Nabucco: 'Pie in the sky' after Georgia crisis?

By EurActiv. The EU's flagship Nabucco pipeline project, which aims to bring gas to Europe from countries other than Russia, notably via Georgian territory, appears to be up in the air due to the crisis currently pitting Moscow against Tbilisi.

The Georgia crisis prompted many analysts to look at the situation on the ground "with their energy spectacles on". While most commentators stop short of saying that the main thrust of the Russian advance in Georgia was pipeline politics, all seem to agree that doubt has been cast as to the reliability of Georgia as a major transit country to bring oil and gas supplies to Europe. In particular, the Nabucco gas pipeline is seen as a direct victim of the developments.

Georgian officials have been complaining for a long time that their country has become a victim of pipeline politics. President Mikheil Saakashvili reportedly claimed that the very fact that Georgia is already home to an oil line, the Baku-Tbilisi-Ceyhan (BTC) pipeline, designed with the precise aim of circumventing Russia in mind, was a major reason for the Russian assault.

One branch of the BTC, which runs from Azerbaijan on the Caspian Sea through Georgia and then on to Turkey's Mediterranean coast for shipment, ends at the Georgian port of Supsa, which was blockaded by the Russian navy during the current crisis.

"Russia is showing it controls this corridor," says Giorgi Vashakmadze, an energy executive in Georgia, quoted by the Wall Street Journal. "The Caspian region is wondering what this means for the future," laments Vashakmadze.

"After the military conflict with Russia, Georgia cannot be marked on oil and gas maps as a safe transit route, and no amount of support from NATO can change this alteration," says Pavel K. Baev, research professor at the International Peace Research Institute in Oslo, quoted by the Moscow Times.

Regarding the Nabucco project, Ed Chow of the Center for Strategic and International Studies is quoted by the Washington Post as saying Russia has raised serious doubts in the minds of Western lenders and investors that such a pipeline through Georgia would be safe from attack or beyond control of the Kremlin. He adds that this pipeline "has always looked more like a diplomats' pipe dream than a viable economic project".

"Its promoters had not only failed to secure supply and transit agreements but also had yet to identify an oil company eager to champion the project and finance the pipeline," states Chow.

The press agency Forbes also notes that while Russian troops are still in Georgia, the Russian state-controlled natural gas monopoly Gazprom has offered to buy all of Azerbaijan's gas exports. If Azerbaijan agrees, it could spell disaster for Western plans to decrease reliance on Russian supplies of natural gas. But, as with Russia's occupation of Georgia, the West will have little opportunity to stop the deal, says a Forbes analysis.