Russ Oil-Gas

21.01.2009 EUObserver by Philippa Runner - BRUSSELS - A major new gas pipe connecting Russia to Germany will be up and running by 2011 Russia predicts, with Paris expected to join Berlin in giving the scheme political backing inside the EU. "The need to diversify routes of supplying gas from my country to EU member states has been underlined by this crisis," Russia's EU ambassador, Vladimir Chizhov, told EUobserver on Tuesday (20 January), as Russia's transit deadlock with Ukraine came to an end. "The Nord Stream project will now be expedited and I believe that in early 2011 it will able to provide gas," he added. "The land sections of this pipeline are already built and pipes are being produced on a daily basis for the underwater section. There are special ships needed to lay those pipes and they will start doing that as Spring comes." Nord Stream is to bring gas from the Shtokman, Yuzhno-Russkoye and Prirazlomnoye fields in Russia to Greifswald in Germany, from where it will branch out west. German firms E.ON and BASF are major shareholders in the venture. But Germany alone has failed to overcome political objections from eastern EU states, such as Poland and Lithuania, which fear Nord Stream will enable Russia to cut off their gas in the event of a bilateral dispute. "It's a key Russian objective to bring France on board, to have a broad political coalition in Europe, not just Germany," European Council on Foreign Relations (ECFR) expert Pierre Noel said. "I don't know if they escalated this [Ukraine transit] crisis intentionally, but they want to solidify links with key partners in France, Germany and Italy and I think this crisis will achieve this." French diplomats declined to comment on the favourability of Nord Stream, beyond saying the Ukraine crunch "might speed up" construction. But the prospect of French firms with strong ties to the Elysee Palace joining the project makes political backing more likely. "We [are] interested in participation in Nord Stream under the condition we would be a partner and there would be contracts for extra gas supply in addition to whatever percentage we would have in the pipeline," a spokeswoman for Gaz de France told this website. French oil firm Total is already a major shareholder in the Gazprom-led consortium to develop the Shtokman field.
Russian circle closing -- Russia believes the Ukraine crisis will also increase backing for its South Stream project to bring gas via the Black Sea to Bulgaria, Greece, Austria, Hungary, Slovenia and Italy. The South Stream countries, together with Germany, have become known as the "Friends of Russia Club" in Brussels diplomatic circles, for their track record of backing Russian interests inside the EU, by - for example - blocking previous EU conflict resolution schemes for Georgia. "South Stream, when completed, together with Nord Stream, will provide a circle, a donut of energy security," Russia's Mr Chizhov said. "If the circle is broken at one point for whatever reason, be it political, technical, natural disaster or even terrorist attack - God forbid - the rest of the circle will work." Meanwhile, the EU's plan to pump Caspian Sea basin gas directly to Europe via Turkey - the Nabucco project - is fraught with political problems despite support from the Czech EU presidency.
Caspian black hole -- Nabucco is not commercially viable unless Turkmenistan joins EU-friendly dictatorship Azerbaijan to put gas into the pipe. But EU-Turkmenistan relations are in a black hole, with Russian influence pervasive in Ashgabat. The European Parliament remains unwilling to approve a basic EU trade agreement due to the country's egregious human rights record. The European Commission does not know if shootings in the country's capital last September, which killed around 40 people, were mafia-related or a failed coup. In this context, EU companies are happier to brave the Russian investment climate than to sign multibillion contracts to get Turkmen gas out of the ground. "Turkmenistan is nowhere near building a commercial gas relationship with the EU," the ECFR's Mr Noel said.