Vice President Dick Cheney will use his trip to the Caucasus this week to try to loosen Russia's grip on Caspian and Central Asian oil and gas exports. But he may be too late.
Mr. Cheney's objective is to express U.S. backing for an export route that crosses the Caucasus, bypassing Russia. But his visit comes on the heels of a Russian-Georgian war that raised fresh doubts about the viability of that corridor and appeared to enhance Russia's domination of the region's energy flows.
The impression was reinforced Tuesday as Moscow signed a deal to build a new pipeline that will increase the export of natural gas from the Central Asian states of Turkmenistan and Uzbekistan to Russia and onward to Europe. Russian Prime Minister Vladimir Putin also agreed to pay European, market-based prices for Uzbek gas, a move that could lock in supplies that might have fed alternative European pipelines.
In Azerbaijan, Mr. Cheney will seek to secure Azeri natural gas for two high-profile, Western-backed pipelines that, once completed, will flow to the heart of Europe -- one called Nabucco, named for a Verdi opera, and a smaller project, Turkey-Greece-Italy.
The White House said the Kremlin's actions in Georgia have only underscored the need for export routes like Nabucco that dodge Russia. The European Union currently relies on Russia for a quarter of its natural gas, yet fears that Moscow could use its energy exports as a political weapon have prompted calls for the EU to reduce that dependence.
A senior U.S. administration official, briefing reporters on Mr. Cheney's trip, said the war in Georgia had undermined Russia's reputation as a reliable energy supplier and should accelerate Europe's efforts to diversify its sources of oil and gas.
"I don't think anything about this, these recent events, has done anything but reinforce the sense that that basic strategy is important and critical, and one that has to be pursued, if anything with greater energy by us and by our European partners," the official said.
But there are fears that last month's war could harm that strategy by undermining the credibility of transit routes that pass through Georgia. Russia's military blew up Georgia's main railroad during the war, obliging Azerbaijan to suspend oil shipments to Georgia's Black Sea terminals. Oil major BP PLC was also forced to close a pipeline that transports Azeri crude from Baku to the Georgian port of Supsa. And Russian aircraft dropped bombs close to the crucial Baku-Tbilisi-Ceyhan pipeline that pumps 850,000 barrels of oil a day from Azerbaijan via Georgia to Turkey's Mediterranean coast.
"The Russians have demonstrated they can close that corridor through Georgia any time they want," said John Bolton, President Bush's former U.N. ambassador.
U.S. officials reject that. "The Georgian energy corridor is safe," Deputy Assistant Secretary of State Matthew J. Bryza, one of Nabucco's major supporters, told an audience in Brussels Monday. He stressed that Baku-Tbilisi-Ceyhan and the South Caucasus Gas Pipeline, which transports Azeri gas to Turkey, were unaffected by the fighting.
Mr. Bryza also said European energy companies behind Nabucco and the Turkey-Greece-Italy pipeline have told him they are determined to proceed with the two projects. "They haven't slowed down at all," he said. "They are anxious to line up gas supply contracts with Azerbaijan as soon as possible."
But some analysts said the Georgian war could scare off investors, making it hard for the consortium to raise the 7.9 billion euros ($11.5 billion) needed to build Nabucco -- a task already complicated by the global credit crunch. Plans to expand Baku-Tbilisi-Ceyhan's capacity may also be in jeopardy.
"This increases the risk profile enormously," said Jonathan Simpson, head of European projects at international law firm Paul Hastings. "Without the EU and the U.S. stepping in and subsidizing them, they won't get built. And so far they've shown no inclination to do that."
Russia gave no dates in Tuesday's announcement regarding construction or completion of the new Russian pipeline. Construction of Nabucco is scheduled to start in 2010. While the Turkey-Greece section of the Turkey-Greece-Italy pipeline was completed and inaugurated in 2007, construction of the Greece-Italy section is to begin in 2009, with the section scheduled to become operational in 2012.
Prof. Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies, said Nabucco's weakness has always been not the security of the Georgian corridor but the fact there won't be enough gas available in the Caspian region to fill it, at least not until the late 2010s.