TPT November 2008

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Oil & Gas News
The Georgia-Russia war and the
geopolitical shift in the Caucasus
“With Iran’s declaration that it opposes the construction of any
undersea pipelines in the Caspian Sea on ‘ecological grounds’ and
thus will block any delimitation of the seabed that allows for it, and
Azerbaijan’s decision not to back the West’s push for the Nabucco
gas pipeline, Moscow can claim its first major political victory” from
the Georgia-Russia war in August.
This is the stark analysis of Times Topics blogger Paul A Goble, who
is director of research and publications at the Azerbaijan Diplomatic
Academy. Earlier, he served as vice dean for the social sciences
and humanities at Audentes University in Tallinn and was a senior
research associate at the EuroCollege of the University of Tartu.
While in Estonia he launched ,
to which he is a regular contributor.
Mr Goble observed that the Russian government will now have full
and uncontested control over pipelines between the Caspian basin
and the West that pass through Russian territory. “That does not
mean, of course, that Moscow now has effectively re-established
its control over the states of this region,” he said. “All of them have
other interests besides oil and gas. But it does mean that Russia
has won a major victory. And the West, which all too often in recent
years has focused on oil and gas alone, has suffered a major
defeat.” (‘Moscow’s big victory on pipelines,’ 5 September).
On 4 September, Mehti Safari, Iran’s deputy foreign minister, told
journalists that Tehran opposes the construction of any undersea
pipelines in the Caspian because ‘this can bring harm to the
ecology of the sea’. Exporting countries can send their gas out via
either the Russian Federation or Iran. Given the existence of ‘such
possibilities’, the Iranian diplomat asked, why harm the delicate
ecosystem of the Caspian?
Why, indeed? Mr Goble saw Tehran as signaling its willingness
to thwart the stated goal of the US and some Western European
countries for any prompt
completion of the Nabucco
pipeline that would transport
natural gas from Turkey
to Austria via Bulgaria,
Romania, and Hungary.
And, he noted, because
Washington opposes the
flow of hydrocarbons from
the Caspian basin out
through Iran, “Tehran’s
action in fact makes it likely
that many oil and gas exporting countries in the region will now
choose to send more or even all of their gas and oil through the
Russian Federation, a longstanding geopolitical goal of Moscow’s.”
■ The sudden geoeconomic and geopolitical shift in Russia’s
favour in the Caucasus was made manifest during US Vice
President Dick Cheney’s brief visit to Azerbaijan on the first
leg of a tour that included Georgia and Ukraine. Mr Goble
writes that, according to Russian media reports, this did not
go well, beginning with Mr Cheney’s 3 September reception at
the airport in Baku by lesser lights of President Ilham Aliyev’s
administration. Mr Cheney was then let cool his heels before
his meeting with Mr Aliyev, from which he emerged sufficiently
dyspeptic to skip a ceremonial dinner held in his honour.
President Aliyev has expressed his commitment to ‘a
balanced foreign policy’ that navigates between Moscow and
the West. But, as duly noted by Mr Goble of the Azerbaijan
Diplomatic Academy, now that Moscow has recognized the
two breakaway republics of Abkhazia and South Ossetia as
independent states, that balance is rather different in the
vicinity of the Western-backed energy corridor intended to
bypass Russia.
“The game has changed,” he wrote, probably without much fear
of contradiction.
[The state-run Azerbaijan Diplomatic Academy opened in
March 2007 for fast-track training of staff for the country’s many
new embassies abroad. The school is headed by a former
Azerbaijani ambassador to the US and attracts faculty and
lecturers from leading Western institutions.]
Global review discloses total oil investment
was flat last year
Outlays by the world’s oil and gas companies for exploration and
development projects totalled $402 billion in 2007 – unchanged
from 2006, according to the annual upstream performance review
published 4 September by corporate advisors Harrison Lovegrove
& Co Ltd (London) and oil and gas research firm IHS Herold Inc
(Norwalk, Connecticut).
The Russian
government will
now have control
over pipelines
between the
Caspian basin
and the West
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Photo courtesy of Thyssenkrupp Stahl AG