Nabucco Update 07/08/2009
Pipeline or Opera?
Despite the best efforts of Russia and its allies in Europe to sink the proposed pipeline and a very lame effort by Turkey and the rest of Europe to keep it alive, somehow the Nabucco project marches on in what can best be described as a geopolitical war of attrition.
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Political Deals
In recent weeks, Russia has redoubled it efforts to render Nabucco politically irrelevant by isolating potential sources of natural gas.
On June 29, Gazprom CEO Alexei Miller and State Oil Company Azerbaijan Republic (SOCAR) Chairman Rovnag Abdullayev signed a basic agreement for the sale of 500 million cubic meters of Azerbaijani natural gas to Russia per year beginning in 2010.
The deal itself was largely symbolic. 500 million cubic meters is only 2% of the 31 billion cubic meters projected to flow through Nabucco.
Economically speaking the deal also makes little sense. At the agreed upon price of $350 USD per thousand cubic meters, Gazprom is actually taking a hit on the deal. If the amount were to increase, Gazprom would have to force SOCAR to accept a much lower price, much like it is currently trying to do in Turkmenistan. Moreover, if Russia wanted to increase the amount of natural gas it imports from Azerbaijan, it would have to invest a significant amount to build a new pipeline along the Caspian shores.
By signing the agreement Russia and Azerbaijan were hoping to send very different political signals. Russia’s goal was to damage the already fragile European political will by gaining a key foothold in Azerbaijan’s Shah Deniz gas fields, which are supposed to provide the initial supply of natural gas for Nabucco.
Azerbaijan, on the other hand, sought to send a firm message to the Nabucco nations that if the political infighting that has stalled negotiations since January continues, Azerbaijan can and will look elsewhere. The biggest issue has been Turkey’s demand that 15% of the gas following through the Nabucco be diverted for its domestic consumption
In the near term, it seems that Baku’s message has had more of an effect than Moscow’s. Just days after the Gazprom-SOCAR deal was signed, rumors began to circulate that the Nabucco partners had resolved their dispute and would sign a transit agreement on July 13th in Ankara. By July 3rd, these rumors were confirmed by Romanian, Turkish, and EU officials. The exact terms of the agreement have not yet been revealed but it is likely that Turkey reduced its demands or gave them up completely.
Nabucco Gets its Own German
For the past four years, Gazprom has employed ex-German Chancellor Gerhard Schroeder as a lobbyist. Schroeder has been a key force behind the development of Gazprom’s Nord Stream pipeline. In what may be their best move of the year, the heads of Nabucco recently appointed former German Foreign Minister Joschka Fischer as a “political communication’s adviser” (read consultant). Fischer brings with him and exceptional network of diplomatic ties across Europe and in Turkey.
-Evan
In recent weeks, Russia has redoubled it efforts to render Nabucco politically irrelevant by isolating potential sources of natural gas.
On June 29, Gazprom CEO Alexei Miller and State Oil Company Azerbaijan Republic (SOCAR) Chairman Rovnag Abdullayev signed a basic agreement for the sale of 500 million cubic meters of Azerbaijani natural gas to Russia per year beginning in 2010.
The deal itself was largely symbolic. 500 million cubic meters is only 2% of the 31 billion cubic meters projected to flow through Nabucco.
Economically speaking the deal also makes little sense. At the agreed upon price of $350 USD per thousand cubic meters, Gazprom is actually taking a hit on the deal. If the amount were to increase, Gazprom would have to force SOCAR to accept a much lower price, much like it is currently trying to do in Turkmenistan. Moreover, if Russia wanted to increase the amount of natural gas it imports from Azerbaijan, it would have to invest a significant amount to build a new pipeline along the Caspian shores.
By signing the agreement Russia and Azerbaijan were hoping to send very different political signals. Russia’s goal was to damage the already fragile European political will by gaining a key foothold in Azerbaijan’s Shah Deniz gas fields, which are supposed to provide the initial supply of natural gas for Nabucco.
Azerbaijan, on the other hand, sought to send a firm message to the Nabucco nations that if the political infighting that has stalled negotiations since January continues, Azerbaijan can and will look elsewhere. The biggest issue has been Turkey’s demand that 15% of the gas following through the Nabucco be diverted for its domestic consumption
In the near term, it seems that Baku’s message has had more of an effect than Moscow’s. Just days after the Gazprom-SOCAR deal was signed, rumors began to circulate that the Nabucco partners had resolved their dispute and would sign a transit agreement on July 13th in Ankara. By July 3rd, these rumors were confirmed by Romanian, Turkish, and EU officials. The exact terms of the agreement have not yet been revealed but it is likely that Turkey reduced its demands or gave them up completely.
Nabucco Gets its Own German
For the past four years, Gazprom has employed ex-German Chancellor Gerhard Schroeder as a lobbyist. Schroeder has been a key force behind the development of Gazprom’s Nord Stream pipeline. In what may be their best move of the year, the heads of Nabucco recently appointed former German Foreign Minister Joschka Fischer as a “political communication’s adviser” (read consultant). Fischer brings with him and exceptional network of diplomatic ties across Europe and in Turkey.
-Evan
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