Foreign

-Turkish and Azerbaijani media published an interview with the head of the NABUCO project saying it is possible that NABUCO will be dismissed. Do you believe this may happen? If yes, why?

- First of all I haven’t seen this media report. In short, if Europeans take gas supply diversification seriously then senior leadership both at the level of the European Union and from individual member state governments and their respective energy companies need to step -up and take this responsibility seriously. Azerbaijan’s President Aliyev said as much so yesterday in Davos.

- What does that mean to Europe?

- It is immaterial from a supply perspective whether European gas supply diversification is called Nabucco or something else. In December China helped inaugurate a new Russian-Chinese oil pipeline, the Eastern Siberian Pacific Ocean pipeline and also a new Turkmen-Chinese gas pipeline in order to secure its own energy supply security. Granted, these projects were long in the making but facts speak louder than words. The Chinese put their time, money, and considerable influence to work to make this project a reality while Nabucco continues to languish as a concept. In short, if the Chinese can accomplish these feats why not the Europeans?

Instead of waiting for something to blow up (either figuratively or literally) the nexus between national or collective EU energy supply security needs to be taken seriously and pursued relentlessly. Companies that provide gas to their citizens need to be held to a higher standard than they presently are. These companies provide a public good (gas) that supersedes the short term interests of their shareholders (higher stock values and dividends). Concurrently, government has the responsibility to ensure the collective security of the nation and in doing so must step forward with policies and programs that protect the public good (in this case gas availability) while not penalizing the companies that are in the position to make this gas available. This is not strictly an energy issue per se; this is a national (or collective) security issue and until it is recognized as such all the flailing of arms as to the lack of progress on Nabucco can continue unabated.

Granted large and expensive energy projects always require a long gestation period but the Turkmen- Chinese gas pipeline demonstrates that these projects can be accomplished with or without Russian interference and consternation. The result is that the Chinese have taken their own security to heart while there appears to be no sense of urgency in European capitals to take supply diversification seriously and consequently their own national security in the energy sphere.

- Does that mean Europe lost to Russia and will depend on its energy resources again? If not NABUCO then which project could help diversify Europe’s energy resources?

- If the companies involved in Nabucco throw in the towel and decide it isn’t worth pursuing, this may not be necessarily to the financial detriment of the companies involved. Everyone understands that Nabucco achieved media attention well before it laid the groundwork for dedicated supply throughput. Nabucco has been a proverbial ‘field of dreams’ based on the conviction that “if we build it they will come.” Well, Odessa-Brody was built and we saw who came so perhaps this strategy should be re-examined on its merits. In an era of tight money it is easy to see where Europe has actually placed its gas future. Expanded LNG regasification capacity is coming online in Europe and will more than double by 2015. While this may not wholly satisfy future European gas demand it does augment the supply picture.

On the other hand, I believe Turkmenistan presents a real historic opportunity for Europeans to develop robust alternative gas supply. They’ve demonstrated their independence from Moscow with their new gas pipeline to the east. Azerbaijan is willing to contribute to Nabucco. Yet collectively the Europeans demonstrate a remarkable lack of political will to push forward on the issue of a Trans-Caspian pipeline with a potential ready supplier or suppliers waiting in the wings. If upsetting Russian sentiments is a major factor in contributing to the lassitude on leadership-commitment and progress on Nabucco then it will never be built because the Russians have never and will never like competition for its gas in Europe. Europeans (eg the EU, individual countries and companies) must demonstrate that they are willing to take responsibility for their own energy future and in doing so put their money, effort, and influence forward. Doing so may salvage Nabucco. Playing ostrich will simply deepen dependence on Russian gas and the political influence that Russia leverages from this disequilibrium.

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