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21.07.2009

“NABUCCO” GAS PIPELINE AND ARMENIA

   

Sevak Sarukhanyan

1 (medium)“Nabucco” gas pipeline is one of the most ambitious energy projects. It supposes the construction of large gas pipeline network from Central Asia to Iran and Azerbaijan, which can supply the EU countries up to 80 billion cubic meters of gas annually.

April and May 2009 were rather eventful and this was connected with large energy projects. “Natural Gas for Europe: Security and Partnership” summit, which took place on April 24-25 in Sofia, laid the first real foundation for the implementation of “Nabucco” gas pipeline project, which is of strategic importance for Europe. And on May 8 during “South Corridor: New Silk Road” summit in Prague the joint declaration on the construction of “Nabucco” pipeline was signed by the representatives of Azerbaijan, Georgia, Turkey and Egypt.

The signing of that declaration is of interest for Armenia due to several reasons.

Firstly, the project of the pipeline is carried out in our region and it would create new infrastructural relations in the line of import of Caspian and Iranian gas to the European market.

Secondly, the pipeline is directly connected with the political relations, which, despite the fact whether the gas pipeline goes through Armenia or not, concerns our interests.

Thirdly, amid the normalization of the Armenian-Turkish dialogue and activation of the negotiations on Nagorno-Karabakh one may have an impression that it is possible that “Nabucco” would go through the territory of Armenia.

To go into all the aforementioned problems, including the last one, which is the most important for Armenia, it is necessary to turn to the essence of “Nabucco” project, as well as to the signing of the Prague declaration.

Certainty and uncertainty of “Nabucco”

In one thing “Nabucco” is definitely certain, i.e. it is directed to the reduction of the role of Russia as the main supplier of natural gas to Europe. This is the main and the only aim of the project.

The idea of the gas pipeline, which emerged in 2003, is closely connected with the logic and spirit of two other projects – Baku-Tbilisi-Ceyhan oil pipeline and South Caucasus gas pipeline (Baku-Tbilisi-Erzurum). These two projects were supposed to create alternative routes for the supply of Caspian oil and gas to world market round Russian territory. Here it is necessary to pay attention to the fact that the new pipelines could not and cannot influence international energy balance; they do not suppose any oil or gas production volume growth. Baku-Tbilisi-Ceyhan and South Caucasus gas pipeline are created to diversify the routs of hydrocarbon resources supply. Azerbaijani oil and Central Asian hydrocarbons were supplied easily to world markets, and they can still be supplied, without new pipelines but only through the territory of Russia, and Baku-Tbilisi-Ceyhan and South Caucasus gas pipeline were supposed to reduce its role. “Nabucco” is based on the same logic but with one peculiarity. And the only peculiarity of “Nabucco” is that as opposed to the pipeline built in South Caucasus it goes to new, vast and undeveloped gas pools of Iran. Iran, which is the second in the world in the context of gas resources, do not export considerable volume of gas and the gas pipeline going to Armenia and Turkey influence neither global energy balance nor the energy security of the EU.

Under such conditions “Nabucco” can become a real and considerable project if Iranian gas is pumped through the pipeline. But (and this is the problem of all the regional energy projects) “Nabucco” is not only energy project but it is also political project. And the political developments in the region, the deepening of the confrontation between Iran and the USA compelled to exclude Iran from the priorities of “Nabucco”. As a result, in 2004 “Nabucco” became a project, which was oriented to get natural gas from Azerbaijan, Central Asia (for this purpose Transcaspian pipeline should be built), Egypt and Iraq. In 2005 Iraq falls out of the project as the civil war in that country came to prove its unreliability as a long-term energy partner. During next two years the project was actively discussed in the context of the activation of European foreign policy in Central Asia. Death of Turkmenbashi and the election of the new leader of Turkmenistan gave hope that this country could join the project soon. In 2008 the relation between Baku and Ashgabat activated, the president of Turkmenistan even visited Azerbaijan for the first time. This allowed supposing that the project of Transcaspian gas pipeline, without which Turkmen gas couldn’t be supplied to Azerbaijan and “Nabucco”, would be carried out soon. But further developments came to prove that the EU and the US would not breakthrough in the line Central Asia.

Last year Iran “returned” to “Nabucco” project. After the election of B. Obama as the US president and the statement of his intentions to improve the relations with Tehran served as a political signal to start the negotiations with Iran on the “Nabucco”. At the beginning of 2009 Turkey, represented by the prime-minister, initiated active lobby of Iran’s participation in “Nabucco”. R.T. Erdogan even stated in Brussels that there was no sense to build the gas pipeline without the participation of Iran.

And indeed, the joining of Iran to the project may lay foundation for its implementation. But there are no official talks with Tehran regarding “Nabucco” started and one cannot state that in case such talks are initiated they will have a fast and positive effect. Iran is very hard negotiator and the recent experience proves that this country is not the one to make fast decisions. The negotiations on the construction of Iran-Armenia gas pipeline had lasted for eight years, and the negotiations on the construction of Iran-Pakistan-India began in 1995 and nothing but for the signing of the declaration has been done for a while. The official statements by the minister of oil of Iran that the country is interested in “Nabucco” means nothing in the Iranian political context. Interesting and striking example: at the beginning of March Iranian minister of oil stated that Iran was ready to embark on the negotiations on the joining to “Nabucco” and at the end of March the same minister stated that the construction of Iran-Iraq-Syria gas pipeline and liquefied natural gas plant construction was priority, meanwhile “Nabucco” was not of great importance for Iran”.

Declaration of construction

Back on the topic of the Prague declaration we can state that Iran, Kazakhstan, Turkmenistan, Uzbekistan have not signed it. Two gas exporting states, which have signed the declaration – Azerbaijan and Egypt – do not play essential role in the global gas production. And not only. The signing of declaration by Azerbaijan has another important peculiarity. The point is that there has already been South Caucasus gas pipeline, which supplies Azerbaijani gas to Turkey without any trouble. Having 25-30 billion cubic meters annually flow capacity, South Caucasus gas pipeline can pump Azerbaijani oil to Turkey without any problem. It follows that the signature of the Azerbaijan’s representative under the declaration and the joining of Baku to “Nabucco” project will make any definite contribution neither to the project nor to the European energy security. Summarizing all said above we can make several conclusions:

  • “Nabucco”, in its essence, is generally anti-Russian project,
  • The project is rather uncertain; it has undergone various changes for recent years and, probably, it is still to be changed,
  • Generally, at a given stage “Nabucco” project can hardly be regarded as successful and the signed declaration will not make any essential changes in global energy security.

But at the same time it is obvious that in the years to come the lobby of joining the project by Iran and Central Asian countries will intensify and this will naturally:

  • Provide to the strong resistance on behalf of Russia,
  • Become a real boost to the regional political relations,
  • Continue to influence project, change its mode, maybe, making it more definite.

Armenian prospects

The aforementioned factors should lay the foundation for starting the discussion of the prospects of joining the project by Armenia, and ignoring those factors makes any forecasts and projects on our participation in the construction of the gas pipeline rather subjective and unreal. And this is equally important, because you cannot connect directly and roughly the problem of Armenia’s joining the project with the thaw in the Armenian-Turkish relations. The opening of the border with Turkey is really closely connected with the energy future of our country. The normal inter-state relations with Turkey will have positive effect on the development of energy sector of Armenia. Setting the export of electricity to Turkey will create good basis for carrying out new large-scale projects directed to the development of energy producing capacities, i.e. the construction of new Nuclear power plant, finishing of the construction of the 5th block of Hrazdan thermoelectric plant, full-fledged usage of Iran-Armenia gas pipeline, the construction of Hydroelectric plant and etc. But it is wrong to say that Armenia would join “Nabucco” project automatically. To take part in that project special concentration of forces is necessary, because from the point of view of geography Armenia is not the most practical way to supply gas to Europe. It is not excluded that by the coincidence of circumstances Iran-Armenia gas pipeline can be extended so that it can re-export Iranian gas to Turkey or Georgia, with the prospect of its joining “Nabucco”. It may seem that such a policy contradicts to the spirit of Armenian-Russian strategy partnership, but at the same time, if Iran joins “Nabucco”, it will be important for Russia that a part of Iranian gas would go through Armenian gas pipeline network, which belongs to “ArmRusGasprom” CJSC. Not to speak of the fact that this company will provide the extension of Iran-Armenia gas pipeline flow capacity, build new pipelines, which, however, will be at the balance of the company.

We think that at the current stage one can speak and think about the prospects of Armenia joining “Nabucco” project. Of course, there is a chance that this prospect will never become real for us, but active policy may bring to positive results.

Armenia has acquired high level of energy system stability, which is a result of real and long work done both by the authorities and biggest energy company in the republic – “ArmRusGasprom”. It is necessary to preserve stability today, to provide conditions for foreign investments, and to think about Armenian investments in the foreign energy assets, which is quite real. At the same time under the conditions when the countries of Central Asia are deprived of direct energy transportation connection with global markets and Iran is mainly closed for foreign investments, the acquisition of energy assets in those countries is more plausible than after everything is changed. And in our opinion Armenia is fated to acquire such assets because without them the long-term stability of energy system may be under the threat.


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