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Central asia: it's a gas

LONDON. March 26. KAZINFORM. Amid concerns about dependence on natural gas from Russia, the EU is looking towards Central Asia. This week German foreign minister Frank-Walter Steinmeier and other top European Union diplomats are flying to the Kazakh capital of Astana to confer with their counterparts from the Central Asian nations. The leading item on their agenda is to be the hydrocarbon riches of Kazakhstan, Turkmenistan, Azerbaijan and Uzbekistan, with the main stress on natural gas. Though overall only a quarter of EU's gas needs come from Russia, almost a dozen EU members depend wholly or overwhelmingly on Gazprom, the leading Russian hydrocarbon company. They include Finland, Estonia, Latvia, Lithuania, the Czech Republic, Slovakia, Austria, Hungary, Poland, and Bulgaria. Germany receives almost half of its gas supplies from Gazprom, and France and Italy nearly a quarter each. Reversing the policies of his predecessor, Boris Yeltsin, who allowed Russia's key assets - oil, gas and metals - to be sold off at scandalously cheap prices to private companies, the Kremlin under President Vladimir Putin, began reclaiming oil and gas resources, starting with Mikhail Khodorkovsky's Yukos Oil Company. As a consequence, the state-owned Gazprom became the country's biggest corporation, with market value of $250 billion - ahead of BP and lagging behind only ExxonMobil - owning more than a fifth of the world's gas deposits. Such a predominant position in the gas market strengthened Moscow's hand in playing the geopolitical game of hydrocarbons. When Ukraine failed to meet Gazprom's demand for a higher price for the natural gas being sold to it at below market rates, Gazprom shut off supplies on January 1, 2006, freezing Ukrainians and hurting their industry, and marginally reducing the gas flow to the destinations further west. Ukraine relented. Moscow's behaviour caused alarm not only in Brussels but also Washington. It gave impetus to EU members to diversify their gas imports. "Europe needs more gas," said Lt Colonel Marcel de Haas, a former Dutch defence ministry expert on Russian security who is now a scholar at the Netherlands Institute of International Relations. "It needs to diversify in order to weaken its dependence on Russia. The game is clear in Central Asia, the new region for power politics." In June 2006, Andris Piebalgs, the EU's energy commissioner, announced the formation of a consortium of five companies from Austria, Bulgaria, Hungary, Rumania and Turkey to erect a 2,050-mile (3,330 km) long pipeline. Tentatively named Nabucco, the pipeline, costing $6.5 billion, will be designed to carry natural gas from Iran at first and, then from Azerbaijan and finally from Kazakhstan connected by a pipeline under the Caspian Sea. It would start at Turkey's borders with Iran and Georgia, and pass through Bulgaria, Romania and Hungary, and terminate in Austria. As it is, a pipeline carrying Iranian gas into Turkey already exists. This was a result of the government of Turkey - a long-time member of Nato eager to join the EU - being driven by the compulsions of its energy needs to defy Washington's Iran Libya Sanctions Act (ILSA) of 1996 which barred investment in Iran's hydrocarbon industry. Within a fortnight of ILSA being enacted on August 5, 1996, Turkish prime minister Necmettin Erbakan signed a $20 billion natural gas deal with Iran to last until 2020. A decade later, a similar compulsion has led EU leaders to overlook the rigged elections and blatant human rights violations by the regimes in the dictatorial and semi-dictatorial Central Asian republics, and court them to import the badly needed natural gas. But it may be too late. Already Gazprom has signed a deal with Kazakhstan requiring it to sell its total export and transit gas capacity to Gazprom. Turkmenistan has agreed to sell Gazprom all of its export surplus natural gas for the next quarter century. And in Uzbekistan, another source of gas, Gazprom has booked most of that republic's transit pipeline network until 2010. This ties up neatly with the conclusion of the Centre for Eastern Studies in Warsaw, Poland, that Gazprom has a long term, triple-headed aim: control not just the gas deposits in Russia and elsewhere but also pipelines to the EU and central European exports to the EU. Gazprom's short-term objective is to sabotage the Nabucco pipeline project. It has already co-opted Hungary, an EU member, to extend its present Blue Stream pipeline - running under the Black sea, from Russia to Turkey - to Hungary where Gazprom is busily establishing vast underground storage facilities. The slogan "Hydrocarbons rule okay" has never been truer, Kazinform quotes Guardian Unlimited.


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