TPT November 2008

Oil & Gas News

The Georgia-Russia war and the geopolitical shift in the Caucasus

pipelines in the Caspian because ‘this can bring harm to the ecology of the sea’ . Exporting countries can send their gas out via either the Russian Federation or Iran. Given the existence of ‘such possibilities’ , the Iranian diplomat asked, why harm the delicate ecosystem of the Caspian? Why, indeed? Mr Goble saw Tehran as signaling its willingness to thwart the stated goal of the US and some Western European

“With Iran’s declaration that it opposes the construction of any undersea pipelines in the Caspian Sea on ‘ecological grounds’ and thus will block any delimitation of the seabed that allows for it, and Azerbaijan’s decision not to back the West’s push for the Nabucco gas pipeline, Moscow can claim its first major political victory” from the Georgia-Russia war in August. This is the stark analysis of Times Topics blogger Paul A Goble, who is director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and was a senior research associate at the EuroCollege of the University of Tartu. While in Estonia he launched www.windowoneurasia.blogspot.com, to which he is a regular contributor. Mr Goble observed that the Russian government will now have full and uncontested control over pipelines between the Caspian basin and the West that pass through Russian territory. “That does not mean, of course, that Moscow now has effectively re-established its control over the states of this region,” he said. “All of them have other interests besides oil and gas. But it does mean that Russia has won a major victory. And the West, which all too often in recent years has focused on oil and gas alone, has suffered a major defeat.” ( ‘Moscow’s big victory on pipelines,’ 5 September). On 4 September, Mehti Safari, Iran’s deputy foreign minister, told journalists that Tehran opposes the construction of any undersea

countries for any prompt completion of the Nabucco pipeline that would transport natural gas from Turkey to Austria via Bulgaria, Romania, and Hungary. And, he noted, because Washington opposes the flow of hydrocarbons from the Caspian basin out through Iran, “Tehran’s action in fact makes it likely

The Russian government will now have control over pipelines between the Caspian basin and the West

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that many oil and gas exporting countries in the region will now choose to send more or even all of their gas and oil through the Russian Federation, a longstanding geopolitical goal of Moscow’s.” ■ The sudden geoeconomic and geopolitical shift in Russia’s favour in the Caucasus was made manifest during US Vice President Dick Cheney’s brief visit to Azerbaijan on the first leg of a tour that included Georgia and Ukraine. Mr Goble writes that, according to Russian media reports, this did not go well, beginning with Mr Cheney’s 3 September reception at the airport in Baku by lesser lights of President Ilham Aliyev’s administration. Mr Cheney was then let cool his heels before his meeting with Mr Aliyev, from which he emerged sufficiently dyspeptic to skip a ceremonial dinner held in his honour. President Aliyev has expressed his commitment to ‘a balanced foreign policy’ that navigates between Moscow and the West. But, as duly noted by Mr Goble of the Azerbaijan Diplomatic Academy, now that Moscow has recognized the two breakaway republics of Abkhazia and South Ossetia as independent states, that balance is rather different in the vicinity of the Western-backed energy corridor intended to bypass Russia. “The game has changed,” he wrote, probably without much fear of contradiction. [The state-run Azerbaijan Diplomatic Academy opened in March 2007 for fast-track training of staff for the country’s many new embassies abroad. The school is headed by a former Azerbaijani ambassador to the US and attracts faculty and lecturers from leading Western institutions.] Global review discloses total oil investment was flat last year Outlays by the world’s oil and gas companies for exploration and development projects totalled $402 billion in 2007 – unchanged from 2006, according to the annual upstream performance review published 4 September by corporate advisors Harrison Lovegrove & Co Ltd (London) and oil and gas research firm IHS Herold Inc (Norwalk, Connecticut).

Photo courtesy of Thyssenkrupp Stahl AG

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N ovember 2008

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