Russian Energy Geopolitics
Moscow’s High Stakes Energy Geopolitics (summary) – by F. William Engdahl
Through the new North Stream and South Stream pipeline systems, Russia is clearly redrawing the energy map of Europe… energy is the lever for Russia’s return to the world stage and for checkmating Washington’s NATO encirclement strategy… On November 7 the first of two pipelines for Nord Stream, the huge Russian-German gas pipeline project, began delivery of gas. A 1224 km pipeline delivers gas from the Siberian Yuzhno-Russkoye field to Lubmin/Germany. Total cost: more than 12 billion $. After completion of the second pipeline by the end of 2012, 55 billion cubic meters of Russian gas a year, almost ten percent the entire EU annual gas consumption, or roughly one third the entire current gas consumption of China. The EU is going for natural gas energy big time and Moscow intends to be a major, if not the major beneficiary of that push. Nord Stream will deliver to Germany, the United Kingdom, Denmark, the Netherlands, Belgium, France and the Czech Republic.
Oil and gas are at the heart of the Russian strategy to counter Washington’s dominance. Russia now is the largest producer of oil, before Saudi-Arabia and in terms of known reserves of natural gas Russia is far away the world leader. State company Gazprom is the centerpiece of this energy strategy. And Germany is the focus of the Russian strategy. Nordstream is a consortium, with Russia holding 51% and the German chemicals group BASF Wintershall and E.ON Ruhrgas of Germany each today with 15.5% share and later they were joined by N.V. Nederlandse Gasunie and France’s GDF Suez which each own a 9% share. The Baltic searoute was chosen to circumvent the Ukraine that did block deliveries in the (recent) past by a pro-NATO Ukrainian government. Prior to opening of Nord Stream in November some 80% of all Russian gas exports to EU countries—mainly to Germany, Italy and France—were flowing across Ukrainian territory. 40% of Russian state income is based on oil and gas.
Parallel with Nord Stream plans were made for a second pipeline between Russia and Western Europe: South Stream. South Stream gas pipeline will be laid on the Black Sea floor, pass through Bulgaria, Serbia, Hungary and Slovakia and on to west European markets from the southern part of the EU.
In order to lower the energy dependency on Moscow, the EU Commission, backed by Washington, in 2002 caproposed the construction of the Nabucco pipeline (see map) of 3,900 km, 31 billion m3/year. Nabucco partners to date include energy companies RWE of Germany; OMV of Austria; MOL of Hungary; Botas of Turkey; Bulgaria Energy Holding of Bulgaria; and Transgaz of Romania. The question is: who is going to provide the gas? Moscow already secured the gas from potential suppliers like Azerbaijan and Turkmenistan, leaving Iran. Not exactly what Washington had in mind. And Nabucco is twice as expensive as South Stream.
Both Nord and South stream came into being at the same time, both with the aim to surpass the Ukraine.
By the end of 2011 South Stream won the backing of BASF, that joined French EDF. In April 2011 Turkey already gave the green light to the initial planning stage of South Stream, giving another blow to Nabucco.
Gazprom wants to increase its gas supply to Europe in 2011 to 155 billion cubic meters, that is 25% of the total European gas. This should epand to 30% after completion of South Stream and other projects.
Mainwhile the realisation of Nabucco has been delayed until 2017, three years later than originally planned. The construction work won’t begin until at least 2013. Were Moscow to succeed in completing South Stream and retain its integral control over the delivery pipeline infrastructure, it would represent nothing less than a major geopolitical defeat for Washington.