Until Georgia's ill-advised transgression, Kazakhstan had been expressing great interest in shipping more oil through the BTC, interest that had been garnered by Azerbaijan, which also was keen to see Kazakh oil move through its capital in Baku. Those years of interest and plans now appear threatened by Saakashvili's self-induced instability. On August 10, Azerbaijan suspended shipment of 200,000 bbls of oil to the BTC pipeline, while Kazakhstan dry-docked all vessels and tankers that had been "filled with oil" and moved the oil to storage. Plans for the Trans-Caspian Gas Pipeline (TCGP), which would bring Turkmen gas to Azerbaijan, are now most certainly doomed in the near to mid term, as energy expert Pavel Baev says, "a trans-Caspian gas pipeline can be considered a forever buried chimera." The planned Nabucco pipeline, a natural gas pipeline extension of the Baku-Tbilisi-Erzurum line, is also mired in uncertainty.
Most importantly to the big board energy players, no one has any real understanding of why exactly Saakashvili launched his ill-fated, foolish attack, and it is that kind of uncertainty -- the uncertainly of dealing with someone not entirely hinged -- that is also causing problems for Georgians and Azerbaijanis, as it is now widely expected that future oil transit plans will seek to avoid rather than exploit the Georgian transit route. This doesn't mean that current capacity will go unused, at least in the long term. Although the recent moves by Kazaskstan cause one to wonder with what the BTC will be filled, if not Kazakh oil, unused carrying capacity cannot continue for long under the current price/demand regime. Overall, however, Saakashvili has seriously compromised consideration toward future investment in Georgia, at least until he is gone.
Naturally, there are a multitude of pipeline projects on the Central Asian table, many if not all them creating sizable headaches for the sizable heads in Washington, who can only see their glorious visions of benevolent global hegemony swirling around the international drain of irrelevance and despair. In the immediate aftermath of the Georgian conflict and a result of the disruption of supplies from Azerbaijan, Iran and Turkey announced, in a joint meeting in Istanbul, that Iran would boost natural gas exports to Turkey. Turkish pipeline company, Botas, announced that increased gas imports from Iran were being implemented "in order to compensate for a reduction in Azerbaijani supplies."
Furthermore, Iranian President Mahmoud Ahmadinejad and Turkish President Abdullah Gul are expected to agree on an "enhancement of an energy partnership," with deals to develop gas fields in Iran and build a new gas pipeline expected to cost $600 million. In anticipation of this agreement, India also expressed keen interest in joining the Medstream pipeline project running from Turkey and thence through Israel, ironically enough, carrying, in part, quantities of Iranian gas. The project is a cluster of five pipelines transporting oil, gas, water, electricity and fiber optics. Both Russia and Azerbaijan, too, are indicating a willingness to use the pipeline for the transport of oil and gas, bypassing Georgia altogether.
Despite its intention to sign an agreement on the long-sought Iran-Pakistan-India (IPI) pipeline, India's interest in the Medstream project comes in light of ongoing difficulties with the vaunted IPI pipeline, difficulties that have mostly arisen from Pak intransigence on transit fees and now rising tensions between the two countries on the Kashmir borders region. Though the transit fee issue has been resolved, the border conflict could prove a hurdle to cooperation on the IPI. However, with Musharraf on the verge of ouster, Indo-Pak border troubles may find themselves also on the wain. And that situation may ease further since China has also expressed interest in joining the IPI pipeline. Even though Musharraf is now pledging to face impeachment charges about to be brought against him by Pakistan's parliament, the president's political demise is certain. Nonetheless, the IPI pipeline deal, in the works now for more than fifteen years, is still on the rails.
The IPI project is a cornerstone in the much larger plans for the pan-Asia energy grid, and both the Clinton and Bush administrations have been trying to scuttle the IPI pipeline for years now, first by proposing the competing Turkemenistan-Afghanistan-Pakistan-India (TAPI) pipeline, a project made far more tenable by US-led regime change in Afghanistan. But as anyone can glean from news out of Afghanistan, the TAPI pipeline is still-borne. But once that became apparent, the US-India nuclear deal came with a proviso that India withdraw from the IPI project, something that India steadfastly refused to do. Therefore, the biggest extant problem for the "peace pipeline" project will be CIA-backed Ahwazi and Jundallah terror groups based in Baluchistan, the southwest region of Pakistan through which the route of the IPI pipeline is planned. Unless the sans-Musharraf government can expunge CIA operatives there, no peace should be expected for the peace pipeline.
Beyond the Caspian basin, further work moves forward on a massive pipeline project planned to bring Turkmen gas to China. Ground has now been broken in Turkmenistan, Kazakhstan and Uzbekistan on the proposed 6500+ km long natural gas pipeline, and the signed agreement will have China conducting geologic exploration and development of the massive Turkmen gas fields that will feed the pipeline. Chinese geologists have assessed that the Bagtiyarlyk fields hold upwards of 1.6 trillion cubic meters natural gas, while the recently discovered Osman-South Yoloton region is expected to yield over 3 trillion cubic meters. Signaling Russian approval of the Turkmenistan-Shanghai pipeline is actual Russian participation in the project, as Stroytransgaz was awarded a 400 million euro contract to build natural gas facilities for the pipeline project as well as lay the 188 km section of pipe in Turkmenistan.
From this perspective, all US and EU plans for creating natural gas sources and corridors outside the control of Russia have been effectively shuttered. Russia could entirely negate the presence of the Georgia petroleum corridor, a possibility that looms large in the face of continued posturing by Saakashvili and various, apparently clueless, United States officials. The foundering TAPI pipeline, with its source in Turkmenistan, is now dependent upon Russian approval. Since this western-backed pipeline was meant as a competitor to the Iranian-based IPI pipeline, and considering the alignment of Moscow and Tehran, the prospects for the TAPI pipeline have grown entirely dim. Furthermore, any talk of a trans-Caspian gas pipeline is now, if not moot, hardly a route that excludes Russia from the equation. If the Georgian conflict did not already render the Nabucco pipeline dead, filling that potential pipe will also depend upon Russian approval. In short, Russia is now the sole source supplier of Caspian natural gas to Europe, regardless of route. The only other energy alternative for Europe is Iran, which also imports 14 billion cubic meters of gas annually from Turkmenistan. Considering the alignment of Russia and Iran, this is really no alternative at all. Though halting at times, Europe must now completely reconsider its ill-advised support of US agitation against the Iranian regime.
What is most notable in all this activity is that it has all been accomplished within a regime of cooperation, while the Bush administration continues to flail about, waving arms madly and issuing threats dressed up as warnings. But Russia has now essentially checkmated western powers on the issue of energy dependence and this carries, or should so carry, a potent counterbalance to the usual US foreign policy bluster, which now always seems to be nothing but the threat of military encroachment or force. Saakashvili's petulant move has only served to highlight the failures of current US foreign policy and the continued petulance of Washington can no longer be seen as a viable path either for Europe or the United States. The foreign policy establishment in Washington would do well to take heed of the examples of cooperation that are breaking out across Asia and elsewhere, because all of it has happened while Washington's countenance has been its most aggressive and, by these accounts, its most failed.
