Russia has created a Gas OPEC!

Nino Arveladze

Energy fight between Russia and the West enters an important phase.

If in a ‘Gas fight’ Germany and France were Russia’s allays and supported the idea of common European diversified energy provision, now the fight is obvious and Russia tries to find other allays in Europe; germany and France are joined by Italy and other countries. Italy was the first to join the above mentioned big countries; Russia suggested the ‘South Stream’ and the pipeline was planned as follows: Russia- Black Sea- Bulgaria- Greece- Italy, as well as branches: Hungary- Europe. This is the project through which Russia tries to punish Georgia and Turkey, the project that is much more expensive than the middle Asia Gas through Georgia and Turkey; Russia cannot forgive the active participation in Baku-Ceyhan and Baku – Tbilisi – Erzerum pipeline. It considers Georgia to be a stubborn former colony that does not recognize Russia’s imperial goals to rule everything in post Soviet Union countries, just the way it does in Kazakhstan, Uzbekistan, Turkmenistan or Byelorussia. Punishing Georgia is of an utmost importance for Russia. Other republics should attentively watch it never dare to repeat the same and be the US allays. Armenia is a perfect example. Russia gives gas for USD 110 and at the same time controls the whole system of energy and politics as well. Moreover, it takes care of politicians, presidents after going on a pension and suggests serious position in Russian energy companies – Kocharian, N. Shroder and many others may serve as a good example of it. Western Europe finds Nabuko Project extremely important- Khazakstan – Caspian Sea – Azerbaijan – Georgia – Turkey – Bulgaria – Rumania- Hungary and South Europe. The project costs about USD 5.8 billiard, its spread on 3300 kms; construction starts this year and will be finished by the year of 2012. 30 billion KBM gas will be provided to Europe through the project. In Vienna Energy Summit the project was supported by the leading gamers of Europe. Moreover, united network among central European countries was being discussed last year. In spite of the MOL (Hungarian company) and Gasprom friendly relations, they took an active part in working out and implementing the project with Australians, which was confronting Russia’s and Gasprom interests.
Moreover, last year Iran Deputy Oil Minister declared at Energy summit in Tehran – ‘Geopolitical processes of Oil and Natural Gas’ that he did not exclude joining Baku pipeline with Iranian Pipeline on the territory of Georgia.
The project approved by 5 European countries was considered to be the most attractive and successful one last year. Iran, providing 27 trillion KBM gas, supported the project. Although Russia, providing 48 trillion KBM gas turned out to be against the project. The exsistance of Nabuko seemed to be under danger. Russia pushed its suborditantes – president s of Turkmenistan and Kazakhstan- they agreed to create gas transportation consortium (see ‘Gas- political price, political heroism on Georgia’s gas market’, #12 Sakartvelos Ekonomika) Russia has used political tools to meet its economic needs through the history. It needs people like Nazarbaev, a semi-democratic leader, easily manageable. The West tries to chng this experienced person with a young ‘democrat’ and constantly points to the lack of democracy, to correction as though this illness does not exist in any other place. It would like to have a leader that would be easy to manage. Nazarbaev played with the west and with Georgia too before elections 2007. Now he doesn’t need any of them and orients to Russia. He is in Putin’s and Russia’s boat, that is why he has sighed a December Revolution agreement according to which gas exportation to any country of Europe will be maintained via Russia.
Kazakhstan has changed its attitude towards Georgia, to please the only enemy of the country – Russia. This is the way it is. Georgia doesn’t have economic or political problems with any of its neighbors except Russia, a country that does not approve Georgia’s independence, unity, and wealth. Russian imperial goals are clear and obvious and it is called competitiveness on energy and transport market. Energy market shares that Russia owns do not seem enough, it wants more, it wants a total hegemony. Kazakhstan, Turkmenistan and Azerbaijan are needed for cooperation; Georgia is needed to be an enemy. Everything is just clear here, but Russia goes on pushing Georgia even after December by means of other neighboring countries.
Georgia and Kazakhstan
Kazakhstan’s business activities in Georgia were serious several years ago. They have made important investments in banking and finances, tourism infrastructure and gas supplying business. They have bought Tbilgazi – Tbilisi gas supply business, with a condition to invest USD 200 million and modernize old network. Even after two years there are no investments, privatization conditions are violated. There is a danger of annulling agreement for violating terms and conditions.
Who is going to be a new owner of Tbilgazi – Sokar- Azerbaijan or a Georgian –Swiss Wissol? It doesn’t matter. What really matters is that Kazakhs are not interested in making investments any more. Besides, Kazakh investors haven’t introduced any amendments or changes in management, neither have they re-equipped anything. Its quite strange.
Kazakh investments were not realized in Batumi either. They violated taken responsibilities in Port as well as in oil business. The same can be said in tourist development sphere.
Why did Kazakh business lose interest in Georgia, where has their investment policy gone? What has made them change their mind?
USD 4 billion financial support was issued with Nazarbaev’s request to assist Banks to overcome international stagnation processes caused by mortgage loan crisis. We believe, Kazakhstan was serving Russia’s orders by that time. It is ,so to say, economically punishing Georgia so that the country’s independent, economic development processes are not encouraged. It’s a fact that Kazakh investments have certain problems related to business transparency and introducing know how.
As for Georgian – Kazakhstan investment relationships, it has changed during the recent period. As it seems they leave Georgia’s gas business and it is some how related to the fact that Kazakhstan denies Nabuko project and denies to participate in Caspian – Georgia – Ukraine – Poland – Europe Brodi-Gdanski Project.
Creation of Kazakstan and Russia gas transportation cartel against European interests is a fact.
The US senate has adopted a low according to which foreign countries are forbidden to create a gas ‘OPEC’ type organizations; more than USD 400 million was allotted in post Soviet Union countries assistance part, mainly directed to weaken Russia’s impact. Russia has still created a ‘Cartel’ and if ‘OPEC” controls about 30% of the world’s oil supply, Russia together with Kazakhstan and Turkmenistan control 45%. Russia becomes more and more rich every day, its economic is growing. Russia’s military expenditure equals to USD 25 billion, the United States’ military expenditures equal to USD 625 billion. Accordingly, Russia, as an empire (consisting of 2 countries, including Chechnya) has more opportunities to use energy potential against post Soviet Union countries, Eastern and Southern Europe, and finally Europe as a whole. The obvious example to it is that Gasprom supplies the following countries with gas and has the following prices: Georgia – USD 280, Byelorussia – USD 107, Armenia – USD 110. a gas in a civilized world should be sold on stock exchange and price should be formed according to supply and demand.
Besides, Russia has very specific plans. It tries to distinguish Bulgaria form Nabuko Project. Putin offered Sofia to sign Russia’s and Italians joint project – ‘the South Stream’. Its worth noting that Medvedev, Russia’s future president and a head of EN corporation Paulo Scaroni signed mutual expluatation of a pipeline in Rome, summer of 2007. Medvedev would represented Gasprom and pipeline from Tuapse would crossing Black Sea and reach Bulgaria, then Greece (See #10, 2007 Sakartvelos Ekonomika) and then Italy. Construction of the pipeline requires about USD 10 billion. But Russia presented Italy’s gas supply plan to the world in 2006; it should be done through Turkey and it was named ‘Blue Stream- 2’. (ENI was the first who realized Black sea submarine pipelines and it is Gasprom’s partner) It was turkey’s turn to be punished. Russia has chosen another way to weaken Nabuko.
Nowadays Russia’s allays are Germany, France and Italy. It tried to join to itself Hungary, Greece, Bulgaria and Holland with the South Stream. According to experts, if Russia controls 2/3 of Europe’s gas supply now, in the nearest future –by the year of 2015- it will cover 85% of European gas market.
Gasprom – a company half owned by a state (but in a realuty it is 100% owned by a state), its base capitalization equals USD 350 billion, becomes a new tool for Russia’s expansion. It been effectively confronted neither by the US nor by Europe. Maybe it is the matter of time only. Today Gasprom own 20% of the world’s supply and it hasn’t increased yet. Perhaps it decreases in the future, but when? after 20-30 years
Russia has conduced negotiations with the Western Europe and the east, doomed Georgia, Baltic countries, even Poland, where he has effectively changed the prime minister, tries to take trade barriers and discuss current pipeline exploitation terms. The only country that opposes Russias energy hegemony and expansion in Europe is Georgia. The country doesn’t find any of Caucasian routs suitable. Therefore, what are the issues that Georgia and Russia should discuss at this stage? How can an economic or political situation caused by the above mentioned reasons improve? No way! It doesn’t have any perspective and will hardly be improved. Russia is not content with huge buisiness in Georgia – Tbilisi electricity supply – Telasi, Tbilisi water supply, business of chemicals, banking sector! Still it is not enough. Selling Railway, I think there is a model, but it has absolutely no perspectives. Russia wants Georgia to be its subordinate, just like Kazakhstan, Turkmenistan, Byelorussia, Uzbekistan. Although there is another way out – to Europe and the US to support Georgia in this fight and Russia to see no perspective in this fight.
Yet, France, Italy and Germany will turn into Russia’s Energy partners; will Europe sacrifice justice to the Russian Gas? It is a fact – Russia has created a gas ‘OPEC’ !