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It's Time To Get Serious On The Southern Corridor

Is there a producer in the house? Nabucco Gas Pipeline signing ceremony in Ankara on July 13

Is there a producer in the house? Nabucco Gas Pipeline signing ceremony in Ankara on July 13

Is Western energy policy in the Black Sea-Caspian region finally coming together? Are the fortunes of the ill-fated Nabucco pipeline finally looking up?

Looking at media coverage of the Nabucco signing ceremony on July 13, one would think the strategic project to bring Caspian natural gas to European markets while bypassing Russia was already under construction.

In addition, reports surfaced that Bulgaria's new government has softened its exclusively pro-Russia stance on energy, signing on to another alternative pipeline, the Turkey-Greece-Italy Interconnector (ITGI), and casting doubt on its commitment to Russia's pet project, South Stream.

While these developments are important milestones in realizing what the EU has dubbed the Southern Corridor to diversify its energy supply, both are only early steps in the quest to see the full vision implemented. And competing visions are still on track to eclipse EU and U.S.-backed ambitions.

Energy Theater

South Stream, which would traverse the Black Sea to avoid troublesome transit states, is increasingly being unmasked as the geopolitical theater that it is: the 24 billion-euro price tag quoted by Russia's Kremlin-controlled natural-gas monopoly Gazprom is inordinately expensive; its stated capacity of 63 billion cubic meters of gas a year is fantastical given its undersea construction; and its projected 2015 completion date is highly unlikely given that Russia does not have deals in place with the region’s producers to fill the pipeline.

But Gazprom's Blue Stream II, which would provide Russian gas to Turkey, and potentially European consumers from there, seems far more likely to be realized. And the Nord Stream route -- directly from Russia to Germany and deliberately bypassing Poland and the Baltic states -- is the furthest along of any new major European pipeline project, with a realistic completion date of 2012.

Sections of the Western-oriented, 1.2 billion-euro ITGI are already functional and barring unexpected roadblocks the project should also be finished by 2012. That said, it is a relatively small-capacity route, with just 8 bcm of Azerbaijani gas planned to eventually reach Italian consumers.

The Producers

Nabucco, which would tap into newly developed Azerbaijani gas fields for its first phase, and Turkmen or Iraqi reserves to reach full capacity, is planned to carry 31 bcm to Austria's Baumgarten gas hub through Turkey, Bulgaria, Romania, and Hungary. These transit states all signed the dotted line on July 13, but so far no producer countries have been brought on board. Baku has long pushed for Nabucco's realization and even signed a symbolic deal with Moscow last month to underscore the consequences of stalling on Western-oriented routes. But Azerbaijani gas alone is not sufficient.

For the Southern Corridor to be successful, the EU, together with the Nabucco consortium partners, needs to put together attractive and comprehensive offers for producer countries: Azerbaijan, Iraq, and Turkmenistan. These will not only require adequate monetary incentives, but political components that focus on institutional engagement, within the energy sector and without.

Caspian producers can just as easily accept lucrative deals from Russia, China, or Iran: governments that are far more proactive in pushing for signatures. Now that a Nabucco transit agreement has been signed, European decision makers will have to step up their game to finish putting together the projects they have started. Now is not the time to celebrate -- now is the time to get serious.

Alexandros Petersen is Dinu Patriciu fellow for Transatlantic Energy Security and associate director of the Eurasia Energy Center at the Atlantic Council in Washington. The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL

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