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Turkmen Gas Riches Revive Pipe Dreams

The announcement this week that Turkmen gas riches may exceed the West's wildest dreams is likely to focus attention back on pipeline projects that bypass Russia in pumping Caspian energy supplies to European markets.

White Stream, a pipeline first proposed by Ukrainian officials in 2005, is just one such project that looks set to come under the spotlight following a Western audit of a key gas field in Turkmenistan, which showed that the Central Asian country has enough reserves to become a "world-class" gas supplier. White Stream and proposed projects such as the trans-Caspian and Nabucco pipelines are aimed at enhancing Western energy independence by transporting Caspian gas supplies to Europe while skirting Russia.

"The interest and attention toward Turkmenistan will rise and we must expect even more heated competition for Turkmen gas," says Federico Bordonaro, a Rome-based energy analyst. "We will see how the European Union and United States are able to quickly react in such a way that the trans-Caspian, Nabucco, and White Stream pipelines will be more realistic."

But real work has yet to begin on any of those projects, which for now remain no more than pipe dreams. Indeed, the Caspian region still only has one route for energy exports that bypasses Russia: the relatively modest Baku-Tbilisi-Erzurum (BTE) pipeline.

White Stream aims to change that. Formerly known as the Georgia-Ukraine-European Union pipeline, White Stream would run 2,000 meters under the Black Sea, its preferred route going from Georgia to Ukraine's Crimean coast and on to Europe. Plans call for building in three phases with an eventual output of 32 billion cubic meters (bcm) annually.

With Europe's thirst for energy supplies expected to double over the next two decades, the need for such a project is increasingly obvious, says Giorgi Vashakmadze, White Stream's corporate development chief.

Two alternate Black Sea routes for the White Stream pipeline
According to the results of a British company's survey on October 13, one Turkmen field, Yolotan-Osman, appears to have enough gas to become the world's fourth- or fifth-largest gas reserve. But to tap into it and other Turkmen resources, Vashakmadze says it will take a much more determined show of Western political will to persuade Caspian countries -- already wooed by markets in Russia, China, and Iran -- to back projects like White Stream.

"We have enormous riches in the Caspian,” Vashakmadze told RFE/RL before the gas audit results were announced. "We have a huge demand in Europe, and the issue is why it's not linked yet and why supplies from the Caspian to Europe have not been achieved at a level which would correspond to supply and demand."

Russian Influence

The obvious answer is Russia. The Caspian power for more than 100 years, Russia had a monopoly over the region's gas exports to Europe until the BTE’s completion in late 2006. And now, through its gas giant Gazprom, Moscow is backing South Stream, a pipeline that would pump Caspian gas via Russia to Italy.

Because of Russia's influence over former Soviet republics like Turkmenistan, many analysts see South Stream as the pipeline most likely to be built, even if Gazprom recently delayed its planned launch by two years to 2015. Vashakmadze acknowledges that both White Stream and Nabucco, which he calls complimentary projects, face major hurdles. "Russia does not seem to be irritated by [Caspian gas] deals related to China or maybe even with Pakistan or India [TAPI], but it shows a negative attitude toward deals going to Europe," he says.

Gazprom is currently seeking to increase the amounts of gas it buys from both Kazakhstan and Turkmenistan, eastern Caspian states with which it has long-term supply contracts. Those two countries have shown interest in alternative export routes but have only committed to the Russian one.

To win them over, Vashakmadze says Caspian countries will need to see concrete European interest for much larger amounts of gas and the possibility of unhindered and sufficiently low-risk transportation.

"These countries need to decide if they can afford to contradict what they understand is Russia's desire -- and would they do this for very small volumes -- for peanuts?" Vashakmadze says. "Is it worthwhile to irritate a neighbor and partner for something that really does not bring much benefit? Only in cases where countries can see that potential exports to Europe are sufficiently high, capable of providing a significant part of their future revenues, will they decide to go this way -- otherwise it is not worthwhile for them."

The EU currently sees the Nabucco project as a top priority. This month, however, the EU is considering according the same priority status to White Stream.

That would create an important multiplier effect. "This effect goes far beyond the simple result of establishing bigger combined potential capacity," Vashakmadze says. "A more important result is the dramatic reduction of perceived transportation risks, so important for governments in [the Caspian region] and potential upstream investors."

Planning For Conflict

Risk has risen, however, in the wake of the August war between Russia and Georgia. Some analysts, for example, have suggested that Ukraine's Crimea, the headquarters for Russia's Black Sea Fleet, could in the future become the object of a conflict between Moscow and Kyiv. French Foreign Minister Bernard Kouchner has called Crimea a possible "future South Ossetia," referring to the Georgian breakaway region that Russia says it defended against Georgian aggression.

An alternative, or possibly additional, route for White Stream includes a pipeline to Romania -- either directly from Georgia or from Crimea. White Stream would also make use of already-developed pipeline technology used in Blue Stream, a Russian pipeline to Turkey.

Vashakmadze says that while Russia has shown its willingness to influence the Caucasus, the conflict’s outcome may help push forward Nabucco and White Stream. He says an EU resolution passed on September 1 "cites very loudly the need to develop the alternative supply routes. This probably makes the countries in the Caspian much more confident.... Probably much more needs to be done, but this is the way for us to succeed."

Vashakmadze won't name the project's partners, but says they are "more than 10." He also says White Stream is in constant consultation with shippers and distributors and "all relevant parties who might have gas or might want to transport gas."