Is Caspian Pipeline the Start of a Gas Cartel?
Wednesday, 16 May, 2007
Is Caspian Pipeline the Start of a Gas Cartel?
Wednesday, 16 May, 2007
On May 14, the United States energy secretary Samuel Bodman said the Russian-Turkmen-Kazak agreement to lay a pipeline along the eastern shore of the Caspian Sea with a capacity of 30 billion cubic metres a year capacity was “not good” for Europe, which needs to diversify its energy imports.
Most of Europe’s gas is currently imported via Russian pipelines.
The Caspian pipeline agreement has placed an even greater question-mark over plans for the Transcaspian Gas Pipeline, which would cross the sea and take gas to Europe without going through Russia.
NBCentralAsia observers say the trilateral agreement signed on May 12 could lay the foundations for a Russian-led gas cartel grouping along the lines of OPEC.
“Putin has said the idea of creating an OPEC for gas is interesting. It is likely the agreement signed in Turkmenistan will be the foundation stone for such an arrangement,” said NBCentralAsia observer Daur Dosybiev.
Political scientist Oleg Sidorov said the May 12 energy summit demonstrated that Russia has the political backing of Central Asia’s major energy exporters.
Sidorov said the “gas OPEC” concept “has already been supported by Arab states. Russia only has to enlist the support of its Central Asian partners.”
Both the US and the European Union are getting nervous at the prospect of a gas union that could use energy as political leverage.
NATO economists issued several reports last year analysing the economic and political risks posed by a gas cartel led by Russia. Other possible participants include Qatar, Algeria, Libya, Iran and the Central Asian states, and the grouping would then control 70 per cent of the world’s total gas reserves.
On April 25, the US Senate Judiciary Committee approved a bill that would allow legal action to be taken against law banning foreign states from forming gas and oil cartels similar to OPEC. The decision followed discussions on a possible gas cartel during the April energy forum in the Qatari capital Doha.
However, commentators say that if a new gas cartel does emerge, then consumers and suppliers will find a way of agreeing.
“The US well understands that if it can come to terms with [OPEC] members on oil, it can also reach a consensus with a gas cartel,” said Dosybiev. “It’s always cheaper to cut a deal.”
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
