Pipeline Politics: Nabucco, TAPI and Friends

There has been a proliferation of gas pipeline proposals surrounding the so-called Southern Gas corridor – an attempt to bring gas from Central Asia to Europe, by-passing Russia and therefore diversifying Europe’s supply by breaking Russia’s monopoly on the market, and so increasing Europe’s energy security. At least that is the theory.

However, the EU’s “much-lauded but under-resourced” Nabucco gas pipeline” (Austria, Hungary, Romania, Bulgaria, Turkey) faces internal competition from TAP (Trans-Adriatic Pipeline – Greece, Albania, Adriatic Sea, Italy), ITGI (Interconnector Turkey-Greece-Italy), as well as Russia’s answer to Nabucco, SouthStream (from Russia, underneath the Black Sea to Bulgaria and beyond). Not to mention other routes across the Black Sea, White Stream or AGRI.

And this is only half of the picture.

Gas for these pipelines must be sourced, and the projects mentioned above are all vying for Azerbaijan’s Shah Deniz II – a new gas field that won’t begin producing until 2017 at the earliest, and initially will have about 10billion cubic meters available to go in Europe’s direction, whichever one of these competitors wins the bid. But whilst such a quantity would suffice for TAP or ITGI, the planned capacities of Nabucco and South Stream are around 30bn and 60bn cubic meters respectively, and so would need to source gas from further afield. Enter Turkmenistan, a notoriously closed country with a poor human rights record and massive gas reserves.

Gas supply from these two countries is deemed so politically important that President of the European Commission José Manuel Barroso and Commissioner for Energy Günther Oettinger have made visits to both countries on the 13th-14th January 2011, securing from Azerbaijan a Joint Declaration on gas delivery for Europe, in return for “visa facilitation” for Azeri nationals. As for Turkmenistan, yes, Europe wants to secure their gas, but so does China, who has already built one pipeline (the Central Asian Pipeline – now the  longest gas pipeline in the world, finished just three years after it hit the drawing board), and has another one, forgive the pun, in the pipeline.

And that’s still not all. In December 2010, Turkmenistan, Afghanistan, Pakistan and India signed a framework intergovernmental agreement for TAPI, an American backed project that faces the Herculean task of not only building a pipeline through parts of the Himalayas, but through Taliban territory in Afghanistan and turbulent tribal areas of Pakistan. TAPI is an extraordinary undertaking, with hugely varying analysis of its real beneficiaries;

  • Afghanistan’s economy?
  • The fuel-poor population in Central Asia, by securing much needed gas supplies?
  • Europe, via gas shipped from Pakistan’s coastal port of Gwadar?
  • Turkmenistan, with interests in diversifying its exports?
  • US influence in central Asia – a new “Silk Road” – and reason for continued NATO presence?

and its emerging and likely effects;

One thing that can be said for certain however is that TAPI adds another dimension to the geopolitics of Caspian region gas. This proliferation of pipelines seeking Turkmenistan’s gas shows the extent of the demand for it, and if Europe wants Turkmenistan’s gas it will have to bid, bribe and beg for it, just like all the other competitors.

In other words, Europe’s bargaining position is not strong enough to insist on conditions like better human rights practices or the Turkmenistan government signing up to the Extractive Industries Transparency Initiative (EITI), an attempt to ensure the revenue from natural resources is dispersed amongst citizens and not just government elites.

In QCEA’s 2009 report “The Nabucco Gas Pipeline: A chance for the EU to push for change in Turkmenistan”, QCEA took the position that if Nabucco is inevitably going ahead (which at the time there was strong evidence for, with apparently unanimous support in the EU institutions), then the EU should use it’s bargaining position to push for change in Turkmenistan by making responsible hydrocarbon revenue management, and the provision of protected space for independent civil society, a condition for buying their gas. The problem is: Turkmenistan is not short of buyers.

The geopolitical and economic conditions which the premises of this argument rest upon have changed. Nabucco is no longer a dead certainty, as it faces stiff competition from the other European directed pipelines mentioned above, and has suffered from a long period of inaction despite high-level political commitment. Behind the scenes, diplomats have suggested that Nabucco is the song the EU sings to keep the American’s off their back. But even US support for Nabucco seems to be cooling off, with Richard Morningstar, the US Eurasian energy envoy, stating in December 2010 that “the United States supports a Southern Energy Corridor, but that did not necessarily mean the Nabucco project”. Analysis of the likely fate of Nabucco seems to change daily, from suppositions that Nabucco and Southstream could merge, to gas finds in northern Iraq being heralded as Nabucco’s saviour, and Bulgaria claiming that the European Investment Bank (EIB) will fund the Bulgarian section of the pipeline.

We are not in a position to be Nabucco’s soothsayer, but even if one or more of Nabucco’s competitors comes to fruition rather than Nabucco, the EU is still aiming to source some of its gas from Turkmenistan. This raises the question of whether it still makes sense to engage with the inevitable and try to bring something good from it.

With so many pipelines vying for Azerbaijan and Turkmenistan’s gas, it is the suppliers that can pick and choose, not the buyers. The assumption implicit in this argument is that the EU could impose conditions on Turkmenistan, but this no longer seems likely because Turkmenistan can simply look towards China and India, the biggest emerging energy markets in the world, who won’t make human rights the deal breaker.

The high profile visit to Azerbaijan and Turkmenistan indicates that the EU is happy to go and get the gas, human rights or not. This trend, reminiscent of what Human Rights Watch has called “destructive engagement”, is corroborated by the EU’s recent engagement with Uzbekistan – partly out of energy security interests – which has also led to criticism over human rights abuses.

Billed at around €8bn, the opportunity cost of investing such a huge amount in Nabucco, instead of widespread, deep retrofitting of Europe’s energy wasting buildings, or serious investment in renewables, is colossal. Investing €8bn in meeting the EU’s 20% energy savings target could save us up to €78 billion annually by 2020. We are currently on track to miss this target by half, which is equivalent to the energy of seven Nabucco pipelines. Combined with the clear human rights concerns, this is one endeavor that requires a considerable amount of doublethink in order to be commensurate with the EU’s priorities of respect for human rights, including in foreign policy, and sustainable development, as part of the fight against climate change.

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About Rachel Tansey

Rachel was a QCEA Programme Assistant on Sustainable Energy Security between November 2010 and November 2011.

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