After the European Commission has finally realized that major investors (RWE) and transit countries (Hungary) are leaving Nabucco, bureaucrats in Brussels are now trying to revitalize a distressed project – the so-called Trans-Caspian gas pipeline.
Their goal is obvious – to find the lacking resources for a shorter version of Nabucco (the so-called Nabucco-West) and prevent its complete failure. Even in Europe many specialists in energy policy understand that without the gas of five Caspian littoral states including Iran, Nabucco will be a mere show of empty pipeline.
European experts in public relations haven’t given Trans-Caspian pipeline (TCP) project a pretentious brand name yet. And they had very good reasons to be cautious. Negotiations between Turkmenistan, Azerbaijan, and the EU on the construction of the Trans-Caspian gas pipeline have been ongoing since the late 90s.
Despite extensive talks for more than 10 years, all summits and meetings were inconclusive.
The European Union has made no financial commitment to the TCP project. What are the bottlenecks of the controversial pipeline? Why many politicians believe it still remains a distant prospect, not to say just another over-advertized pipe dream of Brussels?
First, legal status of the Caspian is currently unregulated. Therefore, territorial arguments among the littoral states are unavoidable. Even worse, two main stakeholders of the Trans-Caspian project, Azerbaijan and Turkmenistan, have unresolved disputes concerning gas fields: Baku and Ashgabat disagree over the ownership of the Kapaz/Serdar hydrocarbon deposit, which is needed to fill the pipe. Such issues are not easy to settle in reality, even if the European “big brother” is turning the heat on and demanding to get all the paperwork done in 2013.
Second, even if Azerbaijan and Turkmenistan succumb to the moment and sign a bilateral agreement to please Barroso and Oettinger, any independent analysis must also acknowledge the practical realities of geopolitics. Russia, Kazakhstan and Iran will never sanction the first link of the pipeline to be run under a body of water, because it is unacceptable from an environmental standpoint.
The Caspian is a closed system, with no outlets to the world’s oceans. Considering the high seismic activity in the region, the level of potential accident implications of underwater pipeline can be also dramatic. That’s why Kazakh President Nursultan Nazarbayev called the prospects for the TCP “very foggy”.
Finally, the questions of Turkmenistan’s proven gas reserves and its future market remain open. By theexpert assessment of “McKinsey & Company” the biggest Turkmenian “Galkynysh” field falls into the category of “very complicated fields”. Gas production cost will be one of the highest in the world. Turkmenistan is very well aware of all these issues and thus is committed to the principle of realization of the energy resources at its border.
It means that the problems of fundraising, security and development for the project automatically become the problems of its partners – Azerbaijan and the European Commission. The market prospects of Turkmenian gas are dubious. Given the ongoing crisis in the eurozone, it will not be easy to the EU to guarantee that it will buy all the gas. Falling energy consumption in Europe due to crisis may also become a factor of economic inconsistency of the TCP.
Moreover, the problem of Turkmen gas brings China into the game, one of its most important consumers. Is there enough gas for both East and West? According to a Chinese diplomat, as quoted by RIA Novosti, “Beijing does not want Turkmenistan to build a pipeline to the European Union, get a different gas price on the European market and then increase it for China.
Beijing will do its best to make sure the Trans-Caspian pipeline project is not developed.” And it should be mentioned that China is one of the major investors in Turkmenistan’s economy.
If one considers all these obstacles to the project, it will be easy to understand that as of today the TCP remains nothing more than a topic for endless negotiations and loud statements for all parties involved.
The EU is desperately trying to get political leverage against Russia’s ambitious South Stream, Azerbaijan is always ready to negotiate and Turkmenistan wants to secure investments. No more than a game of politics, as always.
The ROUTE MAGAZINE is one of the frequent contributors for The 4th Media.