assertions to the contrary, there is an underlying apprehension that in the wake of the recent developments, the Iran-Pakistan-India gas pipeline may ultimately become a hostage to the US bully. And Tehran very much realizes this. Hence it is also pursuing various other options too. It is also endeavoring to supply gas to Europe via Ukraine. As top officials from Azerbaijan, Georgia and Turkey were opening the much-hyped, American-supported Baku-Tbilisi-Ceyhan (BTC) pipeline, Iran started to float the idea of oil pipeline carrying Iranian crude to Iraq and Syria.
Pipeline politics is getting interesting, perplexing and murkier at the same time.
