Pipeline politics: Georgia and energy security

Abstract

The development of new energy export infrastructure, which bypasses Russia, has constituted a fundamental element of US and European engagement with the Caucasus in recent years, but has, to some extent, undermined Moscow's hegemony in an area that it considers to be its own ‘strategic backyard’. This article examines the validity of the argument that Russian military intervention in Georgia in August 2008 was motivated by so-called ‘petro-politics’ and a desire to punish Tbilisi for its overt pro-Western orientation. It analyses the significance of the pipelines that transit Georgia and their implications for European energy security, together with the potential consequences of the 2008 conflict for future infrastructure developments.

Keywords:

• energy
• infrastructure
• hydrocarbons
• energy security
• sphere of influence
• geostrategic
• security environment
• investors
• pipeline
• geopolitical
• transit
• vulnerability
• dominance

Notes

 1. Daniel Fried, US–Russia Relations in the Aftermath of the Georgia Crisis, 5.

 2. In recent years the G8, EU, US Congress and White House have all put energy security back to the top of their agendas. For further analysis of the issue of energy security see Daniel Yergin, ‘Ensuring Energy Security’.

 3. For further details, see S. Frederick Starr, The New Silk Roads.

 4. See, for example, Svetlana Skarbo and Jonathan Petre, ‘The Pipeline War’; David R. Francis, ‘Petropolitics at heart of Russia-Georgia Clash’; and John Roberts, ‘Georgia falls victim to pipeline politics’.

 5. For further details, see Daniel Yergin, The Prize, 43–5.

 6. Bantz Craddock, Statement before the House Armed Services Committee, 13 March 2008, 7.

 7. Charles Tannock, Report on the European Neighbourhood Policy, 10. This reinforced the opinion of the earlier Gahrton report, which asserted that the South Caucasus region would become increasingly important for energy supply to the EU.

 8. Towards a Secure, Sustainable and Competitive European Energy Network, 3.

 9. International oil prices jumped over US$1.70 per barrel over fears of supply disruption because of the military conflict in South Ossetia. Brent crude was trading at US$115.10 in London on 11 August 2008 up from US$113.33 on 8 August, while Nymex crude rose US$1.16 to US$116.36.

10. Both Azerbaijan and Armenia have been far less vocal about their desire to integrate with Western security structures such as the EU and NATO than neighbouring Georgia. Nevertheless, continuing integration with NATO is a key strategic goal of Azerbaijan's foreign policy and the government has welcomed the Euro-Atlantic alliance's growing interest in the South Caucasus. Armenia is Russia's closest ally in the region and Yerevan has sought a close relationship with Moscow to counterbalance what it perceives to be its vulnerable position between two countries that are antagonistic towards it: a militarily powerful Turkey and increasingly strong Azerbaijan.

11. For example, the EU flag is displayed next to the Georgian flag in all official buildings in Georgia. Integration into both NATO and the EU represent key priorities for Georgia's foreign and security policy-makers, warranting dedicated sections in the country's National Security Concept (approved by parliament in 2005) and its Foreign Policy Strategy for the period 2006–2009.

12. Foreign Policy Strategy 2006–2009, Ministry of Foreign Affairs, at http://www.mfa.gov.ge, p. 15.

13. Georgia has witnessed a significant amount of assistance from the US: financial support for Georgia to date totals over US$1 billion, making Georgians the second biggest per capita recipients of American aid after the Israelis. The US$64 million ‘Train and Equip’ (GTEP) programme, which ran from 2002 to 2004, was replaced by a 16-month, US$64 million Sustainment and Stability Operations Programme (GSSOP) launched in 2005.

14. Izvestiya, 31 March 2008, http://www.izvestiya.ru.

15. Russian Minister of Foreign Affairs Sergei Lavrov, Commentary on the Speech of British Foreign Secretary David Miliband in Kyiv on 27 August 2008. http://www.mid.ru/brp_4.nsf/e78a48070f128a7b43256999005bcbb3/9eef4de1d8fddd4bc32574b4001e8521?OpenDocument.

16. Quoted in Nezavisimaya Gazeta, 16 August 1997.

17. The Straits constitute a key ‘chokepoint’, a point that is critical to the global oil trade because of the amount of crude that passes through, but which could easily become blocked, either as the result of an accident or a terrorist attack. There are also major concerns about the environmental risks posed by further growth in oil-related traffic along the Bosporus through the heart of Istanbul. For further details see Christopher Slaney, ‘Turkish Concern for Bosporus Complicates Oil Transport Scenarios’.

18. A total of 10 million barrels of oil from the Azeri-Chirag-Guneshli fields in the Azeri sector of the Caspian Sea were required to complete the filling of the pipeline and the first cargo of oil transported through the pipeline was exported from Ceyhan in June 2006.

19. S. Frederick Starr & Svante E Cornell, The Baku-Tbilisi-Ceyhan Pipeline, 87. The study also estimates that the pipeline will lower the level of unemployment by over 30% and contribute to a rise in GDP. Georgia has the right to take up to 5% of the annual gas flow through the SCP in lieu of a tariff. If it does not take this it will be obligated to pay a fee. In monetary terms, this quantity is equivalent to around US$17 million per year. It can also purchase a further 0.5 billion cubic metres of gas a year at a discounted price.

20. Nezavisimaya Gazeta, 27 October 2008. http://www.ng.ru/courier/2008-10-27/12_georgia.html.

21. See http://www.kmg.kz.

22. ‘Transit of Kazakh oil via Baku-Tbilisi-Ceyhan pipeline boosts regional security’, BBC Monitoring (online version), Panorama, Almaty, 19 September 2008, p. 9. Hopes that Russia's stranglehold on Caspian energy supplies could be further reduced were dashed in May 2007 with the announcement that Moscow had reached agreement with Kazakhstan and Turkmenistan to construct a pipeline around the shore of the Caspian Sea, to boost exports of Turkmen gas to Russia. This planned pipeline will connect with the Central Asia-Centre (CA-C) link that joins Central Asia to Russia.

23. Starr and Cornell, The Baku-Tbilisi-Ceyhan Pipeline, 17.

24. The Iranian route down to the Persian Gulf would have been the shortest, cheapest route and would also have offered direct access to Asian markets. However, the idea of Iran profiting from Caspian resources was unpalatable to the US administration. For further details of US interests in the Caspian region, see The Caucasus and Caspian Region: Understanding US Interests and Policy .

25. See, for example, Francis, ‘Petropolitics at heart of Russia-Georgia Clash’.

26. Svante Cornell questions the timing of this attack, the only terrorist attack against the BTC to date and occurring two days before the Russian incursion. When viewed together with the PKK's historical ties to Moscow, Cornell wonders ‘whether this was indeed a coincidence’. See Cornell, ‘Pipeline Power’.

27. ‘Saakashvili Says Russia Hit Pipeline; BP Unaware’ Civil Georgia, 12 August 2008. http://www.civil.ge/eng/article.php?id = 19066.

28. Stanislav Pritchin, ‘Georgia hits its transit potential’.

29. According to Saakashvili, Nabucco is of ‘fundamental importance for Georgia’ as it would mean ‘hundreds of millions of investments [sic] in Georgia's infrastructure and energy sector.’ ‘Saakashvili Tasks ex-PM Gurgenidze to ‘Lobby’ Nabucco’, Civil Georgia, 30 January 2009. http://www.civil.ge/eng/article.php?id = 20355.

30. ‘Turkey tries to revive EU drive’, BBC News, 19 January 2009. http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/europe/7837145.stm.

31. United States-Georgia Charter on Strategic Partnership, signed in Washington DC on 9 January 2009. http://www.mfa.gov.ge.

32. United States-Georgia Charter on Strategic Partnership, signed in Washington DC on 9 January 2009. http://www.mfa.gov.ge, 2.

33. BBC Monitoring (online version), Turan news agency, Baku, 0000GMT, 17 November 2008.

34. ‘Situation in Georgia: MEPs say Russia must honour its commitments’ Press Release, 3 September 2008, European Parliament, Press Service, Directorate for the Media, Ref: 20080902IPR35954.

35. EU Energy Security and Solidarity Action Plan: Second Strategic Energy Review .

36. Towards a Secure, Sustainable and Competitive European Energy Network, 14.

37. Towards a Secure, Sustainable and Competitive European Energy Network, 6.

38. The audit, conducted by UK consultancy firm Gaffney, Cline & Associates, put the best-case volume of gas at South Yolotan–Osman at 6 trillion cubic metres (Tcm), but said there could be as much as 14 Tcm. ‘Striking energy gold in the Caspian’ Jane's Foreign Report (online version), 15 December 2008.

39. Azerbaijan is keen to maintain a balance in its relations with Moscow and consequently has been far less vocal about its desire to integrate with Western security structures such as the EU and NATO than neighbouring Georgia.

40. The offshore field is thought to contain as much as one trillion cubic metres (Tcm) of natural gas and is expected to yield around 25 Bcm per year for export. Phase 1 of the development is currently exported to Turkey via the SCP. Phase 2 should come on stream in 2013 and will eventually produce up to 20 Bcm per year.

41. ‘Gazprom Eyes Libyan Gas, Oil Exports’, RFE/RL, 10 July 2008. http://www.rferl.org/content/Gazprom_Eyes_Libyan_Gas_Oil_Exports/1182810.html

42. Izvestiya, 31 March 2008. http://www.izvestiya.ru.

43. S.S. Zhil'tsov, I.S. Zoni and A.M. Ushkov, Geopolitika kaspiiskogo regiona, 110.

44. S.S. Zhil'tsov, I.S. Zoni and A.M. Ushkov, Geopolitika kaspiiskogo regiona, 131.

45. It is also important to remember that a lot of Moscow's posturing on the international stage is intended for domestic consumption. The Russian military action in Georgia has played well with the domestic audience and the popularity ratings of both Putin and Medvedev rose in the wake of the conflict. Despite presiding over a roll-back of democratic freedoms, Putin remains a very popular leader credited with bringing order and stability back to Russia after the turmoil of the 1990s.

46. V. Socor, The Frozen Conflicts.

47. Putin caused uproar both amongst Russian liberals and Western observers with his statement in April 2005 that ‘the Soviet Union's collapse was the biggest geopolitical catastrophe of the century’. Many interpreted his comments to indicate neo-imperialistic strategies and his nostalgia for the Soviet Union. Nevertheless, it is important to consider his statement from the Russian perspective: that the country has suffered a series of geopolitical losses since the collapse of the Soviet Union in 1991, from the first wave of NATO enlargement, to the alliance's military action against Serbia over Kosovo and the so-called ‘coloured’ revolutions in Ukraine and Georgia.

48. See ‘Dissertatsiya Vladimira Putina: otkuda vzyalsya skandal’, Polit.ru, 13 December 2005. http://www.polit.ru/analytics/12/13/lopatnikov.html.

49. Energeticheskaya Strategiya Rossii na period do 2020 goda, 37.

50. Interview with Sergei Lavrov, Rossiiskaya Gazeta, 7 October 2008, http://www.rg.ru.