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Analysis: Energy crisis in the Caucasus

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by Stefan Nicola
Berlin (UPI) Aug 21, 2008
The war in Georgia was not mainly about energy, as some have said, but it highlights the vulnerability of energy deliveries through the Caucasus and threatens future projects in the region.

Pipeline security can be quite a fascinating topic, even to the standards of a James Bond movie. The 1999 blockbuster "The World Is Not Enough" deals with the construction of an oil pipeline through the Caucasus, from the Caspian Sea to the Mediterranean coast of Turkey; it is called "King pipeline" in the film, but it is obvious what pipeline is really meant: the Baku-Tbilisi-Ceyhan, which transports oil from the Azeri-Chirag-Guneshli field in the Caspian Sea via Azerbaijan and Georgia to Ceyhan, a port on Turkey's Mediterranean coast.

Shortly before the war between Georgia and Russia captured headlines, an explosion and fire in eastern Turkey (the Kurdish rebel group Kurdistan Workers' Party claimed responsibility, but Turkish officials denied the fire was man-made) shut down parts of the BTC pipeline. The world's second-largest oil pipeline, the BTC is a key element of the West's strategy to diversify its energy exports and become less dependent on Russian deliveries.

Moscow wanted to have part of the BTC pipeline run through its territories, but when that was denied, it refused to join the project. British Petroleum leads the project companies, and Washington became one of its greatest supporters. The BTC pipeline pumps oil to customers in Turkey and Western Europe, and Russia can't do much about it -- or can it?

Russia's offensive into Georgia included attacks on military facilities, but there are also reports that the Russian military, while pulling out, is destroying vital energy infrastructure.

While Russia denies this, its military presence in the country forced shut a pipeline transporting some 100,000 barrels of oil a day from Azerbaijan to the Georgian port of Supsa, after shippers declared force majeure, a legal option contractors can fall back on if circumstances beyond their control make work at a pipeline impossible. A natural gas pipeline from Azerbaijan to Georgia and Turkey was also shut down for several days because of the fighting. All over the country, Russia with vessels and ground troops has been blocking ports, streets and railroads, severely impeding deliveries and transit of oil-related products in or out of the country. Georgian President Mikheil Saakashvili has stated repeatedly that the country, because of its transit role that undermines Russia's energy influence, was a recipient of aggression. That some Central Asian countries, the Caucasus and the Caspian region -- formerly parts of the Soviet Union -- have become a key transit region for Western energy deliveries is more than a thorn in the eye of the Kremlin.

Nevertheless, experts say the Georgian-Russian conflict was not an energy war.

"Energy resources certainly were not the main reason for Russia's military campaign; that would be simplifying the conflict. It wasn't a war about oil," Uwe Halbach, Caucasus expert at the German Institute for International and Security Affairs, told United Press International in an interview. "But of course it plays into the whole thing. New pipeline projects are now in question. At least they have to be re-evaluated for security reasons."

Observers are concerned that some planned projects, including the Nabucco pipeline and the Odessa-Brody-Gdansk-Polotsk oil pipeline, are on hold because of the difficult security situation in the region. At best, the crisis demonstrates that the West needs to provide better security for the pipelines designed to bring oil and gas into Europe.

And there is even greater potential for problems flaring up in the region, according to an expert.

"Any troubles between Armenian and Azerbaijani minorities in Georgia could potentially re-ignite a dormant conflict between Azerbaijan and Armenia over who controls the disputed Nagorno-Karabakh region," Sergei Blagov wrote in a commentary for ISN Security Watch. "Such an eventuality may put an end to any plans of sustainable oil and gas supplies from Azerbaijan and Central Asia circumventing Russia."

There is some good news, however: The BTC pipeline will resume work next week, officials said.


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