Notes on the Pipeline War: Amateur Hour in Washington and Europe

Note: I had an interesting interview today with David Inge of WILL Radio at the University of Illinois. Lots of history, Russia, Iran and China.

Now to pipelines. I’ve been exchanging emails with an oilman friend about a long natural gas pipeline championed by the United States and Europe to meet Vladimir Putin’s petro-thrust into Europe. This friend, who chooses to correspond privately, thinks the West’s handling of the pipeline, called Nabucco, has been amateurish at best. And I must say after going over it with him that he makes a strong case.

As background, this clumsily named, 2,000-mile-long pipeline would start in Turkey and terminate in Austria. It would transport natural gas from the Central Asian republics of Turkmenistan, Kazakhstan and Uzbekistan, providing them a financial channel independent of current monopoly-buyer Russia. It would also help to diversify the natural gas supply of Europe, which relies on Russia for some 30% of its gas.

Nabucco is the West’s response to three big Russian-planned pipelines that instead would channel Central Asian gas north to Russia, for onward export to Europe through the planned Nord Stream and South Stream pipelines. The pipelines would advance a shrewd Russian market strategy to cement and build on its domination of Europe's energy supply.

Russia is far advanced in the contest, but the West thinks it can catch up. As readers of this blog know, the Bush administration is about to name Thomas Pickering, one of Washington’s most seasoned statesmen, to head the diplomatic effort in a newly created office within the State Department.

But my friend argues that, not only would Pickering not be poised to push Nabucco over the finish line, the West is currently “not even in the starting gate.”

Putting aside for the moment that the Central Asians have yet to make a necessary commitment to the line, Nabucco’s advocates have to date failed to perform a detailed economic analysis of the proposed line. And because they also have no convincing engineering study of the line, along with a detailed, country-by-country understanding of how big or small the role of each player in the complex line would be, the West ends up at risk of being manipulated by those with a vested interest in its construction.

In the 1990s, when the U.S. got behind the Baku-Ceyhan pipeline – the million-barrel-a-day line connecting Baku with the Turkish Mediterranean – it corralled support money from organizations like the Export-Import Bank and the European Bank for Reconstruction and Development. No equivalent effort has accompanied the campaign for Nabucco.

So is the West serious? If so, my friend says it might move beyond a pose and create a program. He makes sense.

Photo: PhylB
Rights: Creative Commons