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The geo-politics of gas pipelines
While world’s attention has been focussed on the controversy of European and US opposition to Nord Stream II pipeline from Russia to Germany, it was a European Pipeline project that met a quiet death this January. The US State department announced it no longer supported the much-touted 1,900 km, €6 billion East Mediterranean (EastMed) natural gas pipeline on grounds of financial viability, environmental concerns and political tensions.
The Cyprus government, its leading protagonist, has been touting EastMed as a project of the century that was meant to transform the divided island into an energy exporter to be reckoned with, but has not yet accepted the reality to throw in the towel. The reasons are political – Cyprus ruling party Democratic Rally ( DISY) has long hyped the pipeline as a major vote catcher and the next Presidential elections are not far off.
There is a widespread feeling the supposed economic advantages of the pipeline were oversold to the average Cypriot who knows how fragile the island nation’s economy is. The country’s over dependence on tourism and financial services and ongoing European investigations into a controversial passport sale scheme worry the well read Cypriots who are looking to find economic competitiveness for the country, respect and dignity in the European Union.
The US volte-face on EastMed does not come as a surprise to the discerning observers and analysts who had for long decried the pipeline as unviable. They believed the project was too ambitious and complicated. The gas fields are located in the sea shelf south of the country and exploratory drilling has faced several hurdles. The gas was to be pumped to the island and then to EastMed pipeline from Cyprus’s northwest coast, under the Mediterranean sea to Greece and then to Italy’s southern coast. The 1,900-km long pipeline plan was vulnerable to many vagaries of technology, engineering, environment and Turkish belligerence. At a time the whole world is leaning towards clean energy, the island with more than 340 days of sunshine has not joined the India and France-led International Solar Alliance and has a low renewable energy component, depending heavily on imported fossil fuels.
Energy experts have repeatedly questioned the viability of large investments in gas pipelines while Cyprus could substantially cut its energy costs by allowing investments in renewables and use the gas for its own competitiveness.
Turkish victory
The factor that seems to have played the biggest role in the American decision is the dogged opposition of Turkey which is permanently at war with Cyprus. Turkish leadership has made it clear that EastMed cannot happen without its participation. It has been fighting hard for a sizeable share of the natural gas revenues for the northern Turkish Cyprus enclave that it occupies since the invasion of 1974 through a puppet government and for itself, making spurious claims to Cyprus’s exclusive economic zone and interfering with the gas drilling.
Turkey is a thorn in the flesh of Cyprus but it carries enormous influence with Washington due to its NATO membership and as a gateway to the Black Sea. It considers the US pull-out from EastMed as a victory of sorts. With such large geopolitical stakes, in the end, the Cypriot plan looked impressive only on the drawing board and did little more than energise the now dashed hopes of the island’s voters for a decade.
All this comes in the context of wider geo-politics of global gas supplies. The US, which has only 5 per cent of global gas reserves, is now the world’s biggest gas exporter having made large investments in LPG plants and gas tankers. The US is pitted against Russia which at 24 per cent has the largest proven gas reserves of the planet.
Russia’s gameplanTraditionally Russian export of gas has been to Europe through pipelines that pass through Ukraine and Eastern Europe. These pipelines have come under increasing pressure due to increased US influence over eastern European countries and recently over Ukraine.
Another Russian ally and gas transit country Belarus is under western sanctions. Russia therefore decided to bypass both Ukraine and Belarus and build a direct pipeline to Germany, to the industrial heartland of Europe and invested over $9 billion in the construction of NordStream pipeline. However , approval from the German regulators for this pipeline to become operational has stalled as the US has increased sales of LPG to Europe and has tried to capture the market.
The European Union has tried for years to cut its dependency on Russian natural gas. But a number of EU countries, particularly Germany, are still very keen on stable long-term supply contracts with Moscow. Russia has also pivoted east and is building the Power of Siberia pipeline to China from its gas fields in the Arctic circle. China wants to lower its energy dependence on the US and its allies, too.
In the larger context of competition between great powers, and US commercial interests in supplying their own gas to Europe, EastMed was of no relevance to global gas markets and thus no relevance to India. India imports LPG from open markets through very large tankers. Qatar, Australia and the US are the largest suppliers to India.
In future, India is very likely to buy LPG from Russia where India has been making substantial investments in petrocarbon extraction. Russia has commissioned 10 ice-breaker gas tankers to deliver LPG gas to markets round the year from the Arctic. By diversifying its sourcing and betting on reliable and large gas exporters, the Indian government has ensured energy security.
The only relevant pipeline from the Indian point of view can one day be the TAPI (Turkmenistan Afghanistan Pakistan India ) pipeline from Turkemenistan’s Galkynish gas fields, the world’s second largest proven gas field with natural gas and proven commercial reserves of 2.8 trillion cubic metres. The pipeline, if completed, will deliver 33 billion cubic metres (1.2 trillion cubic feet) of natural gas per year to Afghanistan, Pakistan and India.
Despite the political upheavals in Afghanistan and strained relations between India and Pakistan, this pipeline has much greater relevance to India than the EastMed. Raghavan is a former High Commissioner of India to Cyprus, and Ajay Goyal is a security analyst based in Europe
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