Table of Contents
Nabucco Pipeline which also goes by the name Turkey-Austria gas pipeline is essentially a proposed natural gas pipeline whose idea was broached sometime before the year 2000, the year when its preparatory work was commenced (Barysch, 2010). It is expected to extend from Erzurum, Turkey, to Baumgarten an de March, Austria (Barysch, 2010). It has taken almost seven years since the preparatory work of this project started to have the intergovernmental agreement between Romania, Turkey, Austria, Bulgaria, and Hungary signed. Developed by a total of six companies namely; MOL (Hungary), OMV (Austria), Bulgargaz (Bulgaria), Transgaz (Romania), RWE (Germany) and BOTAS (Turkey), Nabucco pipeline project is expected to reduce this region's dependence on Russian energy (gas) (World Bank Group, & Gerner, 2009). Despite all the commitment from these countries no concrete decision concerning the project has been reached so far, however, the final binding decision is expected to be made in the year 2011. If the decision recommend for a continuation of the project then building works will begin in earnest thereby making it fully operational by 2015 (World Bank Group, & Gerner, 2009). Once it is fully operational it is expected to carry a total of 31 cubic meters of gas each year. It should be noted that this project has received a thumb-up from the United States and majority of the European Union, however, majority of people see it has a rival of South stream pipeline which is a project that is lead by Gazprom.
Nabucco project is driven solely by the need to diversify energy, and especially gas, supplies from the traditional Russian major sources (World Bank Group, & Gerner, 2009). In this regard the pipeline will endeavor to connect better the European Union with the natural gas sources in Middle East and Caspian Sea regions; this ultimately will have the results of reducing the region's (European Union) dependence on energy sources in Russia which are currently the biggest in the region. It will also reduce the threat of the energy supply interruptions which has partially been blamed on the intermittent Russian-Ukraine gas disputes (World Bank Group, & Gerner, 2009). According to European commission, the gas consumption of the European Union is expected to escalate to 815 cubic meters from the 2005 year figure of 502 cubic meters, this will most definitely mean that Russian supplies will not be able to meet the need of the regions which therefore calls for concerted efforts to connect the regions with other gas sources, in this case the Caspian Sea and the Middle East sources (World Bank Group, & Gerner, 2009).
Nabucco pipeline faces a number of political challenges. According to Ivan Grachev, chairman of the state Duma's energy committee, Nabucco project is an attempt to put pressure on Russia which is one of the reason that has made him shrugged-off this project as unviable (Barysch, 2010). The Russian Prime Minister, Vladimir Putin, has also poured cold water on the project which according to him is another attempt to reduce Russia's influence in the world stage. In response to Nabucco project Russia has closed a number of gas deals with Turkmenistan and Azerbaijan, an efforts which has been viewed has Russia's attempt to reserve gas supplies that are likely to benefit Nabucco project one it is start running (Barysch, 2010). Other attempt to sabotage Nabucco project although in their infancy that have been noted include the opening of the China Gas Pipeline in Central Asia and the agreements to construct the South Stream pipeline to name but a few (Barysch, 2010).
Several commentators have criticized this project as uneconomical due to lack of a guarantee to the effect that adequate gas supplies will be available from the places that it seeks to connect to the European Union (Barysch, 2010). The 31 Billion cubic meters of gas that Nabucco intend to carry has been question, this is because Azerbaijan which has so far confirmed has only offered a comparably small percentage of that amount while Caspian Shah Deniz, another of the companies that have confirmed, can only provide 8 Billion Cubic meters because the rest of its production is normally purchased by Russia in advance (Luft, 2009). This was confirmed by Manouchehr Mottaki, Iranian foreign minister, when he stated that "speaking of Nabucco pipeline without Iran participation would amount to nothing but a pipeline void of gas (Luft, 2009)."
Trans-Caspian Pipeline project
The Trans-Caspian Gas Pipeline refers to a submarine pipeline that has been proposed to run from Turkmenbasy, Turkmenistan to Baku, Azerbaijan (Luft, 2009). A section of this pipeline is also expected to connect TengizField, Kazakhstan and Turkmenbasy. This pipeline once completed is expected to transport an estimated 30 billion cubic meters every year of natural gas which is equivalent to close to 27 million metric tons oil or 73, 972 metric tons of the same every day (Luft, 2009). In Baku, Kazakhstan, the pipeline is expected to connect to the so called South Caucasus Pipeline which essentially link Baku, Tbilisi, and Erzurum, in that order, all the way through the Nabucco pipeline which on the other hand is expected to link Turkey, Bulgaria, Romania, Hungary, and Austria, in that order (Luft, 2009).
Just like the Nabucco pipeline Trans-Caspian Pipeline is expected to reduce the dependence of gas supplies from Russia which has been almost the sole supplier of gas to the Central Europe region (World Bank Group, & Gerner, 2009). Once completed this pipeline would carry natural gas from Turkmenistan and Kazakhstan to Central Europe, and most importantly, circumvent both Iran and Russia. Another important bottleneck that the pipeline is expected to help resolve is the perennial gas interruptions emanating from the sporadic Russia-Ukraine gas dispute (World Bank Group, & Gerner, 2009). In fact, this project had been shelved after an unresolved territorial dispute over the territorial boundaries of the Caspian Sea was rekindled by Russia in collaboration with Iran, however after a 2006 Russian-Ukraine gas dispute erupted the idea of the Trans-Caspian Gas Pipeline was once again rekindled, this demonstrate the potential of this project to settle once and for all the disruption that have previously been caused by this dispute (Russia-Ukraine gas dispute).
Russia and Iran have always displayed their opposition to this project. In their opposition they have involved all sorts of delay tactics all of which are meant to thwart its completion. For instance, in 2000 following what appeared like an accelerated attempt to accomplish the major initial stages of the project the Iranian and the Russian governments moved to court and revived a longstanding territorial dispute concerning the Caspian Sea boundaries which touches on the Azerbaijan's Shah Deniz filed, all in a bid to halt the faster completion of the project which they consider as a threat to their international influence (World Bank Group, & Gerner, 2009). In this particular case they succeeded in their bid because ultimately the project was shelved for several years. Another attempt to be included in the project can be found in the Viktor Khristenko, Russian minister for industry and energy, assertion that the project is unlikely to come to a successful accomplishment any time soon due to its gigantic legal, environmental, technical and other risks unless a political solution is first sought (Luft, 2009). Another setback that the realization of this project has underwent is the 2007 agreement between Turkmenistan, Russia, and Kazakhstan which sought to reconstruct and expand the western branch of the so called Central Asia Center Gas Pipeline System in order to deny this pipeline supplies and instead act as its replacement that would transmit the Central Asia gas to Central Europe just as the trans-Caspian pipeline project was proposed to handle (Luft, 2009). In response to the Trans-Caspian pipeline plan of the 1999 Russia and Iran are said to have called for a gas cartel involving all the Central Asian gas producers. In recent times Russia and Iran offensive on the project have gone over bound with the two arguing that any project, for gas or oil, and regardless of the route it takes undersea, will require the consent of the five littoral states before it proceeds, without such consent, they have maintained such a project would be illegal (Luft, 2009). The two have also maintained that the 1921 and 1940 treaties involving them and which requires that any action undertaken in the Caspian water being done after consent has been granted from the five littoral states is still in force (Luft, 2009). Another fear that has gripped the western world concerning this pipeline is the continued collaboration of the West with the Azerbaijan and Georgia which have the possibility of pushing Armenia towards Iran and Russia (Luft, 2009).
One important thing about this project is the fact that it has the potential of not only diversifying gas supplies but also stabilizing prices (World Bank Group, & Gerner, 2009). Due to the fact that it is the shortest of the other available options, Trans-Caspian pipeline is likely to reduce considerably the price of gas in Central Europe and other countries that are expected to benefit from this pipeline (World Bank Group, & Gerner, 2009). However, the project has come under fire from some quarters for a number of reasons. For example, the Iranian government has expressed its opposition to the project or any other undersea pipeline in Caspian Sea ostensibly for environmental concerns. One of the major reasons why Russia and Iran are up in arms against this project is the fact that an alternative and competing pipeline for the Kazakhstan's gas and oil would most definitely reduce significantly their earnings and the general price of the two commodities in the European counties (World Bank Group, & Gerner, 2009).
The Azerbaijan Georgia Romania Interconnection (AGRI)
The Azerbaijan Georgia Romania Interconnection (AGRI) essentially refers to a proposal by the three governments (Azerbaijan, Romania, and Georgia) to develop new Liquefied Natural Gas (LNG) terminals connecting the three countries (Global Insight, 2010). This project can be considered as a new entrant in the already crowded race of projects that are expected to deliver gas into the South-Eastern Europe from the Caspian region. This project was been recently launched by the three countries and envisages a number of gas supply routes that will be relying on the Liquefied Natural Gas) LNG deliveries that will connect gas supplies from the Caspian-regions to the European market (Global Insight, 2010). It envisions the development of two LNG terminals, each in the Georgian and Romanian coasts, where the two terminals are expected to allow gas coming from Azerbaijan to flow to Georgia via pipeline across Caucasus, from where this gas will be liquefied at a terminal in Kulevi, and then shipped to the Constanta in Romania across the Black sea (Global Insight, 2010). It is at this point that this LNG will be regasified, then pumped in the gas grid of Romania and finally delivered into the European market (Global Insight, 2010). This has been considered as the fastest project that has been undertaken towards delivering gas to the European Union. According to Adrien Videanu, Romanian minister for economy, "this is the fastest and one of the most efficient projects .... to bring Caspian gas to the EU (Socor, 2010).
This project together with another proposal to deliver Compressed Natural Gas (CNG) to Bulgaria from Azerbaijan through Georgia has mainly received the support of number of countries involved primarily due to the stalemate that has existed between Azerbaijan and Turkey over gas transit and prices, as a result this project has the implication of threatens to halt the Nabucco pipeline project (Socor, 2010).
A number of reasons have been advanced to explain why this project has been proposed. Chief among these reasons is yet-to-be-resolved dispute involving Turkey and Azerbaijan over transit tariff and gas prices which has remained a stumbling block to the realization of Nabucco pipeline project (Socor, 2010). Azerbaijan is also reported to be annoyed with being treated as a mere supplier by Nabucco supporters instead of being a member of the consortium which is the major reason why it has prompted it to strike supply agreement with Iran and Russian together with pursuing supply deals with Romania and Bulgaria (Socor, 2010).
However, there are a number of players who would like AGRI to be complementary to Nabucco pipeline project, which might not necessarily be the case. Otherwise what with the possibility of AGRI route pulling away a huge chunk of gas supply from the Nabucco pipeline project potential supply. There are also those who think that AGRI also has its fair share of drawback namely; its viability issues especially when considering in the context of the LNG's (Azerbaijani Liquefied Natural Gas) closed Black Sea that essentially involves only two players namely; Azerbaijan as the sole supplier and Romania as the sole buyer (Global Insight, 2010).
CNG (Compressed Natural Gas)
CNG is one of the viable options (together with LNG) that AGRI is considering in its efforts to transport gas across from Azerbaijan to the European Union, although it has been noted not to put a lot weight on CNG as compared to LNG as far as the transportation of gas to this region is considered (Pasturia, 2010). According to Azerbaijan's MOU which was signed by the three countries (Azerbaijan, Romania, and Bulgaria), the agreement is exploring the option of CNG (other than LNG) where it envisions the use of CNG in shipping the Azeri compressed gas through Georgia and across the Black Sea therefore we can say that AGRI initially was considering transporting gas from Azerbaijan across the Black Sea through compression (CNG) or liquefaction (LNG) either in surface ship or seabed pipeline (Pasturia, 2010). However, it has since settled for Liquefied Natural Gas export route which they expect to beat the long delayed Nabucco pipeline which has been noted to be "long in promises and short on financing (Pasturia, 2010)." In this case, AGRI (Azerbaijan-Georgia-Romania Interconnection Project) plans to supply at least six to eight billion cubic meters of liquefied natural gas from Azerbaijan every year to the European Union through Black Sea tankers. This way the project would have to circumvent both Turkey and Russia which are considered as two of South Caucasus key energy transit corridors (Socor, 2010).
LNG (Azerbaijani liquefied natural gas)
AGRI is essentially a Liquefied Natural Gas (LNG) project that has been designed as an interconnector of the Azerbaijan, Georgia, and Romania. According to the three governments their agreement which actually forms the basis of this Liquefied Natural Gas (LNG) project in the name AGRI, is an element of the European Union-planned Southern Corridor for Caspian gas towards Europe (Socor, 2010). The main reason why we are saying that AGRI is a LNG project is because it (AGRI) envisions carrying Azerbaijan gas to the European Union zone by pipeline all the way to the back Sea coast, then liquefying it there from where it is ferried by tankers across the black Sea to the Romania Coast where it is re-gased and delivered to the Romania coast in that forms (Socor, 2010). One important thing about that line of processes is that it takes cognizance of the potential environmental issues that might stem from using a pipeline to transport it across the Back Sea. It is also important to note that just as we said about CNG (Compressed Natural Gas), LNG is another option that is being considered by the three governments as they brainstorm on the best way to convey gas supply across the Back Sea.
Azerbaijan's Georgia-Black Sea-Bulgaria Route RUSSIA pressure on Azerbaijan
Azerbaijan and Bulgaria recently signed an agreement of intent concerning the carrying of Azerbaijan gas to Bulgaria where it is further transmitted to the European Union. The center piece of that agreement concerns the carrying of the Compressed Natural Gas (CNG) to Bulgaria from Azerbaijan via Georgia across Back Sea. This agreement is expected to take care of the existing bottlenecks that are associated with transiting via Turkey (Global Insight, 2010). At the signing ceremony Giorgio Purvanov, Bulgarian President, placed this project within the broader context of the European Union's intended Southern Corridor for gas carrying across Europe. He also envisioned an integrated solution to the perennial Caspian-Central Asian gas problem, with Azerbaijan doubling up as a transit country as well as a producer for Turkmen gas to the entire European Union market (Global Insight, 2010). Azerbaijan president, Ilham Aliyev, on his part noted that the CNG project would "make Azerbaijan a direct supplier to the European Union... advancing the E.U. - Azerbaijan strategic partnership on energy (Pasturia, 2010)."
CNG is untested and unprecedented solution to the carrying by tankers in Eurasia. Compressed gas has so far been used for road transport, although in small volumes. Transporting CNG across the Black Sea on the other hand requires specialized tankers which are comparably dearer to build, which might not be the case with the liquefied-natural-gas (LNG) tanker. However, in its delivery mode CNG does not require liquefaction in its natural state and its subsequent re-gasification, thereby averting the need for such a tasking processes and installations which are normally expensive.
Europe's need for energy
The need for energy in Europe goes up each and every day and a recent study indicated that energy needs in Europe would require a solar panel coving the whole of the Sahara desert to sustain it through the solar energy. It's evident that currently, the energy consumption of the majority of the countries in Europe is experiencing a growth in the energy consumption but the sad thing is that the better part of this consumption is supported by importation of energy sources. In the year 2006, there was a notable increase worldwide competition over the natural energy resources and this was brought into the limelight by the developments in terms of the geopolitics that incorporates the demographic growth as well as economic factors. It is after putting all these factors into consideration that one can be able to get the meaning of the concern of the over-reliance of the majority of the European countries relying on such limited sources. In case the source diminishes or dries up, the drama that may arise may be irreparable. This is the reason why the limitation of the European energy vulnerability as well as the elimination of overreliance or the energy sector diversification is very important (Bahgat, 2006).
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The dependence of the whole of Europe on Russia for the energy supplies gives the continent a need to diversify their energy sources and this forms the basis of this paper. In the paper the connection of Gazprom and Kremlin are mentioned not forgetting the role played by turkey in ensuring that there is mutual agreements between Caspian and European energy markets. The key role that Azerbaijan has played in ensuring that Europe secures the energy supplies from Caspian is also highlighted in this paper. The different projects that are meant to relief Russia its demanding responsibility of providing the whole of Europe with energy have been highlighted in this paper (Richard, 2009). The accomplishment of the biggest energy project in the energy sector, Baku-Tbilisi-Cayman (BTC) oil pipeline in the year 2006 opened up the perspectives and great potential hopes in terms of the cooperation and international security in the energy sector.
Another construction that has also boosted energy sector in terms of the alternative source is the Baku-Tbilisi-Erzurum gas pipeline. This will assist in the diversification of the sources of energy in Europe through provision of applicable alternatives. There are also other major projects that have also been discussed in this paper and all have similar goals which are the diversification of the energy sources. Azerbaijan entered into a memorandum of understanding with European Union on 7th November of 2006 and this proved that this state was committed to providing Europe and its entire community with the energy security that was desired (Richard, 2009).