Pipelineistan’s Great Game of Gas
“The problem – and the opportunity – was referred to by oil men as ’stranded gas’ … Russia and Turkmenistan fought bitterly over how the pipelines should be used. Their battles finally shut down the fields altogether. Until new pipelines were built, or the conflicts with Russia were resolved, Turkmenistan was stuck with 159 trillion cubic feet of gas, 32 billion barrels of oil, and no place to sell any of it.”
- Steve Coll, ‘Ghost Wars’ (Penguin, 2004)

[A slideshow accompanying this report is available here]
By Daniel Simpson
LONDON, May 2009 – For centuries, Caspian gas has been revered. In the Middle Ages, Zoroastrian pilgrims flocked to worship plumes of “Holy Fire”, fuelled by hydrocarbons beneath the Aspheron peninsula. By World War I, these fields were coveted by Brits, Turks and Russians. The latter prevailed, weathering even Hitler’s assault on the Caucasus. Then, in 1998, Dick Cheney said: “I cannot think of a time when we have had a region emerge as suddenly to become as strategically significant as the Caspian.” Within three years, he was in the White House, armed with plans to “make energy security a priority of our trade and foreign policy.” Weeks after 11 September 2001, Uncle Sam parachuted Halliburton airbases onto Central Asia’s “Grand Chessboard”, and a “new Great Game” kicked off. It’s as baffling as Buzkashi, the indigenous mounted bloodsport, and even likelier to kill people. Picking winners is almost as dicey, for the reasons of geography that make Afghanistan a graveyard of Empires. The region’s landlocked, and mountainous, so getting its oil and gas to market means controlling territory to pump it across. As Bill Clinton’s energy secretary mused: “It’s very important to us that both the pipeline map and the politics come out right.” China thinks the same, as do Russia, India, Pakistan and Turkey, to say nothing of less influential transit nations, or producer states that want to call the shots, from Iran to the former Soviet “Stans”.
In Europe, there are further complications. More than a quarter of its gas comes from Russia, which buys up most of Central Asia’s exports and sends them west. The most logical route is via existing pipes in Ukraine, through which 80 percent of Russian imports flow, but the politics have come out all wrong. Backed by Washington (and the protest groups it’s funded), Ukraine’s president has stuck two fingers up at Moscow, which duly scrapped subsidised gas shipments. The two nations’ ongoing fight over prices, debts and contracts has sent shivers through the coldest parts of Europe, leaving people powerless in midwinter. With little hope of a deal, neither Russia nor its customers are satisfied, and both are now planning alternative pipelines to bypass Ukraine. Yet even if all of these were built – and big ifs hover over many of them – they’d struggle to cover import demand, assuming it doesn’t collapse. Curbing it completely would ensure independence, but that seems improbable. This year’s recession-induced decline should reverse, if the economy picks up. And there’s little prospect of a wholesale switch to alternative energy any time soon. Gas is the easiest substitute for coal to curb emissions, and its liquefied form (LNG) can be tapped from multiple sources, with lower fixed costs than fixed pipes. That’s probably the biggest threat to Russia.
Seen from Asia, the pipeline picture’s more straightforward. While Europe dithers over energy policy, and its governments pursue conflicting strategies, China’s dropping tens of billions of dollars on new developments. As one Caspian policymaker puts it: “When we hear the sentence ‘this project is a strategic priority’ from the Chinese, it means construction starts tomorrow. From the EU it means the Commission will write a Green Paper.” Barring the outbreak of peace in Afghanistan, or a U.S.-Iranian love-in of pre-Revolutionary proportions (neither of which looks imminent), the Central Asian Stans can’t send their gas south onto open markets. Most goes north to Russia, but more and more will flow east, to China and India, especially if deals with the West remain elusive, and Moscow keeps trying to stymie them. Some gas will reach Europe, whether via Gazprom’s pipes or other means, but Caspian states will primarily fuel the emerging Sino-Russian “co-prosperity zone”. And it’s hard to see what America, or anyone else, can realistically do to counter this.
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