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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Russia Drives Final Stake Through the Heart of the Nabucco Pipeline?

European investors, ever eager to embrace massive and profitable energy projects, in the last several years have dreamed of somehow persuading Turkmenistan to divert volumes of its ever increasing natural gas production to fulfill one of Europe's most cherished reveries, the Nabucco pipeline.

Quite aside from the billions in profits that Nabucco would generate, it would have the added political advantage of assisting one of Europe's most cherished ambitions, lessening its energy dependency on Russia, as state owned Gazprom now supplies 40 percent of Europe's natural gas imports. Worse, the EU's European Commission projects that the EU's overall gas consumption will increase by as much as 61 percent from its current level of 502 billion cubic meters (bcm) to 815 bcm by 2030.

A quick note to investors - forget about it, as Russian Federation President Dmitrii Medvedev has just effectively killed Turkmen participation in the pipeline, no matter how eager investors are to throw cash at the 56-inch, 2,050-mile Nabucco pipeline, first proposed in 2002. At a cost initially estimated at $11.4 billion and rising, Nabucco will be the most expensive pipeline ever built.

And just how did Medvedev drive a stake through Turkmen participation in Nabucco?

Simple - on 14 October Medvedev insisted that all five Caspian nations would have to assent to building the undersea pipeline, which would transit from Turkmenistan's eastern Caspian shore to Azerbaijan's capital Baku, where the Turkmen gas would be added to Azeri production from its offshore Caspian Shah Deniz field before being dispatched westwards through Turkey, Bulgaria, Romania and Hungary into Austria and western Europe. Medvedev said, "This (the Caspian undersea pipeline) is a rather difficult question, which, of course, directly depends on the status of the Caspian Sea as an inland sea and requires that all the countries which participate in the Caspian summit agree their positions."

Ever helpful, the Russian Federation's Foreign Affairs Ministry added that, under a 2007 politically binding joint declaration of the heads of five Caspian states, only littoral countries could resolve important questions regarding the Caspian.

Medvedev's declaration follows the EU opening talks last month in the Turkmen capital Ashgabad aimed at negotiating a treaty to begin construction of the pipeline.

What is more than a touch cynical about Medvedev's pronouncement is that it is Russian…




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