Pipedreams and reality. The shifting sands of the global energy landscape are turning into a foreign policy battle ground, a tool used by energy-rich countries to throw their weight around on the world stage, boost their power and implement their ambitions. A world market governed by competition and the rules of the market is little more than a pipedream when it comes to energy.
Do I need to go into specific examples? Turkey has vetoed Gaz de France's involvement in the consortium of the Nabucco project (the members of which, alongside Turkey, are energy companies from Germany, Austria, Hungary, Romania and Bulgaria), and according to seasoned Turkey observers, this is Ankara's response to the French parliament's recent vote recognising the Armenian genocide. Vladimir Putin has again used Gazprom as an instrument of Russian foreign policy, vis-à-vis Serbia this time. At the high point of the Kosovo crisis, Gazprom took control of NIS, the Serb oil industry company, by buying up 51% of its shares. At the same time, Gaz de France, without dropping its aim of getting involved with Turkey over the Nabucco project, issued a press release to say that it was giving itself full room to manoeuvre and also looking at other big Eastern gas supply projects in Europe like South Stream, whose 'great prophet' is none other than Gazprom. As is well known, Nabucco wants to supply the EU with gas from the East without crossing Russia. South Stream is Russia's response to this - it will transport gas from Russia and its neighbours to the EU without crossing Turkey, instead crossing the Black Sea, Bulgaria, Greece, Southern Italy and, now, also Serbia, a transit country for getting to Austria and Northern Italy. South Stream already has the backing of Bulgaria, Serbia and Greece and is being prepared in collaboration with ENI of Italy.
At the same time, information from Moscow suggests a big 'Gas Opec' plan is afoot, mooted a while back by Gazprom and Algerian company Sonatrach, but from which Algeria later withdrew. The new venture would be called Manngo and would comprise Russia, Kazakhstan, Uzbekistan, Turkmenistan and Kyrgyzstan. A meeting will be held on the matter in Moscow in June 2008. Kazakhstan points out to the EU that its main hydrocarbon deposits are located in the European part of the country, which is also the world's third biggest producer of uranium (and hopes to become the world's biggest supplier of uranium in 2010). In Africa, Belgian sources note that the Democratic Republic of Congo has enormous energy resources and the capacity currently installed at the Inga site is barely 4% of the country's potential. It would be possible to transport energy from the Congo to Southern Italy more cheaply than the cost of transporting local energy generated from fossil fuels. At the same time, Gazprom has expressed interest in Kenyan gas.
Is Peter Mandelson being naïve? Amidst this huge political chess game (and I have only cited the moves of direct interest to the EU), EU Trade Commissioner Peter Mandelson's speech in Cambridge on 8 February was astonishing. He argued that the World Trade Organisation (WTO) was the obvious platform for regulating trade investment in energy (see issue 9598 of our newsletter), echoing ideas he mooted in November 2006. In theory he is right of course. Global rules for energy translating the WTO principles of free transit, transparency and lack of discrimination, covering both access to market and access to resources, would be ideal. But what he ignores is the fact that a project of this type already exists, called the Energy Charter. The EU negotiated it in the past with Russia and other countries, but Vladimir Putin later slammed the idea with much sound and fury. In his November 2006 speech, Peter Mandelson spoke about balanced solutions for accessing markets, resources and infrastructure and balanced solutions to transit problems. He also discussed improved investment conditions and competition rules (see issue 9311 of our newsletter). Is Peter Mandelson simply being naïve in bringing up these ideas again today or is he over-connected with certain ideas doing the rounds in his country of origin?
The global context and growing use of energy as a foreign policy tool mean that the EU has to have a different strategy and different tools rather than a type of WTO energy pipedream. I will return to this tomorrow.
(F.R.)