For anyone interested in European energy security, and especially the long-suffering Nabucco gas pipeline project, there was a fascinating piece of news on Monday. The Obama administration appointed Richard Morningstar, a former US ambassador to the European Union, as its special envoy for Eurasian energy issues.
Morningstar has a career background not only in EU affairs but in the energy diplomacy of the Caspian Sea area. As such, there is no one better placed to give the Europeans the benefit of US advice on Nabucco, a project some energy analysts think may be doomed to failure unless resolute action is taken soon to finance it, secure the necessary gas supplies and get it up and running.
The basic idea behind Nabucco is to reduce the EU’s growing dependence on Russian energy by importing gas along a proposed 3,300km-long pipeline from the Caspian, and later from central Asia, through Turkey to Europe.
But it is a project that is of more interest to the EU’s eastern European member-states, many of which were severely affected by last January’s abrupt cut-off of Russian gas deliveries, than to western European countries such as Germany and Italy, which were not affected and which invest a lot of time and effort in securing bilateral energy deals with Moscow.
Moreover, it has never been entirely clear where all the gas for Nabucco is going to come from. Azerbaijan, which the EU has identified as the key supplier in the first instance, has never made a whole-hearted commitment to the project. Russia’s military triumph over Georgia last August raised security questions about Nabucco.
Another problem concerns Turkey, which is withholding its support from Nabucco because the Greek Cypriot-controlled government of Cyprus is blocking the start of talks on the energy section of Turkey’s EU membership negotiations. The Turks are not wholly innocent, though. They see Nabucco as an opportunity to leverage their favourable geographical location to buy gas from the Caspian and elsewhere and sell it on to the EU at a profit. This vision of Turkey as a middleman enriching itself at Europe’s expense infuriates some western Europeans who have never wanted Turkey in the EU anyway.
At a EU summit last month, the tensions were temporarily defused when German chancellor Angela Merkel lifted her objections and agreed that the EU could earmark €200m of seed money for Nabucco. At a time when it is by no means easy to secure funding for any big-ticket investments, let alone one with as many question marks hanging over it as Nabucco, this was undeniably a step forward for the EU. But the total cost of Nabucco is officially estimated at €7.9bn (the final cost will surely be higher), so an awful lot remains to be done.
Meanwhile, the head of Azerbaijan’s state-owned energy company was in Moscow last month to sign a memorandum of understanding that pledges the gas from Azerbaijan’s two big new fields to Russia. The deal, though not yet irreversible, could sound the death knell for Nabucco.
Clearly, Morningstar and the Europeans have much hard work ahead of them.
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