Saturday, November 28, 2009

Pipeline Puzzle

In Europe, the movers and shakers are always gabbing about the continent's security being... secured by 'diversifying' their energy resources.

That, of course, means weaning itself off as much as possible from Russian gas. Here at the Informant, we'll be updating important developments in the great Energy Game.

An interesting article appeared in the Czech daily "Mlada Fronta Dnes" on Nov. 18th reporting about another gas pipeline on the drawing boards. This one called "Gazela" (play on the word gas?) Would bring gas in from Belgium through the Czech Republic and back into Germany.

There is some grumbling in the Czech Republic in particular with the mayor of one town where the pipeline would begin saying it would bring no benefit to his town, or to the Czech Republic for that matter.

Czech energy gurus disagree, saying the pipeline is "strategic", making the Czechs a player in the gas game.

The gas from Belgium would come from another planned pipeline, the North Stream.

This is part of a two-pronged pipeline strategy the Russians are using to get around pesky states, like Ukraine, Poland and Belarus, who either siphon off gas, don't pay for it, or want to charge more for shipping it across their territory.

The Czech eagerness to facilitate Russian gas strategy points out to the dismal failure European Union bigwigs have had in crafting a unified 'energy strategy' It ain't working. EU states are doing what's best in their interests, not in the interests of the EU as a whole.

Russian Prime Minister Vladimir Putin had to laugh about EU energy solidarity on a recent visit to Paris. According to reports, Putin secured deals bringing France's EDF into the South Stream pipeline project. According to Gazprom, EDF will take a 10 percent stake in the project.

As AFP points out:

Italy's ENI is already a partner in South Stream, while German firms are working with Russia on a second pipeline, Nord Stream, that runs under the Baltic Sea to western gas markets, again bypassing eastern Europe.

AFP also reported:

The French energy giant GDF-Suez confirmed it was in talks to buy a nine percent stake in Nord Stream "which should contribute to the continuous strengthening of cooperation between Gazprom and GDF-Suez."

So, the Russians have the Italians, French as big investors on South Stream; the Germans on North Stream with the Frech looking to get in on the deal. Other countries who still fear the Kremlin, like the Czech Republic, and Hungary feel they can't stay on the sidelines.

They play both sides, signing up with the Russians, while talking out of the other side of their month about their backing for the Western-backed and complicated Nabucco pipeline project.

What it all means for Europe as a whole is hard to say, but the idea that Europe can unite to sideline Moscow is fanciful at best.

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