9.11.2009

Foreign Affairs Friday: Russian Gas

Russia has the world's largest reserves of natural gas (about 44 trillion cubic meters, for those counting at home). Not content to merely make money off of this gas, Russia also uses it as a political weapon. And a very potent weapon it is, because Russia supplies 25% of the EU's gas, and also controls most of the gas that comes out of Central Asia. Eastern European nations that were once part of the Soviet Union, such as Ukraine and Belarus, are particularly reliant on Russian gas. Russia uses this leverage to try to keep these countries from becoming too close to the West. Russia has shut off gas to Ukraine twice in recent years (in the dead of winter, when it is most needed) during pricing disputes. Clearly, it is in the best interest of Europe to diversify its gas supplies, and for Central Asia to diversify its customer base.

The way to do this is with new pipelines that bypass Russia. Unlike oil, which can be hauled anywhere via ship, natural gas is generally transported by pipelines, which are expensive and serve to tie producing and consuming countries together into long-term relationships. Currently, there are few pipelines that bypass Russia. One proposal, the Nabucco pipeline, would carry gas from Azerbaijan and potentially Turkmenistan to Turkey and then on to Europe.


Russia doesn't want to see diversification, of course. The South Stream pipeline on the above map is Russia's planned response. If they can lock up gas supplies, in order to keep them out of Nabucco, then that project would fail.

Russia has several advantages in this battle. One, all the existing pipelines that go through Russia. Two, their big gas company, Gazprom, is state-owned, so it works closely with the government. Three, the EU is made up of a number of countries, and getting them all to agree on the same energy policy is not easy.

As with most issues these days, the impact of China is important, as its gas requirements grow. It gives Russia another customer, which could potentially lead to increases in gas prices and more leverage over Europe. But it also gives Central Asian gas producers a new customer, which hurts Russia's attempts to monopolize natural gas.

There are signs, though, that nations like Azerbaijan, Turkmenistan, and Kazakhstan want to sell gas to Europe. There are also indications that Eastern European countries are willing to get to work on building new pipelines. It is in the US' interest to free Russia's neighbors from its gas-fueled clutches. The battle over natural gas is only going to get hotter.

2 comments:

Rachel said...

Tangent: did you see the thing about how Margaret Thatcher told Gorbachev she didn't want Russia to pull out of Eastern Europe, or for Germany to reunite?

Craig said...

I heard about the Germany part, and I was aware that Britain and France were wary of unification, which is understandable, considering the havoc a united Germany wrought in the 20th century. I heard a poll not too long ago that said a number of Germans wished they'd stayed separate. I think this was mostly a Western attitude, based on resentment over having to pay money to bring East German up to modern standards. But overall, we can look back and say that unification was A-OK.