K. Simonov: 'Russian response to Trans-Caspian pipeline construction would follow quickly'

News.Az interviews Konstantin Simonov, Director General of the National Energy Security Fund (Russia).

What impact will the launch of the Nord Stream have on energy market? Will it toughen the competition among other projects in the Caspian region or, on the contrary, will ease it?

Nord Stream has nothing to do with the "southern theme." After all, this is “northern access”. But when it comes to the Caspian region, the local gas is meant for the south of Europe. Although the EU promises to integrate all countries into a single gas network, this has not happened yet.

Of course, now any gas issue is perceived in terms of the competition that you mentioned. Azerbaijan does not need to worry in this regard because its 16 billion cubic meters of gas from the Shah Deniz will sell very easily. Another thing is that this gas will not save the European Union, because the demand for gas will still grow at a faster pace. But Nord Stream, is, of course, an extra request and extra proposal by Russia and it will increase gas supplies to European markets.

In fact, the problem of alternative suppliers is that the EU, obsessed with the idea of diversification, takes any other gas, except that of Russia, with great pleasure. Another thing is that this gas is not in volumes needed by Europe. Therefore, building the Nord Stream, Russia offers the EU, "Guys, we have invested together with your companies, built the pipeline and we are ready to increase gas supplies to European markets."

Nevertheless, one should bear in mind that the Nord Stream will partly function as a replacement for Ukrainian route for the time being. That is, we should not think that this is an additional volume of gas which will come into the European market. This is part of the gas which will be pumped from the Ukrainian direction.

This raises a question about the South Stream in this regard. Let me explain why. We have built the Nord Stream. This is a message to Ukraine to finally agree on the fate of the gas transportation system. Ukraine does not want to negotiate. So, Ukraine’s reluctance to solve the problem prompts Russia to be active in the south of Europe, too. Despite intensive talks about competition, there is no real competition at all.

And what competition can be here? In the south there is a proposal only from Azerbaijan. But there are already a number of requests for Azerbaijani gas. Will it create competition? No, it will not. It is planned to export 6 billion cubic meters of gas to Turkey and 10 billion cubic meters to Europe. This volume is not enough to create competition. There is no any other gas yet.

So, the competition in the south is still of political nature. It is unclear yet with whom Russia will compete in the gas market.

Meanwhile, the EU is actively lobbying the construction of a gas pipeline in the Caspian seabed despite objections from Russia and Iran. Let me remind that the first round of talks on this project involving experts from the EU, Azerbaijan and Turkmenistan took place in Brussels in October. What are the chances to implement Trans-Caspian Gas Pipeline?

In fact, the situation is very simple. Russia’s viewpoint is based on international law. It is known that there were only two countries in the Caspian Sea at the time - the Soviet Union and Iran. They signed all the agreements over the reservoir. It is known that these agreements have identified the 10-mile zone within which the coastal states are engaged with production in the Caspian Sea.

These documents clearly state that all the issues associated with such complex infrastructure projects should be resolved through consent of only these two littoral states.

Naturally, all these rules transformed into current arrangements over the reservoir when the USSR collapsed and four states at once appeared in its place in the Caspian Sea. The idea is simple - the problems of the Caspian Sea should be resolved through consensus of all five littoral states, and only and only by them. We do not have Brussels, Washington and Beijing in the Caspian region. They should not be there at all.

I always read the European press, where lawyers argue that it is legal to build Trans-Caspian gas pipeline without Russia’s consent. By and large, it is possible to organize conferences to focus on this topic. But we must understand one thing: it will not change Russia’s position on the Trans-Caspian pipeline.

Russia will always be against the construction of this pipeline. And it has legal grounds to do this. This prompts a question to Turkmenistan: Is Turkmenistan ready to ignore Russian Federation, ignore its opinion?

It will be impossible to persuade Russia through conferences, Barroso’s visits to Baku and Ashgabat. Will Ashgabat dare to openly declare it to Moscow?: "We don’t care about any of the international agreements and your approach to the status of the Caspian Sea. We will build this pipe just because Brussels and Washington support us."

Naturally, this prompts a question: how Moscow will react to all these? Many people call me a hawk, but I do not deny that this is a matter of prestige of the state – whether Russia is ready to tolerate such an outright move of disrespect. If Russia’s allows to treat itself in a way Tajikistan did a couple of days ago trying the crew of the Russian aircraft, the Trans-Caspian gas pipeline will become possible.

But what we see today is that Turkmenistan, despite the support from Washington and Brussels, is not ready to risk yet. I am very doubtful that Russia will tolerate it. Moreover, the reaction can be very hard up to some sort of military conflict in the Caspian Sea.

Is Turkmenistan ready for this? I have great doubts in this regard. And I can see how European and American officials, experts now try to persuade Turkmenistan to begin to construct it.

I also see determination of Turkmenistan to do it in words. I can see that it does not start this. So, Ashgabat understands that the situation will be the same as it was in Georgia in August 2008. Back then they promised to protect Georgia and some kinds of guarantees. And how it ended? No one protected it and when Russia responded, Washington abandoned Saakashvili, and things could almost end up in a capture of Tbilisi. Thank God, Russia did not do it.

Does Turkmenistan want the same happen in the Caspian? If so, then let's begin to build Trans-Caspian pipeline and wait for the military response by Russia. I think it will follow very quickly.

Caspian countries have a number of initiatives to foster regional cooperation in the field of energy and economy. Is it possible to realize them without intervention of non-regional players?

Today we see that the situation in the Caspian Sea is very complicated. We understand that the states here have quite different interests which hinders to implement common initiatives, work of some joint institutions which worked really, but were not only discussed at talks, conferences and so on.

The reason is clear. It is correct view that the Caspian problem must concern only the five littoral states. But today we understand that Washington cooperates with Azerbaijan and Turkmenistan quite actively. Brussels is also active in this regard.

There is Kazakhstan, which has a more complicated position. It claims to be one of the most important players in the Caspian Sea and Central Asia, in general. But Kazakhstan understands that it has no enough power and so it is not going to quarrel with Russia. But on the other hand, he also acts very carefully based on its interests.

Finally, there is Iran. We witness increasing political tension around Iran. It is enough to look at the latest nuclear dossier of IAEA. Israeli Premier claims that his country is ready to launch military action against Iran. Of course, the war in Iran will have an inevitable impact on Caspian region although facilities in the Caspian Sea will not face a direct attack.

Look at the relationship between Iran and Saudi Arabia. These countries are actually on the brink of war! Will this impact Caspian region? Of course, if Iranians start a war with Saudis, will they later participate in some kind of joint Trans-Caspian projects?.

Therefore, the situation is very complicated. It is hard to bring the countries around the single table of talks. We know that meetings are held annually, but they do not lead us to common denominators.

Today there are no some actually working institutions that could bring together the five Caspian littoral states. I hope that there will be one. But what I see today is that the coastal states have own interests and are difficult to bring together.

We even see that they reach the point of an open conflict. Today Russia and Turkmenistan have very difficult relationship. There is also an uneasy relationship between Russia and Iran plus additional pressure from an external factor. While talking about Washington and Brussels, we forget that soon Beijing will certainly begin to deal with solution to the Caspian problems.

Moreover, it is already present in the Caspian through Kazakhstan and Turkmenistan, where China’s influence is growing at a fantastic pace. This is another great power.

That is, the tangle of problems in the Caspian Sea is becoming more complicated and dramatic. I think all this will not lead to good results.

By F.H.
News.Az, November 11, 2011