Tuesday, September 20, 2011

The Great Game in Central Asia, Pipelines and hundreds of Tribes with Flags...

The Great Game in Central Asia, Pipelines and hundreds of Tribes with Flags...

The world needs energy and hence we have the term “energy security”. For the longest time, energy meant OIL. Well, that is changing now – to OIL & GAS, and then onto Renewable energy, Solar energy, Wind energy et al....

Today we are the initial cusp, where we are moving from OIL based energy dependence to a Gas based energy dependence. A few countries have made the leap, but globally we are at the inflexion point.

Why this shift ?

Oil has a finite supply and that supply is on the verge of coming to an end. According to the Energy Bible : BP Statistical Review, at current levels of production, Oil reserves of -

1. Saudi Arabia is projected to last only 66 years
2. Iraq & Kuwait is projected to last 100 years
3. India, Australia, Italy, Brazil is projected to last 21 years.

In contrast to the dipping oil reserves, the gas reserves are growing as new findings are being made. Cars which are running on gasoline (petrol) and diesel will be run on Auto LPG, CNG etc and these are all gas derived. Subsequently these cars will run on hydrogen and even on Compressed Air (Our very own TATA NANO). Industry, home etc will make this shift as pipeline infrastructures are put in place.

Currently the largest gas reserves are in Russia with 48 TCM, followed by Iran with 28 TCM. However, all this is changing and will continue to change. With the discovery of Yolotan Osman gas field in Turkmenistan in October 2008, the gas equation and dynamics have changed. Preliminary indications are the gas reserves in Turkmenistan is around 38.4 TCM – far more than Iran and just 20% lower than Russia. And this means immense geopolitical movements around this neighbourhood.

It is to be understood, gas needs to be extracted and then moved over pipelines, some running over thousands of kilometres to reach its ultimate destination. Mostly the end destinations are ports – from where super tankers carry their cargoes around the world. Getting hold of gas fields in not enough. Hence, it is also a game of getting hold of “warm water ports”. The major players in Central Asia are Russia, USA and China.

Let us look at the map of Central & South Asia.

Turkmenistan is atop Afghanistan & Iran and this Yolotan Osman gas field is just near the Afghanistan – Turkmenistan border. Other than this, for other gas fields too, Afghanistan is of extreme importance – pipeline infrastructure to warm ports – hence USA will be embedded in Afghanistan for “generations”.

Central Asian nations were part of Soviet Union and the breakup of Soviet Union was the handiwork of USA whereMICHAEL VICKERS played a sterling part in arming and training the Mujahideen from bases in Pakistan. The goal – Access to Central Asian gas reserves, maintaining its superpower status etc etc.

The other major concern for USA is to keep both Russia and China out of the gas reserves of Central Asia. And also ensure that India and Russia do not join hands with Iran (USA remembers Northern Alliance).


And most of this Gas is located in a place called Central Asia. The access to this by major global powers has been romantically called “THE GREAT GAME” – to get a toehold to the supply lines of Central Asia GasAzerbaijan was the true success story of US oil diplomacy. Clinton literally snatched it from Russian orbit in the 1990s by pushing through the Baku – Tbilsi – Ceyhan (BTC) pipeline against seemingly impossible odds. The pipeline meanders from Baku (capital of Azerbaian) to Tbilsi in Georgian and then onto the Turkish port of Ceyhan. From here gas is filled in super tankers and shipped to Europe for consumption.

BTC completely bypasses Russia and this was the main purpose of this line.


The other important pipeline for the USA is the Nabucco pipeline. However, question marks have appeared regarding the future of the Nabucco gas pipeline, which, if constructed, would bypass Russian territory and bring Caspian gas from Azerbaijan via Georgia and Turkey to the European market. What if Azerbaijan accepts the Russian offer to buy gas at “European prices”? Has the Caucasus conflict fatally hurt Nabucco’s prospects? It seems, for the present, it has.

Europe has pinned its hopes on Nabucco, but it can only be implemented with Russian participation and also Iran. Nabucco is a serious threat to the Russian “South Stream pipelines” that feed Europe.


USA was planning and plotting and came to the conclusion that it has to make BLACK SEA into a NATO LAKE. If you look at the map of Central Asia, notice that other than Russia the other 2 countries of ex-Soviet Union that skirt the Black Sea are Ukraine and Georgia. And guess, who have been offered NATO memberships – you guessed it right – Ukraine and Georgia.

However, Russia remains vehemently against this NATO intrusion into its former republics and has made its opposition very clear. USA overplayed its hands in Georgia and gave Russia the chance to kill two birds with one stone.

Georgia has two breakaway provinces – Abkhazia and South Ossetia. It has majority Russian population. The Georgian maverick President Mikhail Shakashvili, under direction from his US experts, started bombing these two provinces to take them over by force.

Russia just drove in and in deft military manoeuvres took control of these provinces. Russia annexed these two provinces, and thus took de-facto control of two major Black Sea ports of Sukhumi & Poti. This was a great tactical blow to USA, because with this single Russian manoeuvre, the US dream of making BLACK SEA into A NATO LAKE was LOST – probably FOREVER.

There were reports that Israel wanted to use bases in Georgia to attack Iran and one of Russia’s aim was to pre-empt that. Interesting to note – Israel got wind of the Russian attack a week before the attacks and left Georgia with its advisers (note: USA stayed behind). The Israelis went to Russia and admitted that arming Georgia was a mistake and implored Russia NOT to arm Hezbollah and Iran with sophisticated armaments and missiles.

Germany came running to Russia and told them that they will block Ukraine’s and Georgia’s entry into NATO and this is exactly what they did – together with France. Germany, scarred from WWII memories of Russia and currently dependent on gas sales from Russia is in no position to take on Russia, nor is there any inclination to anger the Russian bear.

Condoleeza Rice came out defeated and admitted, “Georgia and Ukraine are not ready for (NATO) membership. That is very clear”. Russia won through coercive diplomacy.

Russia also sent a message through this military move to all its former republics, to take cognizance of Russian interests while plotting their gas sales – which have all been duly noted.

Central Asian republics all saw that USA is actually in NO position to militarily help them – Georgia was a case in point.

Russia deftly followed this by meeting Syrian President Assad and getting the port of Tartus as a resting place for its Black Sea maintenance quarters.

With a series of further moves, Russia has made USA nearly redundant in the Caspian region. Russia is flush with funds, and the economic might of USA has taken a serious beating in the economic crisis.

Russia has re-negotiated to buy gas from Uzbekistan and Azerbaijan at prevailing “European prices” thus raising the bar.

The four Russian oil majors had asked Putin for $ 80 billion package to pay off their foreign debts and finance strategic projects. Putin responded by saying that the government will disburse up to $ 50 billion.

How many Western governments can match Russia providing such backing of sovereign wealth funds to its oil majors at the present time of global credit crunch?

Moscow offered $4 billion loan to Ukraine for establishing two nuclear power plant in its western region. This is despite the pro-US stance of Ukranian Victor Yushchenko.

Also, there is huge political symbolism when Iceland expresses “disappointment” with the Western world and turns to Moscow for a 4 billion Euro ($ 5.5 billion) loan to salvage its economy from imminent bankruptcy.

Such images make a lasting impression on the Central Asian steppes.

Russia with its vast deposits of oil and gas is already an energy superpower. And unlike Iran and Venezuela, it does not subsidize its economy from the oil proceeds – hence with the oil price down, its economy is still strong unlike those that of Iran and Venezuela. The EU is heavily dependent on Russia for gas imports and this dependence is expected to increase further as a result of declining offshore production of North Sea.


Currently there are 3 major pipelines running from Baku (capital of Azerbaijan). 2 are US sponsored – the BTC pipeline and the Baku – Supsa pipleline (Supsa in Georgia). The 3rd one is the Russain pipeline : Baku – Novorossiisk pipeline. SEE MAP ABOVE.

Azerbaijan is negotiating with Russia to increase the annual capacity of the Baku – Nvorossiisk pipeline. At the same time Azerbaijanis reducing its commitment to the US sponsored Baku – Supsa and BTC pipelines and this is a major breakthrough for the Russians. Azerbaijan understands the Russian resurgence in southern Caucasus and Baku’s new interest in the Russian pipeline stems from a desire to protect its relationship with Moscow.

The implications are very serious for Washington. Any reduction in the Baku export through BTC could impact the viability of the pipeline which has been the cornerstone of US diplomacy in the region, pumping nearly 1 million barrels of oil / day from Azerbaijan to Turkey’s coast from where it is shipped to Europe. BTC, though secure now, has come under the watch of the Russians.

In September 2008, Uzbekistan and Russia agreed to build a new pipeline with a capacity of 26 to 30 billion cubic meters (bcm) annually to pump Uzbek and Trukmen gas to Europe. Such a pipeline will again undermine the US efforts to pump trans-Caspian energy routes bypassing Russia.

On top of this, neither Azerbaijan nor Kazakhstan appears interested in US entreaties to re-route energy exports bypassing Russia. Both hope to maintain good relations with USA but that cannot be done by picking a quarrel with Russia.

It seems the US phrase – “either you are with us or against us” is not finding any takers in Central Asia. Central Asian countries would do business with both but not at the expense of Russia and this rankles the USA as it has clearly fallen from the high “horse” they thought it was in.


At the same time China is anxious to get its act together and bind its energy security in this region. It has formed SCO to cement its energy needs in this region which the US is vehemently trying to push out. China knows that it cannot match US power for at least the next 15 years and its naval forces are no match to the US fleet and even the Japanese fleet. Hence it is going out of its way to get to the Central Asian gas reserves through land routes, even though many of them look unviable at the present time.

One of the better tie-ups will be to tag along the Russian ESPO pipeline. Russia is expected to complete this East Siberia to Pacific (ESPO) by 2012 for routing oil to Asian markets. Kazakhstan’s state oil pipeline operator KazTransOil is interested in transporting Kazakh oil through the ESPO. To note – Astana has shown no hurry to commit Kashagan oil to the US sponsored BTC pipeline but has committed to the Russian ESPO pipelines. US influence has truly reached its nadir in this region.

Unlike the USA or Russians, the Chinese have their own method of doing business overseas. Being a mercantilist and free of moral and political constraints, it hopes that it will continue doing what it loves best – making money. Chinese hope to sell cheap DVD players and exotic Chinese prostitutes, build roads and docks and in the bargain – gobble up Central Asian energy.

Washington is clearly nervous that Kazakhstan is showing alarming signs of shifting towards Moscow. All early investments by the USA in this region has come to naught. Astana supported Russian action in the Caucasus and cut down its investment in Georgia.

Clearly the Russians and Chinese have outmaneuvered the American in Central Asia stakes.


We had touched earlier on the fact : Preliminary indications are the gas reserves in Turkmenistan is around 38.4 TCM – far more than Iran and just 20% lower than Russia (largest gas reserves in the world). The British consultancy company Gaffney, Cline & Associates (GCA) presented the first results of its audit of Turkmen gas reserves.

The biggest gas field discovery was in October 2008 – called the Yoloten Osman deposits. It is located near the Afghan – Turkmenistan border.

Turkmenistan has contracts to supply Russia with 50 bcm annually, China with 40 bcm and Iran with 8 bcm annually. The Russian energy giant GAZPROM requires this Turkmen gas to meet its export obligations in the European market, which accounts for 70% of the its total revenue. Gazprom sells 2/3 of Russia’s 550 bcm annual gas production in the rapidly growing domestic market. This compels it to secure Turkmen supplies to meet contracted European demands.

Looks like Russia is all set to gobble up gas supplies from Turkmenistan – but look again. Gazprom’s agreement with Turkmengaz DOES NOT INVOLVE YOLOTEN – OSMAN reserves.

Russia thought it held in its hand a chimera when it fancied that the July 25th Agreement put GAZPROM in charge of all of Turkmenistan’s exports. Surely, this is proving to be a misconception of Himalayan proportions.

USA has deftly moved in to claim its stakes on the Yoloten-Osman gas reserves and for Russia the game starts again.

Take a look at the map. USA is well places in Afghanistan and can easily draw pipelines from Yoloten-Osman gas reserves through Afghanistan. And after that, it needs a warm water port to load it on super tankers.

The only viable ports are Karachi in Pakistan and also Gwadar port in Baluchistan area of Pakistan. Pakistan has built Gwadar with Chinese help to serve several purpose and one of them was access to Central Asian oil. USA is in no mood to see that this happens. Gwadar may well become the Chinese naval base in future and have eyeball to eyeball confrontation with the US naval fleet.

The other port is Chabahar in Iran. This has been built by India. Look how close the ports of Gwadar and Chabahar are.

We must not forget this part :

When Afghanistan was under the control of Taliban, USA was willing to shake hands with the devil – just to get access to pipelines through Afghanistan. UNOCAL the US company in the thick of pipeline planning through Afghanistan, was acting as the unofficial lobby for the Taliban and they were regularly briefed by CIA and Pakistan’s ISI.

The then US Assistant Secy of State for South Asian Affairs, ROBIN RAPHAEL went on to state – “The Taliban capture of Kabul is a POSITIVE STEP.”

Another senior US Diplomat stated : “The Taliban will probably develop like the Saudis did. There will be Aramco, pipelines, an Emir, no parliament and lots of shari’a law. We can live with that.”

We must not lose sight of these statements. These are not statements of two individuals – they represent the USA mindset.

The USA will have tolerated Taliban and Shari’a just to get gas pipelines and this approach has not changed. USA tolerates the Saudi emirs. It may be a democracy itself, but in matters of business, it follows only one policy – “ANYTHING GOES” as long as its interests are met.

USA is looking for any stable partner that will guarantee it “peace” to “do business” in Afghanistan. Hence, for India, this becomes very important – Who will guarantee this “Peaceful business environment in Afghanistan”?

Will it again be Taliban + Pakistan or will it be Pushtuns + Balochis through independent countries created out of parts of Afghanistan and Pakistan?

If the USA game plan is the former – Taliban + Pakistan, we must ensure that this never comes into being. This will be disastrous for India. The latter, we can deal with and we will come to this part in the next article.

The Central Asia as it will look in the future. Afghanistan will play a pivotal pipeline role.

India too has legitimate energy concerns but USA will see to it that the Iranian – Indian gas pipeline or even the TAPI (Turkmenistan, Afghanistan, Pakistan, India) does not come into being.

The US with its dipping wealth and high levels of corruption is unable to stake claim of any sort in Central Asia. It is clutching at the straws with BTC and Nabucco pipelines. It will surely seek to leverage its presence in Afghanistan on the Yolotan-Osman gas fields to salvage pride and standing in the region.


USA is not going to give up without a fight. The attacks of NATO supply trucks recently in Pakistan has given planners in Washington time to formulate alternative strategies. The US has begun working on an entirely new supply route for Afghanistan which steers clear of Tehran, Moscow and Beijing and which, more importantly, not only dovetails but holds the prospects of augmenting and even strengthening the US’s containment strategy towards Russia and Iran.

Thus, the US has begun developing an altogether new land route through the southern Caucasus to Afghanistan, which doesn’t exist at present. The US is working on the idea of ferrying cargo for Afghanistan via the Black Sea to the port of Poti in Georgia and then dispatching it through the territories of Georgia,Azerbaijan, Kazakhstan and Uzbekistan. A branch line could also go from Georgia via Azerbaijan to the Turkmen-Afghan border.

The project, if it materializes, will be a geopolitical coup – the biggest ever that Washington would have swung in post-Soviet Central Asia and the Caucasus. At one stroke, the US will be tying up military cooperation at the bilateral level with Azerbaijan, Kazakhstan, Uzbekistan and Turkmenistan.

The US will have virtually dealt a blow to the Russia-led Collective Security Treat Organization (CSTO) and the Shanghai Cooperation Organization (SCO). Not only will the US have succeeded in keeping the CSTO and the SCO from poking their noses into the Afghan cauldron, it will also have made these organizations largely irrelevant to regional security when Kazakhstan and Uzbekistan, the two key players in Central Asia, simply step out of the ambit of these organizations and directly deal with the US and NATO.

Therefore, the US is making a determined bid to render Russian diplomacy on Afghanistan toothless. Interestingly, the US has allowed NATO at the same time to negotiate with Russia for transit route facilities, which Moscow will be hard-pressed to refuse.

Washington has certainly done some smart thinking. It is having the best of both worlds – NATO taking help from Russia with the US at the same time puncturing the CSTO and undercutting Russian interests in the Caucasus and Central Asia.

Ever since the conflict in the Caucasus (Russia – Georgia conflict) in August, the US has maintained a continuous naval presence in the Black Sea, with regular port calls in Georgia. The indications are that the US is planning a carefully calibrated ground presence in Georgia as well. Talks are in the final stages for a US-Georgia Security and Military Agreement.


Another dramatic fallout is that the proposed land route covering Georgia, Azerbaijan, Kazakhstan and Turkmenistan can also be easily converted into an energy corridor and become a Caspian oil and gas corridor bypassing Russia. Such a corridor has been a long-cherished dream for Washington. Furthermore, European countries will feel the imperative to agree to the US demand that the transit countries for the energy corridor are granted NATO protection in one form or the other. That, in turn, leads to NATO’s expansion into the Caucasus and Central Asia.

RUSSIA is not expected to keep quiet and watch US intrusion into its former territories passively. The chief of the General Staff of the Russian armed forces, General Nikolai Makarov, just about lifted the veil on the geopolitics of the Afghan war to let the world know that the Bush administration was having one last fling at the great game in Central Asia. Russia, it seems is about to transfer the S-300 missile defense system to Iran. S-300 is one of the most advanced surface-to-air missile systems capable of intercepting 100 ballistic missiles or aircraft at once, at low and high altitudes within a range of over 150 kilometers. As long-time Pentagon advisor Dan Goure put it, “If Tehran obtained the S-300, it would be a game-changer in military thinking for tackling Iran. This is a system that scares every Western air force.” Russia stated that giving Iranians the S-300 will avoid “wars” in the region. More than US, the Israelis view this as a threat to their existence. the head of political-military policy in the Israeli Defense Ministry, Major General Amos Gilad, was traveling to Moscow with a demarche that Russia should not transfer S-300 to Iran. If things are not sorted out on the Iran front, Israel may have a go at Iran’s suspected nuclear sites – ALONE.

All this is expected to unfold in India’s backyard and soon.

The veiled threat of reopening the “Kashmir file”, which is patently aimed at keeping India at bay, also serves a useful purpose. Plainly put, the US faces a real geopolitical challenge in Afghanistan if only a coalition of like-minded regional powers like Russia, China, Iran and India takes shape and these powers seriously begin exchanging notes about what the Afghan war has been about so far and where it is heading and what the US strategy aims at. So far, the US has succeeded in stalling such a process by sorting out these regional powers individually.

Was India getting too close to Russia and Iran for USA’s liking and was the Mumbai blast a timely reminder for India not to meddle in the “GREAT GAME”?

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