Mikhail Krutikhin: Streams in Dreams

It doesn’t look as a coincidence. On the eve of Dmitry Medvedev’s visit to Ankara a group of Turkish experts left for Baku to prepare a comprehensive agreement on supplying Azerbaijani gas to the planned Nabucco pipeline.

The agenda of the Russian president focuses on the South Stream project of Gazprom as Moscow keeps wheedling the Turks for allowing this pipeline to pass through the economic zone of Turkey in the Black Sea. Without this vital permission, the whole project will collapse despite a multitude of non-obliging—but overhyped—intergovernmental memorandums of understanding the Russians have secured along the route of their pet project.

> South Stream On The Map Of Europe
> Specifications of the South Stream Project
To cajole Ankara, policymakers in Moscow have already compromised some of their advantages. They have agreed to assume the role of a minor partner in Turkey’s project of the Samsun-Ceyhan oil pipeline—a project that makes their own Burgas-Alexandroupolis pipeline redundant. Gazprom has also dropped the take-or-pay clause from its gas supply contract with Turkey, saying farewell to around $7 billion of missed annual profit. The list of Russian concessions is growing, but the Turks are still eager to show that they may prefer Nabucco after all, and the agreement with Azerbaijan is another piece of this puzzle.

> Nabucco Pipeline Map
After hearing what the Russian president has to offer in addition to earlier proposals Turkish Prime Minister Recep Tayyip Erdogan will reportedly go to Baku to sign an agreement on May 16 and facilitate the construction of Nabucco. The agreement will settle such issues as the price of Azerbaijani gas; volume of gas deliveries to Turkey; transit tariffs for gas that will go across the Turkish territory to Europe; and Azerbaijan’s quota of independent gas sales on Turkey’s domestic market.

To soften the attitude of the Turkish negotiators, Azerbaijan has signaled it can do without Nabucco. On April 13 it signed an intergovernmental memorandum with Georgia and Romania to launch a project of delivering Azerbaijani gas across the Black Sea to Europe in either liquefied or compressed form. In addition, Baku keeps playing on Turkish feelings by announcing possible increase of gas sales to Russia and Iran. The feints are apparently making effect.

Turkey can easily agree to host both competing pipelines—and reap benefits from both Russia and Nabucco’s promoters in the EU. This is exactly what the European governments are doing along the route of these pipelines. They promise assistance to each of the parties and then wait and see which one comes first.

The double-pipe solution will come out costly for Gazprom as the Europeans appear determined to diversify sources of supply rather than routes. If the Russians nevertheless keep insisting on having the South Stream built it may come as another proof that Gazprom is really interested in splitting the construction budget among friendly contractors rather than in the ‘safety of gas deliveries’.