This article, authored by Veton Qoku, was originally published in Energy World Magazine.
Since the end of the Cold War, the Black Sea region has gained even greater political and economic importance and has become the subject of a dominance battle between world powers including the United States of America, Russia and the most influential member states of the European Union. While these world powers battle for dominance, local players such as Turkey and Ukraine have also gained importance and have used their geopolitical position to promote themselves as key international policy players.
The Black Sea region has, throughout history, represented an area of global interest. As one of the most important strategic east-west corridors between Asia and Europe (that connects Europe, Russia, Central Asia, and the Middle East), the region has often been at the heart of political tension, economic interest and military aspirations.
The importance of the Black Sea region is more evident in no other but the energy sector. This region has become one of the most important crossroads through which both Russia and the European Union are trying to exert energy sector control, particularly in the area of natural gas.
On the one hand, Russia is trying to maintain its dominance in Europe's energy sector. It has attempted to bypass the troublesome Ukraine as a transit country (although this has been, at least partly, achieved with the construction of the Nord Stream pipeline, which transports natural gas from Russia through the Baltic Sea to North-eastern Germany), while at the same time denying Ukraine and Moldova alternative gas supplies.
On the other hand, the European Union is trying to decrease its Russian energy dependency by using the Black Sea region to bypass Russia and to purchase natural gas directly from alternative Caspian Sea suppliers (thus reducing Russia's political leverage in the Caucasus Mountains, the Black Sea region, and in South-eastern Europe).
The European Union seems to have based its strategic goal to decrease Russian dominance in Europe's natural gas market on both political and economic/ financial reasoning. While the political reasoning is self-evident, the economic/ financial reasoning may perhaps be best explained by referring to an article from the Russian newspaper "Izvestia" containing a list of prices of Russian gas sold in different European countries. Specifically, this price list indicates that countries that are heavily dependent on Russian gas pay a much higher price in comparison to countries that have a liberalised gas-to-gas market.
Nabucco vs South Stream
The broader Black Sea Region, encompassing the twelve Black Sea Economic Cooperation member states (Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Serbia, Turkey and Ukraine) has had more than its fair share of proposed oil pipeline projects, reflecting the importance of this region for the European energy sector.
What started off in the early and mid-nineties as a rivalry between two highly promising large gas pipeline projects, the EU-backed Nabucco and the Russian-backed South Stream, seemed to have finished ingloriously for both parties and projects.
Specifically, Russia officially dropped the South Stream natural gas pipeline project in late 2014 due to complications related to regulatory challenges and non-compliance with the EU's Third Energy Package, particularly in the area of ownership unbundling which would have required the separation of Russian companies' generation and sale operations from their transmission networks.
The Nabucco project also seems to have hit a major stumbling block (although the project has not officially been cancelled or dropped yet). Namely, the decision of the members of the Shah Deniz II Consortium to select the Trans Adriatic Pipeline (as part of the Southern Gas Corridor) as the delivery route for the initial 10 bcm of gas to the Italian market has posed some serious challenges and has left Nabucco's shareholders in a difficult position regarding the future of the project.
Alternative pipeline projects
Since the original European and Russian rival projects (seem to) have fallen through, both the European Union and Russia have quickly turned their attention to the next geopolitical battle.
The European Union now seems poised to offer its support behind the Southern Gas Corridor project which would include three separate but interconnected segments of one gas pipeline corridor:
- the already functional South Caucasus Pipeline;
- the Trans-Anatolian Natural Gas Pipeline – TANAP (expected to be constructed by 2018); and
- the Trans Adriatic Pipeline – TAP (expected to be constructed by 2018).
The Southern Gas Corridor will ultimately transport natural gas from the Shah Deniz gas field in Azerbaijan, through Georgia, Turkey, Greece, Albania and the Adriatic Sea to Italy. Moreover, the corridor will have the possibility for further connections to gas networks in South Eastern, Central and Western Europe.
Russia is unlikely to sit idly by as the Southern Gas Corridor project is under development. In its latest move, Russia has indicated that it will attempt to effectuate the suggested natural gas pipeline project from Russia to Turkey across the Black Sea and then to the Turkish-Greek border. The suggested annual capacity for this pipeline is 63 billion cubic metres (same as that which was planned for the South Stream project). The projected pipeline remains without an official name as of yet, however it has been referred to as the Turkish Stream in the media.
Russia seems to be on the diplomatic offensive side in obtaining support for the Turkish Stream project with Russian President Vladimir Putin holding talks on this subject matter with both his Turkish and Greek counterparts Recep Tayyip Erdogan and Alexis Tsipras respectively. The foreign ministers of Serbia, Hungary, Greece, Turkey, and Macedonia also recently held a meeting to discuss their potential participation in the Turkish Stream pipeline project.
The role of the Western Balkans
EU candidate countries Albania, FYROM, Montenegro and Serbia, as well as potential applicants Kosovo and Bosnia-Herzegovina, would all like to benefit from the planed pipeline projects and to avoid being bypassed by gas pipeline developments in the region. Moreover, all of these countries are, to the best of their leadership's abilities, attempting to become transit countries (instead of a cul-de-sac) with respect to any pipeline that may cross through their territory, which would in turn give them a greater geopolitical and economic stake in these energy developments.
Russia's natural gas dominance in the region would surely be diminished by the development of the Southern Gas Corridor pipeline, leaving the possibility for Western Balkan countries to become more energy secure open.
The full article is available at: http://www.energyworldmag.com/11/05/2015/world-the-gas-pipelines-the-cold-war-and-the-black-sea-region/