Friday, August 15, 2008

War stirs energy corridor in Georgia

To understand what the conflict in Georgia has signaled for the future, we should return to earlier this year and read carefully into Russian Prime Minister Vladimir Putin's statements in which he strongly objected to Kosovo's independence.

There were political reasons behind Putin's strong opposition. He was unhappy that the Albanian Macedonian Bulgarian Oil pipeline (AMBO), extending from Bulgaria's coastal city of Burgaz through Macedonia and ending at Albania's Vlora port, would pass through Kosovo. The pipeline project in question is being actively supported by the EU and the US with the goal of carrying Azerbaijani and Kazakh oil to the Black Sea via Georgia.

Now let us discuss why Georgia has evolved into a strategic energy transit country. Following the disintegration of the USSR, Russia started to lose its authority in the Caspian region, and the countries in this region with large oil and natural gas reserves gradually came under Western influence. Western oil companies consolidated their strength in the region to the extent that in the oil community Azerbaijan has come be known as "BP country" and Kazakhstan as "Chevron country." Yet there was an important problem that needed to be addressed. The only course available for a pipeline carrying Azerbaijani and Kazakh oil to Western markets was to use the already-existing pipelines that passed through Russia on their way to Russia's Novorossiysk port on the Black Sea. How could Azerbaijani and Kazakh oil be carried to Western markets while bypassing Russia? Via Georgia.

The Baku-Supsa pipeline, the construction of which was completed in 1999 and which is capable of carrying 115,000 barrels of oil daily, was the first pipeline to bypass Russia by carrying Azerbaijani oil to the Black Sea coast of Georgia, which was then transported via oil tanker to Western markets. The second pipeline to bypass Russia was the Baku-Tbilisi-Ceyhan (BTC) pipeline, which opened in May 2005 and which is capable of carrying 1 million barrels of oil a day.

The reasons for Georgia's rise as an important transit route for carrying Caspian oil and natural gas to Western and Eastern markets are not restricted to the pipelines mentioned above. A preliminary agreement was signed on April 3 of last year for construction of a pipeline that will connect Romania's Konstanza port to Italy's port of Trieste. A pipeline that will connect Ukraine's Odessa-Brodi pipeline to Poland's Gdansk port in the Baltic Sea was also signed under a preliminary agreement on Oct. 10 of last year. Similarly, a deal was made in November of last year for a pipeline that will carry Azerbaijani and Turkmen natural gas to Europe via Romania and Ukraine. All give key roles to Georgia.

Russia had another plan for Caspian oil and natural gas. On April 21, 2000 Putin gave a speech to a meeting of the Russian Security Council that effectively put an end to Russia's sit-and-watch policy. "Turkey, the UK and the US do not take coincidental interest in the Caspian region. Therefore, Russia must also take a competitive stance in the region," Putin said. Putin's interest in the Caspian region was also not coincidental. It has been estimated that Russian production of oil and natural gas will possibly decrease after 2010.

Russia had several options for consolidating its dominance over transportation of Caspian oil and natural gas. It could buy all the oil and natural gas supplied by producing countries, if possible, and leave none to be carried by rival pipelines. Or it could block rival pipelines and create problems in these pipelines' transit countries so that the flow of resources had to move through Russia's own pipelines. In light of these options, we can make the following predictions: Russia will continue to take concrete steps to ensure that the majority of Kazakh oil and Turkmen natural gas are carried via Russia to Western markets.

Just 48 hours before the war erupted in Georgia, there was an explosion in the BTC pipeline near the city of Refahiye in the province of Erzincan, and since Saturday the oil flow has been halted. The oil that could not be transported via BTC will be carried via Russia to its Novorossisk port. The Nabucco natural gas pipeline project, which is very important for Turkey, will have to be delayed further due to uncertainty in Georgia. All planned projects will be suspended if the existing government is overthrown and if the new government is not pro-Western.

There are several possible undesirable scenarios for Turkey. While the Georgian Foreign Ministry's claim that Russia was targeting the BTC pipeline is untrue, Georgia may still destroy the pipeline in order to put the blame on Russia. If Turkey can be convinced that Russia is responsible for it, NATO's supplementary articles on energy security may be invoked. If Russia achieves its goals in Georgia, it may concentrate its efforts on Azerbaijan.

I hope all these scenarios prove false.

NOTE: This article of mine originally (in Turkish) appeared on Zaman, a Turkish daily Newspaper. Translation was done by its sister daily newspaper in english, Todayszaman.


At 6:51 PM, Blogger Powrtalk said...

Dr. K,

Thanks very much for this article. Very timely/topical. And as you said: hopefully none your undesirable scenarios for Turkey (and other countries) won't come to pass.

One question: you mention multiple current and future pipelines that circumvent Russia to get oil out of the region. Are you aware of any maps/graphics that show these, and if so, can you point me to them? Thank you.

Andy Bochman
Boston, USA

At 9:41 AM, Blogger sohbet karbuz said...

unfortunately I am not aware of a complete pipleine maps which are available free on charge on internet. however, EIA's maps at

are useful.


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