Wednesday, March 28, 2012

Black Sea sliver may decide Nabucco fate....

Trans-Caspian pipeline remains distant prospect, Black Sea sliver may decide Nabucco fate....

After Turkmen government representatives met European Union officials to discuss a possible gas pipeline across the Caspian Sea, a leading energy expert said the chances of it happening were slim. Talks on the pipeline took place at a conference in Berlin on March 12-14, intended to promote the EU-backed Southern Gas Corridor project to take natural gas from the Caspian region to Europe.

To become more than a plan, this framework pact would need at least two pipeline projects to come to fruition. First, a major westward route which could be either the Trans-Anatolian Gas Pipeline, on which Azerbaijan and Turkey recently signed a preliminary agreement; or else the long-heralded Nabucco pipeline from eastern Turkey to Europe, which would require an additional stretch to be laid to Azerbaijan.

Secondly, a pipeline would need to be laid under the sea from Turkmenistan to Azerbaijan to feed in gas from the Central Asian state’s massive reserves.

To facilitate this, Azerbaijan and Turkmenistan are likely to sign a bilateral agreement, in a talks process that the European Union has been mediating. This document would commit Turkmenistan to supplying a certain volume of gas to make the whole Southern Gas Corridor viable.

News Briefing Central Asia asked Rovshan Ibrahimov, head of the foreign policy department at the Centre for Strategic Studies in Azerbaijan, about the prospects for an undersea route - the Trans-Caspian Gas Pipeline project, TCGP - given the numerous obstacles it faces.

NBCentralAsia: How feasible is a pipeline across the Caspian?

Rovshan Ibrahimov: If the participants continue making the same arguments they did at the Berlin conference, the project will remain nothing more than a topic for endless debate. The practical realities and requirements for pushing the project forward are being ignored.

NBCA: Would existing treaties among Caspian littoral states allow Turkmenistan and Azerbaijan to sign the kind of bilateral agreement that’s planned?

RI: Legally speaking, there wouldn’t be a problems if Azerbaijan and Turkmenistan, at least, could reach a bilateral agreement on the status of the Caspian Sea. However, no such agreement exists.

Baku and Ashgabat disagree on which of them owns the Kapaz/Serdar hydrocarbon deposit. It’s impossible to agree on such matters when the states in question hold opposing views on how sectoral demarcation of the Caspian should work.

But even if we assume that Baku and Ashgabat do sign an agreement, we must also acknowledge the practical realities of geopolitics. Russia and Iran would obstruct it [TCGP] in every possible way. And it will not be possible to go ahead and ignore their national interests.

NBCA: What are the conditions for mitigating the risks and for making the Trans Caspian south branch a reality?

RA: At the Berlin conference it was agreed that the EU would sponsor the [Azerbaijani-Turkmen] agreement. But the EU will also have to provide security guarantees, and insure against possible interference by Russia and Iran.

Furthermore, the financing for the project has to be clarified. It would be reasonable to expect the EU to provide this, but I doubt it is in a position to do so - it doesn't have the mechanisms. Its foreign and energy policies are implemented through inter-government ties, not at supranational level, and this limits the options for reaching comprehensive agreements.

Germany, the driving force in the EU, has close connections with Russia [an opponent of TCGP] in the gas sector. It's unclear whether the EU will provide the kind of guarantees that Azerbaijan and Turkmenistan will need to make the pipeline happen. Neither country is going to be able to handle the risks on its own....
Black Sea sliver may decide Nabucco fate....
By Vladimir Socor

On March 22 and 25, Romania's Foreign Affairs Minister Cristian Diaconescu announced on television that a "legal dispute" ("litigium") exists between Romania and Bulgaria over the delimitation of their maritime border, continental shelf, and exclusive economic zones in the Black Sea.

The dispute affects, in one way or another, ExxonMobil's oil and gas exploration plans in Bulgarian waters, Gazprom's South Stream project, and the EU-backed Nabucco project.

Diaconescu's initial announcement generated some confusion until Romanian diplomats intervened with clarifications. The minister stated that the dispute over maritime borders concerned an area of merely 17 square kilometers; and he complained also about Bulgaria's treatment of its ethnic Romanian minority, seemingly linking the two issues.

According to subsequent Romanian clarifications, the disputed maritime area measures some 350 square kilometers in a critical location. It forms a triangle, centered on the point at which Romania's, Bulgaria's, and Turkey's respective exclusive economic zones converge.

Bucharest's follow-up statements no longer mentioned the Romanian ethnic minority issue in Bulgaria, but digressed into a further border issue on the Danube, where the river's thalweg (main channel, deepest watercourse) has apparently shifted toward Bulgaria, inspiring Bucharest to seek a corresponding shift of the riverine border in Romania's favor.

In the Black Sea, the disputed area overlaps with ExxonMobil's planned offshore exploration area. The disputed area also intersects South Stream's planned route on the seabed of the Black Sea to the Bulgarian coast. And it would (if Romania wins its claim) narrowly connect Romania's exclusive economic zone directly with Turkey's exclusive economic zone on the seabed of the Black Sea, potentially enabling Romania to link up with Turkey by an offshore pipeline, instead of the overland Nabucco via Bulgaria (see below).

According to Romania's Foreign Affairs Ministry, two recent developments prompted Bucharest to serve public notice that this legal dispute exists. On January 31, Bulgaria announced its offshore oil and gas exploration tender via European Union official publications, staking out a 14,000 square kilometer area that overlaps with Romania's continental shelf claim.

On March 19 (the direct trigger), the CEOs of Gazprom and Bulgargaz, Aleksei Miller and Dimitar Gogov, agreed in Moscow to promptly designate a company for mapping out South Stream's Bulgarian section, starting with the pipeline's landfall point on the Black Sea coast.

Romania is in a position to delay both of those projects, simply by announcing that a portion of that area forms the object of a legal dispute between Romania and Bulgaria. This could result in protracted negotiation and litigation between the two countries.

Alternatively, it could force re-mapping and other adjustments to a Bulgarian-ExxonMobil offshore exploration project, as well as to South Stream. The existence of a legal dispute would require these projects to stay out of the disputed area, at least pending its adjudication.

As a third possibility, Gazprom and Bulgaria would have to apply for Romanian consent in order to lay the pipeline through the now-disputed area.

According to Romania's State Secretary for Foreign Affairs, Bogdan Aurescu, the Nabucco pipeline might run from Turkey directly to Romania on the seabed, bypassing Bulgaria. This could become a possibility, if Romania wins the seabed portion that would connect its exclusive economic zone with Turkey's.

This "if" seems a big if in the first place; but even in that eventuality, there is no basis for assuming that Caspian gas suppliers or transit pipeline owners would consider such an idea. As an attempt to build Romanian negotiating leverage against Bulgaria, it lacks credibility.

On the other hand, forcing a delay to South Stream (even at the perception level, which matters primarily with South Stream) would help Nabucco to survive as "Nabucco-West" from Bulgaria to Vienna. This could be the Trans-Anatolia project's continuation pipeline into EU territory.

Romania and Bulgaria have been negotiating since 1994 over delimiting their maritime border, continental shelf, and exclusive economic zones. By various counts, either 14 or 17 rounds of Romanian-Bulgarian negotiation have been held since 1994 at the expert level. Based on the Convention on the Law of the Sea (1982), the two countries seek to advance from the territorial waters limit of 12 nautical miles to the 200 nautical miles limit of exclusive economic zones.

Their respective claims overlap in the small but key area that Romania has now officially declared as "disputed". In the wake of this demarche, Bucharest and Sofia both declare that they seek a bilateral solution, as soon as possible.

Sofia has both good reasons (ExxonMobil offshore exploration) and bad reasons (South Stream) for seeking a quick bilateral solution with Bucharest. The Romanian side, however, has no apparent reason to hurry; instead, it is well placed to stall the bilateral negotiations and go to international litigation.

According to the Foreign Affairs Ministry, Romania is prepared to take the dispute to the International Court of Justice (ICJ) in The Hague, to the International Tribunal for the Law of the Sea in Hamburg, or to some arbitration court.

In 2009, Romania won its case against Ukraine at the ICJ after many years of litigation over delimiting the continental shelf and exclusive economic zones in the Black Sea. The court awarded Romania 9,700 square kilometers, out of the 12,200 in dispute with Ukraine. State Secretary Aurescu litigated that case for Romania. That success colors Bucharest's attitude in the dispute it has just declared with Bulgaria.

In Sofia, the Foreign Affairs Ministry called in the Romanian ambassador for explanations, then issued a conciliatory statement. Satisfied that Romania does not pose "territorial claims", Bulgaria is prepared to negotiate for a quick resolution of the dispute "in the spirit of both countries' membership in the European Union". Prime Minister Boiko Borissov and Bulgarian diplomats are responding in conciliatory tones.

If Bucharest persists with its current approach, Sofia will be playing the weaker hand. Sofia's tactics seem designed to let Bucharest look unreasonable in the eyes of Brussels....

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