The Great Oil Triangulation

by Joshua Foust on 4/5/2007 · 1 comment

Petro-politics in general are damnably complex, and often serve to underscore the (in my estimation) fundamental chaos of the international system. Though the power relationships between oil producers and oil consumers are relatively fixed in the Middle East, the last decade has seen a huge scramble for extraction and distribution rights—especially around the Caspian Sea.

Underscoring this, Vasili over at neweurasia wrote a really good background piece on the area’s current big energy issues—the Nabucco project (which would pump oil from Azerbaijan to the rest of Europe, and was recently pushed forward another step by an MoU between Baku and Washington), and a new Russian pipe that will travel from Bulgaria through Greece to the Mediterranean.

Kazakhstan now wants in on the new Russian pipe. Here’s what puzzles me: Azerbaijan has been furious with Russia ever since it got caught up in Russia’s Gas Games a few years back. Why would the Kazakh energy minister make such an announcement—that they want to cooperate with Russia on developing new energy sources that avoid the BTC pipe—in Baku?

On a broader picture, this could present some trouble in the coming years. Keith C. Smith, of CSIS, has been on a publication offensive concerning Europe’s lack of a clear energy policy with regards to Russia, including a recent article in the Georgetown Journal of International Affairs. The gist of his work is that Russia has, through the clever use of bilateral or trilateral arrangements, solidified its position as the dominant energy bully in both Europe and Eurasia—not just snatching up ownership rights to refineries and distribution points in Western Europe but also securing exclusivity contracts with Turkmenistan, Kazakhstan, and Uzbekistan.

Kazakhstan, at least, doesn’t seem to be jumping into Russia’s arms so much as exploiting every opportunity it has to pump oil. The big problem is that Russia continues to successfully insert itself as the middle man between Central Asia and the rest of the world (though almost entirely Europe). As such, it gives Putin a measure of control of his Near Abroad that is totally out of proportion to Russia’s military and economy on all other terms. How well this bodes for eventual liberalization, even a fair election or two (or maybe just an end to the systematic abuses), no one can really say. But I’m not optimistic, as Russia doesn’t seem to care about human rights—not even in its own borders.

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This post was written by...

– author of 1848 posts on 17_PersonNotFound.

Joshua Foust is a Fellow at the American Security Project and the author of Afghanistan Journal: Selections from His research focuses primarily on Central and South Asia. Joshua is a correspondent for The Atlantic and a columnist for PBS Need to Know. Joshua appears regularly on the BBC World News, Aljazeera, and international public radio. Joshua's writing has appeared in the Columbia Journalism Review, Foreign Policy’s AfPak Channel, the New York Times, Reuters, and the Christian Science Monitor. Follow him on twitter: @joshuafoust

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{ 1 comment }

Bonnie Boyd April 5, 2007 at 9:33 pm

Dear Joshua,
You are right that Russia has an outsized influence over Eurasian oil transit, and you are also right that distribution avenues convey power as much or more than ownership at the wellhead does. It is a kind of dependency.
EU states are pretending that they are acting in aggregate, but all of them are cementing bilateral and trilateral deals as fast as possible-just as you mentioned. The one smart thing the EU is doing is developing alternate energy sources. The EU-Russia Energy Charter isn’t worth much as long as Russia holds the hammer and the price is high. Alternate technologies will not change the stakes, but it will make the fuel market a lot more complex. Of course, both Russia and Kazakhstan have uranium, too.
The other complexity is that the rest of Russia’s economy is still stagnating. We don’t notice that they have development disease because oil prices have given them a lot of revenue. Russia has a huge treasury and has paid off a lot of debt on high oil prices, but little of that money has been invested in social goods or alternate exports.
Clifford Gaddy at Brookings is all over this issue. After you listen to what he has to say for a sentence of two, you wonder why Europe is caving in so quickly. But I think it’s a little tougher for Kazakhstan and Turkmenistan to anger the bear.
Great post! One of my favorite topics.

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