Sourcing more natural gas from the 'Stans' looks like a way for Europe to lessen its reliance on Russia, but there are plenty of roadblocks
Watching some of their citizens forced to shiver through one of the coldest winters on record after Moscow cut natural gas supplies to the Continent via Ukraine last month has only brought home what most European leaders have long known: Europe has to reduce reliance on Russia for its energy needs.
"We have to stop simply talking about energy security in Europe, and start doing something about it," said European Commission President Jose Manuel Barroso on 20 January, the day the pricing dispute ended with the signing of a new 10-year gas supply contract between Moscow and Kyiv.
But how? For years the EU has eyed Turkmenistan, Kazakhstan, and Uzbekistan as potential new sources for its gas imports, around 40 percent of which pump from Russia now.
"The EU has realized for a long time that it needs to foster good energy relations with Central Asia," said an EU official who asked to speak on background because of the sensitivity of energy relations between Brussels and Moscow. "What changes now is the importance with which this is looked at. Everybody now realizes that [the way] for the EU to avoid such crises is to use other sources of gas supply. It must diversify."
Central Asia could conceivably be this source of diversification. Together the three "Stans" have more than 7 trillion cubic meters of proven gas reserves, or around 4 percent of the global share, according to data from the U.S. Energy Information Administration. And much of this gas isn't harvested yet.
But in this case the distance between conceivability and feasibility is long. For several reasons, not the least of which is strident competition from Russia, a meaningful EU-Central Asia energy partnership is unlikely.
Today, nearly all the gas that leaves the Stans goes through Russia. The EU's best near-term hope for securing direct Central Asian imports in the coming decades is the Nabucco pipeline. Unfortunately, though, it looks more like a pipe dream than a reality.
One of Europe's most expensive and complicated energy proposals, Nabucco aims to bring in gas from Azerbaijan and Central Asia (primarily from Turkmenistan) via Turkey, bypassing Russia. The project has progressed glacially since its inception in 2002, but this year's gas crisis has reinvigorated political will to realize Nabucco by 2013. The EU held a Nabucco summit 27 January in Budapest, where Czech Prime Minister Mirek Topolanek called the pipeline "of paramount importance to the freedom of the continent."
But not a single section of the pipeline has been built, several rival, Moscow-backed projects seem to undermine the economics of Nabucco – the projected cost of which has skyrocketed to $10 billion or more – and neither Azerbaijan nor Turkmenistan has explicitly committed to supply the gas, although Azeri President Ilham Aliev said in Budapest he supports the project.
Furthermore, even if the Stans sign on, these governments have already inked separate, large-scale transit and supply deals with Russia and China that have committed much of their harvestable gas to these two countries through the next decade.
There's concern that "there's not enough gas available in Central Asia to support Nabucco," the EU official said. "Central Asian countries have already sold much of their gas to Gazprom, so it's unclear how much they could contribute."
Azerbaijan could supply only one-third of Nabucco's planned 31 billion-cubic-meter annual capacity. Gas giant Iran and even Russia have been mentioned as alternative suppliers, but these are politically unpalatable and ironic choices, respectively.
Russia is also doing its damnedest to keep Europe out of Central Asia. Concerned that Uzbekistan might warm to European overtures on natural gas supplies following the Russia-Ukraine standoff, Russian President Dmitry Medvedev flew to Tashkent just days after the crisis ended. There he secured the Uzbeks' support for a new trans-Russian gas pipeline that could exceed Nabucco's planned capacity within 10 years.
In Central Asia, it's starting to look as if Moscow and, to a lesser extent, Beijing, with their deep pockets and lack of compunction on the atrocious human rights records of some Central Asian countries, may have already outmaneuvered Europe. In any case, Nabucco would meet only around 6 percent of the EU's natural gas needs by 2020. Further developing these countries' energy infrastructure – dilapidated, in the cases of Turkmenistan and Uzbekistan – to raise output and building new, secure transit routes to get that gas to market will require a monumental investment. Europe may lack the political will and cash for such an undertaking.
"I personally think that region could represent a huge source of gas," said Shamil Yenikeyeff of the Oxford Institute for Energy Studies. "[T]he case for gas pipelines from Central Asia probably has a large number of supporters in Europe, but it's also a question of where the money is going to come from, especially in the times of the financial crisis."
Option B, anyone?