Tag: Energy

  • Official Calls Gas Pipeline From Russia To Israel ‘Very Promising’

    Official Calls Gas Pipeline From Russia To Israel ‘Very Promising’

    JERUSALEM, October 1 (ITAR-TASS) – Project of Russian natural gas supplies to Israel via the territory of Turkey is “very promising” and it was one of the issues discussed by co-chairmen of the Russian-Israeli intergovernmental commission at talks here, First Deputy Prime Minister Viktor Zubkov, the co-chairman on the Russian side told reporters Thursday before departure for Moscow.

    “That’s a very promising project and we think we must work in that direction,” Zubkov said.

    “We have an opportunity to build a Blue Stream-2 pipeline across the Turkish territory.” he said.

    To make the project profitable, however, it is important to invite other countries, like Russia, Turkey, Israel, maybe Cyprus and some Middle East States, to take part in it, Zubkov indicated.

    “We agreed to begin with bilateral talks and, in fact, negotiations between Gazprom executives and officials from the Israeli Energy and Natural Gas Authorities of the Ministry of Infrastructures began yesterday,” he said. “They were quite successful, I was told, and the work in that field will continue.”

    “In the future, we may agree on trilateral talks with Turkey and, maybe, with some other countries, too.”

    In the course of the two-day visit, Viktor Zubkov held talks with Deputy Prime Minister Avigdor Lieberman, who chairs the intergovernmental commission on the Israeli side.

    Besides, he had meetings with President Shimon Peres and Prime Minister Binyamin Netanyahu.

  • Turkish Gambit

    Turkish Gambit

    by Jaroslaw Adamowski
    15 September 2009

    As a keystone in two competing natural-gas schemes, Turkey can be either pawn or power broker.

    European opinion makers followed Russian Prime Minister Vladimir Putin’s visit to Turkey in August with keen interest. Among the 20 or so agreements he and his Turkish counterpart, Recep Tayyip Erdogan, signed was one initiating Turkey’s participation in the South Stream natural-gas pipeline to Europe – coming less than a month after Turkey hosted a summit for European Union countries participating in the Nabucco project, generally perceived as a rival to Russia’s South Stream.

    Since Putin’s visit to Ankara, pundits and analysts have continued to speculate on the future of Turkish-Russian relations, the dynamics of their fast-growing bilateral trade (behind the EU, Russia is Turkey’s prime trade partner), or Ankara’s dependence on Russia for 65 percent of the natural gas and 25 percent of the oil it consumes. Missing from many analyses was the possible impact of South Stream on Turkey’s relations with the European Union, especially the bloc’s members with direct engagement in Nabucco.

    JITTERY LAUNCH

    Nabucco was formally launched – although the question of which countries will supply its gas is far from clear – at the July joint summit with Austria, Hungary, Bulgaria, and Romania, the four EU members the new pipeline is slated to traverse. The Russian authorities were also invited to the summit but chose not to attend. The project was designed to diversify Europe’s energy supply with Caucasian, Central Asian, and Middle Eastern natural gas resources, but no potential source countries are formally on board yet.

    Nabucco faces other problems as well. On 14 September a spokesman for the consortium in charge of the project said its completion would be delayed two years, until 2016, UPI reported. Any delay could be a gift to Russia, but as the Kremlin faces serious problems raising funds for its own energy projects, South Stream’s construction could be slowed as well.

    Some experts suggest that stagnation in Turkey’s EU membership negotiations is the key to understanding Ankara’s complex foreign policy. Turkish politicians from government circles, however, counter this notion.

    “There is no link between the membership talks slowdown and Turkey’s participation in the South Stream project,” said Ozlem Turkone, a member of parliament for Istanbul and deputy chair of the ruling Justice and Development Party’s foreign affairs department.

    “Becoming an energy hub for the surrounding European and Asian regions has always been Turkey’s objective, and participating in both the Nabucco and South Stream pipelines is part of it,” she said. “Europe needs to diversify its sources of energy, and so does Turkey. Everyone will profit from our engagement in both projects.”

    Similar opinions were expressed by Turkish Foreign Minister Ahmet Davutoglu. Interviewed by the Turkish Kanal 7 TV channel, the minister said the South Stream project “creates a North-South energy corridor, similar to the East-West corridor of Nabucco,” and therefore the two pipelines “are not substitutes for each other.”

    South Stream would cross Turkish waters in the Black Sea before coming ashore in Bulgaria; Nabucco is set to traverse the Caucasus and Turkey over land.

    South Stream

    Nabucco

    Still, such views draw criticism not only from many EU officials, who regard the pipelines as competitors and often accuse Russia of attempts to destabilize European energy security, but also from Turkey’s opposition parties. “Before turning to profit, we had better check the financial side of the balance sheet in this project, which I believe is missing in the whole picture,” said Mustafa Ozyurek, former general manager of Petrol Ofisi, Turkey’s major oil and gas distribution company, and currently an MP for the opposition Republican People’s Party. Ozyurek said he and other experts believe the pipelines cannot both be operated cost-effectively, either by Turkey or the other partners.

    However, “Nabucco itself can cover up to only 7 percent of the European Union’s gas supply needs,” Turkone said, adding that “in order to provide enough energy to the European market, we need to focus on both projects, none of which should be viewed as harming anyone’s interests.”

    DIVIDED LOYALTIES

    While many observers continue to perceive the Russian-backed South Stream pipeline as a threat to the energy security of many new EU states, ironically, it is some of those same countries that could hobble Nabucco’s creation by their commitment to South Stream. Sezin Oney, a Budapest-based correspondent and columnist for the Turkish daily Taraf, said, “Hungary itself signed an agreement to join South Stream on 10 March, when Prime Minister [Ferenc] Gyurcsany paid a visit to Moscow. … Despite Hungarians’ generally distrustful approach to Russia, which is due to historical reasons, public opinion remains quite rational, in my opinion, about the pipeline issue. Be it South Stream, be it Nabucco – if the gas is supplied and affordable, the source does not matter either to the public or to the politicians.”

    Some of the most energy-insecure countries on the EU’s eastern fringe, unsure of which pipeline has a better chance of being completed, are choosing to participate in Nabucco and South Stream alike. But the one neighboring country that is being bypassed in both scenarios is Ukraine. Seeing the clear deterioration of already strained relations between Moscow and Kyiv over Russia’s continuing attempts to undermine Ukraine’s current pro-Western stance, many European analysts agree that South Stream’s main objective is to enlarge Moscow’s political leverage over Kyiv. During last winter’s gas crisis, provoked by a Russian-Ukrainian dispute over gas and transit payments, Central and Eastern European public opinion generally sympathized with the Ukrainians, accusing Moscow of energy blackmailing its neighbor. Still, some Russian experts maintain that Central Europe should re-evaluate its stance on relations with Kyiv.

    “Given the political and economical instability in Ukraine, I think that it is very much in Europe’s interest to diminish this country’s role in gas transit,” argues Dmitri Babich, a political commentator with Russia Profile magazine, published by the government-owned RIA Novosti news agency.

    “Prime Minister Putin came to Ankara to show Europe that Nabucco and South Stream can complement each other and that Russia is willing to cooperate with both Turkey and the EU,” Babich said.

    Such views reflect the official position of the Russian government. Decision-makers in Moscow understand that Europe disapproves of the political use of energy and generally try not to manifest it too openly. However, when speaking off the record, one can hear different voices from Russian diplomatic circles.

    “The Kremlin is well aware of the fact that in the long term, Turkey will always strive to eventually join the EU, and we have already accepted it,” said a senior official at the Russian general consulate in Istanbul who asked to remain anonymous. “Still, Ukraine’s membership in NATO or in the EU is unacceptable, and its authorities should bear in mind that transit country status is not given forever.”

    On 13 July, at the Nabucco signing ceremony in Ankara, a special brand of wine, designed for this occasion, was distributed among the foreign guests. Composed of six wine strains, one from each country at the summit and one from Germany, it was produced to order for RWE, Germany’s major energy supply company and a partner in the Nabucco project.

    It seems that the next few months will be crucial not only for European energy solidarity, which will be tested by Russia’s rival project, but also for the fate of those 600 bottles of special wine. If the EU Nabucco participants and Turkey don’t let their commitments to Nabucco flag in favor of South Stream, politicians and diplomats will be able to exhibit the dry red Nabucco cuvée 2009 in their spacious offices with pride. Otherwise, the EU-backed pipeline’s setback will definitely spoil the wine.

     

      

     

     

    Jaroslaw Adamowski is a freelance writer who divides his time between Warsaw and Istanbul.

    South Stream would cross Turkish waters in the Black Sea before coming ashore in Bulgaria; Nabucco is set to traverse the Caucasus and Turkey over land.

    South Stream

    Nabucco

    Still, such views draw criticism not only from many EU officials, who regard the pipelines as competitors and often accuse Russia of attempts to destabilize European energy security, but also from Turkey’s opposition parties. “Before turning to profit, we had better check the financial side of the balance sheet in this project, which I believe is missing in the whole picture,” said Mustafa Ozyurek, former general manager of Petrol Ofisi, Turkey’s major oil and gas distribution company, and currently an MP for the opposition Republican People’s Party. Ozyurek said he and other experts believe the pipelines cannot both be operated cost-effectively, either by Turkey or the other partners.

    However, “Nabucco itself can cover up to only 7 percent of the European Union’s gas supply needs,” Turkone said, adding that “in order to provide enough energy to the European market, we need to focus on both projects, none of which should be viewed as harming anyone’s interests.”

    DIVIDED LOYALTIES

    While many observers continue to perceive the Russian-backed South Stream pipeline as a threat to the energy security of many new EU states, ironically, it is some of those same countries that could hobble Nabucco’s creation by their commitment to South Stream. Sezin Oney, a Budapest-based correspondent and columnist for the Turkish daily Taraf, said, “Hungary itself signed an agreement to join South Stream on 10 March, when Prime Minister [Ferenc] Gyurcsany paid a visit to Moscow. … Despite Hungarians’ generally distrustful approach to Russia, which is due to historical reasons, public opinion remains quite rational, in my opinion, about the pipeline issue. Be it South Stream, be it Nabucco – if the gas is supplied and affordable, the source does not matter either to the public or to the politicians.”

    Some of the most energy-insecure countries on the EU’s eastern fringe, unsure of which pipeline has a better chance of being completed, are choosing to participate in Nabucco and South Stream alike. But the one neighboring country that is being bypassed in both scenarios is Ukraine. Seeing the clear deterioration of already strained relations between Moscow and Kyiv over Russia’s continuing attempts to undermine Ukraine’s current pro-Western stance, many European analysts agree that South Stream’s main objective is to enlarge Moscow’s political leverage over Kyiv. During last winter’s gas crisis, provoked by a Russian-Ukrainian dispute over gas and transit payments, Central and Eastern European public opinion generally sympathized with the Ukrainians, accusing Moscow of energy blackmailing its neighbor. Still, some Russian experts maintain that Central Europe should re-evaluate its stance on relations with Kyiv.

    “Given the political and economical instability in Ukraine, I think that it is very much in Europe’s interest to diminish this country’s role in gas transit,” argues Dmitri Babich, a political commentator with Russia Profile magazine, published by the government-owned RIA Novosti news agency.

    “Prime Minister Putin came to Ankara to show Europe that Nabucco and South Stream can complement each other and that Russia is willing to cooperate with both Turkey and the EU,” Babich said.

    Such views reflect the official position of the Russian government. Decision-makers in Moscow understand that Europe disapproves of the political use of energy and generally try not to manifest it too openly. However, when speaking off the record, one can hear different voices from Russian diplomatic circles.

    “The Kremlin is well aware of the fact that in the long term, Turkey will always strive to eventually join the EU, and we have already accepted it,” said a senior official at the Russian general consulate in Istanbul who asked to remain anonymous. “Still, Ukraine’s membership in NATO or in the EU is unacceptable, and its authorities should bear in mind that transit country status is not given forever.”

    On 13 July, at the Nabucco signing ceremony in Ankara, a special brand of wine, designed for this occasion, was distributed among the foreign guests. Composed of six wine strains, one from each country at the summit and one from Germany, it was produced to order for RWE, Germany’s major energy supply company and a partner in the Nabucco project.

    It seems that the next few months will be crucial not only for European energy solidarity, which will be tested by Russia’s rival project, but also for the fate of those 600 bottles of special wine. If the EU Nabucco participants and Turkey don’t let their commitments to Nabucco flag in favor of South Stream, politicians and diplomats will be able to exhibit the dry red Nabucco cuvée 2009 in their spacious offices with pride. Otherwise, the EU-backed pipeline’s setback will definitely spoil the wine.

     

      

    Jaroslaw Adamowski is a freelance writer who divides his time between Warsaw and Istanbul.

  • Ex-spy is BP’s Lawrence of Arabia

    Ex-spy is BP’s Lawrence of Arabia

    By Glen Owen
    Last updated at 3:48 AM on 06th September 2009

    He is the modern Lawrence of Arabia who used his relationship with Colonel Gaddafi to help to secure a £200,000-a-year job with BP.

    The career of ex-MI6 agent Sir Mark Allen, the driving force behind the suspected ‘deal’ to return Abdelbaset Al Megrahi to Libya, reads like an espionage novel, taking in Middle East spy schools, falconry and secret meetings in Pall Mall gentlemen’s clubs.

    Our investigation has discovered how Sir Mark, 59 – who resigned from MI6 to join BP in 2004 – used the contacts made during a life in the shadows to build a new career in business.

     

    adsiz-2Sir Mark Allan, a modern Lawrence of Arabia, was the driving force behind the suspected ‘deal’ to return Abedlbaset Al Megrahi to Libya

    It reveals that he:

    • Led the diplomatic drive to lift sanctions against Libya, teaming up with a top CIA agent for private meetings with Colonel Gaddafi.
    • Chaired a secret meeting with Gaddafi’s spy chief in The Travellers Club in London, which included discussion of the Megrahi case and led to the Libyan leader being allowed to trade again with the West.
    • Resigned from MI6 six months later to join BP and was cleared by the Cabinet Office to start working for the oil giant immediately.
    • Is a friend of Justice Secretary Jack Straw, who backed his unsuccessful attempt to head MI6.

    The Mail on Sunday tracked Sir Mark to his secure £1million apartment in Westminster but he refused to talk about the role he may have had in securing Megrahi’s return.

    Last week it was revealed that he lobbied Mr Straw to speed up an agreement over prisoner transfers – which had been expected to lead to Megrahi’s return – to avoid jeopardising a trade deal with Libya worth up to £15billion to BP.

     

    Allen’s book, Falconery In Arabia which was published in 1980

    Yesterday Mr Straw admitted the agreement had played a ‘very big part’ in his decision to include Megrahi in the transfer deal.

    In 2003, Sir Mark, then head of MI6’s counter-terrorism unit, joined forces with Steve Kappes, now deputy director of the CIA, to lead secret talks with Gaddafi’s regime to end international sanctions.

    The two men embarked on shuttle diplomacy, flying around the world to meet senior Libyan figures, including Gaddafi.

    Pulitzer prize-winning US author Ron Suskind, who has investigated British and American dealings with Gaddafi, said Sir Mark had several meetings with the Libyan leader in summer 2003.

    ‘He played a key role in charming Gaddafi out of his international isolation,’ he said. ‘His job was to make it clear to Gaddafi that anything could be put on the negotiating table, including Megrahi.’ At that point, Megrahi had been in a Scottish jail for two years.

    A deal to end sanctions was sealed in December 2003 at The Travellers Club, where Sir Mark thrashed out an agreement with Gaddafi’s external intelligence chief Musa Kousa.

    In return for the lifting of sanctions – and, sources say, assurances from Britain about Megrahi’s future – Gaddafi promised to abandon plans for weapons of mass destruction. Britain and America resumed relations the next month.

    In May 2004, Sir Mark was the favourite of Mr Straw, then Foreign Secretary, to succeed Sir Richard Dearlove as Head of MI6. But the following month, after it was announced that the job had gone to John Scarlett, Sir Mark resigned to take up a special adviser’s job with BP. 

    Unlike Sir Jeremy Greenstock, Britain’s special representative to Iraq who joined BP at the same time, Sir Mark was told by the Cabinet Office’s Advisory Committee on Business Appointments that he could start work immediately.

    Sir Mark, who was knighted in 2005, immediately used his Libyan contacts in BP’s drive to win gas and oil contracts in the country, flying with the then BP boss Lord Browne to meet Gaddafi in the desert.

    The BP deal with Libya was announced in May 2007. But by November it had still not been ratified because of delays in finalising prisoner transfers which had been arranged between Tony Blair and Gaddafi in tandem with the BP deal. The sticking point was debate in the British Government over whether to exclude Megrahi.

    Sir Mark made two calls to Mr Straw, asking for the agreement to be speeded up. Within six weeks of his second call in November 2007, Mr Straw had written to Scottish Justice Minister Kenny MacAskill to say Megrahi would be included.

    In the Seventies, Sir Mark studied at the Middle East Centre for Arabic Studies, a British ‘spy school’ in a village near Beirut.

    He was posted to Cairo in 1978, where he developed a love of falcon-hunting with Bedouins.

    In 1980 he published Falconry In Arabia, with a foreword and photos by Wilfred

    Thesiger, the late writer-explorer who devoted his life to roaming deserts in the spirit of Lawrence of Arabia.

    A BP spokeswoman refused to comment yesterday.

  • Turkey’s Multivector Energy Hub: Ignore At Your Own Peril

    Turkey’s Multivector Energy Hub: Ignore At Your Own Peril

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    Chums: Turkish Prime Minister Recep Tayyip Erdogan (right) meets with his Russian counterpart, Vladimir Putin, in Ankara on August 6.

    August 31, 2009
    By Alexandros Petersen

    According to Turkey’s popular “Zaman” newspaper, the country can now claim the title of “world’s largest energy hub.”

    While over a decade of government policy has sought to transform Turkey’s energy sector into first a European, then a regional, and now a global energy hub, a rash of recent international agreements, according to “Zaman,” have enabled Turkey to finally attain that status.

    Deals with European Union member states on the Nabucco natural-gas pipeline, with Russia on the competing South Stream project, with Qatar on liquefied natural gas and a possible pipeline, with Azerbaijan on gas supplies for its isolated Nakhchivan autonomous region, and with Syria on a gas-import deal have kept Turkey’s energy aspirations in the headlines.

    These developments should not come as a surprise.

    For those looking at the big picture, Anatolia’s tailor-made to be the geographic center of crisscrossing pipelines, inputs, and outlets for the flow of hydrocarbon resources. Turkey is surrounded by the world’s largest natural-gas reserves — Russia, the greater Caspian region, Iran, Iraq, the Gulf and Egypt — and one of the world’s greatest markets, the European Union.

    Decision makers in Ankara certainly see this big picture, and with projects like Nabucco are pushing to realize Turkey’s potential.

    Their counterparts in Brussels and other European capitals, however, often do not see the same picture.

    Turkey, for European decision makers, is the alternative energy corridor to the resources of the Caspian, a thoroughfare to connect EU consumers with producers such as Azerbaijan and Turkmenistan, allowing for supply diversification and less dependence on problematic Russian reserves.

    This limited view often leads to incongruent policies between Ankara and Brussels, not to mention already Turkey-skeptical leaders such as France’s Nicholas Sarkozy and Germany’s Angela Merkel. The prolonged and difficult negotiations over Nabucco are just one example. 

    EU Myopia

    European energy policies, to the extent that there has been any unity of focus on reaching alternative reserves, have yet to take into account the enormous potential of genuinely partnering with Turkey as a global energy hub — as opposed to just hammering out a deal with Turkey because it controls the territory between the EU and the Caspian.

    It goes without saying that this myopia has led to complacency in Turkey’s EU accession process. One of the world’s largest markets for hydrocarbons has yet to open energy negotiations with the world’s largest energy hub, right on its doorstep.

    Most regrettably, this limited view of Turkey’s energy role among Western decision makers has contributed to an overall trans-Atlantic sense of “the loss of Turkey.” Ankara’s deals with Moscow on South Stream are seen as undermining the strategic Western-oriented Nabucco project. Turkish policymakers’ openness to including Russia and Iran in projects that are at least partly meant to strengthen the sovereignty of those powers’ smaller neighbors — and Prime Minister Tayyip Erdogan’s chummy relationship with Russian Prime Minister Vladimir Putin — have more than just raised eyebrows in Washington and Brussels.

    But, again, that view ignores the bigger map on the tables of Ankara. Turkey’s energy ambitions have evolved into a fully fledged multivector policy. And, given Turkey’s overwhelming dependence on Russian natural gas for its own consumption, it is surprising that Ankara is still so open to Western-oriented projects.

    To deny Turkey’s multivector energy policies and potential would be to take Ankara for granted. It is a losing proposition for proponents of Western-oriented projects such as Nabucco to expect not to compete with counteroffers from the other major energy players in Turkey’s neighborhood.

    It behooves Western decision makers to fully appreciate Turkey’s energy big picture or risk upcoming surprises such as Armenian electricity exports to Turkey and a Russia-dominated Turkish nuclear sector. The “world’s largest energy hub” headline is not only aimed at puffing up chests in Turkey, but at turning heads in Europe and the United States.

    Alexandros Petersen is Dinu Patriciu fellow for trans-Atlantic energy security and associate director of the Eurasia Energy Center at the Atlantic Council. The views expressed in this commentary are the author’s own and do not necessarily reflect those of RFE/RL.

    https://www.rferl.org/a/Turkeys_Multivector_Energy_Hub_Ignore_At_Your_Peril/1811254.html

  • Russia Gazprom unveils strategies for Turkey

    Russia Gazprom unveils strategies for Turkey

    Published: Friday 21 August 2009   

    Russian gas monopoly Gazprom has acquired a majority stake in the Turkish Bosphorus Gas Corporation, hoping to boost its investment and become a powerful player in the future strategic Eurasian gas hub to be established in Turkey, the Russian press announced on 19 August.

    Gazprom has expanded its share in Bosphorus Gas Corporation A.S. to 51 per cent, writes the daily Kommersant. The company, specialised in sales to final consumers, is expected to become a key player in the process of liberalization of the Turkish market, including the privatization of the gas supply network, the daily adds. 

    Gazprom had until now a 40% share in Bosphorus Gas, through its daughter company Gazprom Germania ZMB. The current share is 51% and the aim is to achieve soon a 71% share, officials said. But the Turkish press reportedly said that Gazprom already controls 71%, as it had acquired the shares of a Turkish key shareholder. 

    An unnamed high representative of Gazprom said that his company’s strategy is to make out of Bosphorus Gas “a powerbase of the Russian monopoly on the Turkish internal market”. 

    According to the source, Bosphorus Gas will boost its gas volume trade, participate in the privatization of pipelines and in building underground gas storages in Turkey. “In the perspective of Turkey becoming a huge world gas hub, Gazprom needs to have here its own companies,” the Gazprom representative told Kommersant. 

    On 6 August the prime ministers of Turkey and Russia signed a series of agreements on energy projects, including on Turkey’s acceptance that the “South Stream” gas pipeline would pass through Turkish territorial waters. As one of the aims of Russia with “South Steam” is to bypass Ukraine, the move would also help bypass Ukrainian territorial waters. 

    The source, quoted by Kommersant, however, dismissed the participation of Bosphorus Gas in “South Stream”, or in EU-favoured rival Nabucco pipeline. 

  • The Great Pipeline Opera

    The Great Pipeline Opera

    Inside the European pipeline fantasy that became a real-life gas war with Russia.

    www.foreignpolicy.com
    August 24, 2009

    BY DANIEL FREIFELD
    Daniel Freifeld is director of international programs at New York University’s Center on Law and Security.

    When Joschka Fischer’s lucrative new job as the “political communications advisor” to a consortium of European energy companies was leaked to a German business publication this summer, there was one comment that stood out. “Welcome to the club,” said Gerhard Schröder, an even more highly paid advocate for the other side in Europe’s increasingly politicized energy war.

    Schröder’s remark was short, snide — and very much to the point. For eight years, the two men had led Germany together, with Schröder ruling as its center-left chancellor and Fischer as his foreign minister. Their long-running partnership had survived a particularly complicated era in post-Cold War Europe, and publicly Fischer had always been supportive, even telling Der Spiegel that Schröder “will go down in the history books as a great chancellor.”

    But since their coalition government collapsed in 2005, Schröder’s controversial work has led to an ever-more-public breach between the former allies. Less than one month before leaving the chancellorship, Schröder used his office to guarantee a $1.4 billion loan (later turned down) for a Kremlin-backed natural gas pipeline that would connect Russia to Germany via the Baltic seabed. Then, just days after stepping down, Schröder accepted a senior post with the pipeline consortium run by Russia’s state gas monopoly Gazprom. The deal was a huge scandal inside Germany, where Schröder had already been known for years as Genosse der Bosse — “comrade of the bosses.”

    The chancellor’s move to the Kremlin energy payroll inspired a wave of alarm in Europe over its potentially dangerous dependence on Russia for natural gas. Moscow supplies about a third of the European Union’s gas — Europe’s preferred heating source — and some of its countries are 100 percent dependent on Russia. What’s more, Europe’s annual gas consumption is set to rise 40 percent by 2030, further stoking those fears about Russia. Several times in recent years, the Kremlin has abruptly cut off gas deliveries after disputes with key transit countries such as Ukraine, leaving millions of Europeans shivering in the winter cold.

    Schröder had been reliably pro-Russia while in office, even famously calling the KGB-spy-turned-president Vladimir Putin a “flawless democrat.” Although Fischer did not criticize his boss publicly at the time, more recently he has been openly dismissive. Schröder’s idea of Putin as a democrat, Fischer told the Wall Street Journal, “was never my position.” Asked later by Der Spiegel what he found “most objectionable” about Schröder’s tenure, Fischer replied succinctly: “His position on Russia.”

    This summer, Fischer made the breach with Schröder official: He signed up with a rival consortium — energy companies from Turkey, Bulgaria, Romania, Hungary, and Austria that have joined together to build the $11 billion Nabucco natural gas pipeline. Nabucco would bring gas from Middle Eastern and Caspian fields across Turkey’s Anatolian plateau, and north into Europe. The pipeline is backed and partly funded by the EU and is strongly supported by the United States. Perhaps most importantly, Nabucco would completely bypass Russia. Such an energy strategy, Fischer has argued, is urgently needed to stop Moscow’s “divide-and-conquer politics.”

    Moscow, not surprisingly, is pulling out all the stops to scuttle the project. It is seducing pliant politicians and resorting to old-fashioned bullying, especially in the states that Nabucco transits. It is acquiring stakes in European energy companies, often through questionable shell companies, that could complicate Nabucco’s completion. It is buying up natural gas in Central Asia and the Caspian, even paying up to four times more than in previous years, to deny supplies to Nabucco. And it has proposed a rival pipeline, called South Stream, which would flow from Russia across the Black Sea to Bulgaria and the Balkans and fork, with one spur running west to Italy and the other north to Austria.

    In many ways, Schröder and Fischer personify the intense struggle — some call it a war — over Europe’s energy future. On one side are those countries most worried about their dependence on Moscow, especially the former communist countries of Central and Eastern Europe. On the other are countries such as Italy and Germany and leaders such as Schröder, who see closer ties with Russia as both a mercantilist opportunity and a strategic imperative. When I caught up with Schröder at a conference in Houston earlier this year, he was quick to brush aside concerns about Moscow. “There is no reason to doubt the reliability of Russia as a partner,” Schröder said. “We must be a partner of Russia if we want to share in the vast raw material reserves in Siberia. The alternative for Russia would be to share these reserves with China.”

    This gas war is especially hard-fought because of the physical nature of the prize itself. Unlike oil, which can be put onto tankers and shipped anywhere, gas is generally moved in pipelines that traverse, and are thus tethered to, geography. Because a pipeline cannot be rerouted, producers and consumers sign long-term agreements that bind one to the politics of the other, as well as to the transit states in between. In this way, today’s gas war is a zero-sum conflict similar to the scramble for resources that divided Eurasia in the 19th century. And now, as then, commerce is taking a back seat to politics.

    That is what I found when I set out this spring to travel the pipeline routes, encountering along the way a rogue’s gallery of cynical politicians, murky middlemen, insistent executives, and innumerable technocrats, each eager to shape the decision. But the real question that will determine Nabucco’s future — a question vividly on display in every country the pipeline will touch — is whether Europe has the stomach to fight as hard for its interests as Russia does for its own.

    One evening in 2002 in Vienna, a small group of Austrian energy executives took their colleagues from Turkish, Hungarian, Bulgarian, and Romanian firms to see a rarely performed Verdi opera. It recounted the plight of Jews expelled from Mesopotamia by King Nebuchadnezzar. The officials had spent the day sketching out a plan for a 2,050-mile pipeline that could transport up to 1.1 trillion cubic feet of natural gas every year across their countries and into European markets. The sources of this gas would not be Russia, but Azerbaijan, maybe Iran one day, and with a U.S.-led war against Saddam Hussein looking increasingly likely, possibly the gas fields of northern Iraq. The opera they attended that night was called Nabucco, and that is the name they gave their pipeline.

    The original impetus for the project was just business: The Turks and Austrians saw it as a way to get new supplies of gas from the Caspian and Middle East — not to mention lucrative transit fees for moving it across their territories into Europe. But politics soon entered into it, as Nabucco won early moral support from Russia skeptics in Central and Eastern Europe. They saw the pipeline as a historic opportunity to build a new lifeline to the West while weakening Russia’s grip on them. Many worried, as former Estonian Prime Minister Mart Laar wrote, that “Russian leaders regard their energy assets as tools of foreign-policy leverage and envisage a future in which resource competition may be resolved by military means.” The main energy firms in Bulgaria, Romania, and Hungary — all countries that would host Nabucco — signed on to help build the pipeline.

    The big powers of Western Europe, however, were less dependent on Russian gas and far less willing to antagonize Moscow by bringing non-Russian gas into Europe through former Soviet satellites. Italy, under Silvio Berlusconi, and Germany, under both Schröder and his successor Angela Merkel, dragged their feet on Nabucco. France, with its nicely diversified supply of energy, had little appetite for changing the status quo. Together, these countries blocked any effort within the European Union to allocate funding for Nabucco or even make support for the pipeline a common policy. This resistance infuriated the European Union’s newest members, and it still rankles. “The EU role has been weak,” Mihaly Bayer, Hungary’s special representative for Nabucco, told me. “The EU coordinator for Nabucco, Jozias van Aartsen, simultaneously serves as the mayor of The Hague!” Bayer thundered when we talked in his Budapest office. “When I assumed my post, I sent him multiple letters offering my assistance. I even spent two days in The Hague trying to meet with him. He ignored me.”

    This east-west deadlock held until 2006, when events started to push in Nabucco’s favor. The reason had everything to do with Ukraine, which has clashed repeatedly with Russia in recent years.

    Eighty percent of natural gas from Russia travels to Europe through Ukraine, across an energy infrastructure built by the Soviet Union after the 1956 Hungarian uprising. The main pipelines converge in Ukraine before fanning out into Eastern Europe, and were key to the Kremlin’s strategy of controlling its Warsaw Pact satellites. The route went through Ukraine because Soviet planners never imagined a day when Ukraine would not be ruled by Moscow. But when that day did arrive, on Aug. 24, 1991, Russia’s hold on Ukraine did not end. It just grew more complex, and gas remained a central means of control.

    How this unfolded was explained to me in Kiev by Bohden Sokolovsky, an energy advisor to Ukrainian President Viktor Yushchenko, over a breakfast of vodka, blintzes, and cigarettes. It all came down to two things, Sokolovsky said, “Otkat and deriban” — roughly translated, kickbacks and theft. As Soviet assets and state-run energy companies were privatized in Ukraine in the 1990s, apparatchiks and businessmen on both sides of the border concocted elaborate schemes to get in on the action. They manipulated prices and parceled out kickbacks. The deals were “obviously corrupt,” recalled a senior advisor to former Ukrainian President Leonid Kuchma. “But it was a great deal for Ukraine.”

    Many Europeans disliked their dependence on Ukraine. “The very basis of the gas business in Ukraine is graft,” Vaclav Bartuska, the Czech Republic’s ambassador at large for energy security, told me. But the desire to do something about it only really materialized with the gas disputes that broke out between Ukraine and Russia after the 2004 Orange Revolution. Ukrainian protesters had just successfully contested an election marred by fraud and voter intimidation, ultimately preventing the Kremlin-favored candidate from taking power. Soon after, the new president, Yushchenko, sought to steer Ukraine into a Euro-Atlantic orbit. This was a direct threat to Russia’s influence over its main point of entry into European gas markets. So Putin countered that if Ukraine wanted to be a Western country, it would have to pay the far higher Western price for gas. When Kiev refused to pay those higher prices in the winter of 2006, Moscow shut off gas shipments to its neighbor for four days, denying fuel to millions of other Europeans as well.

    “It wasn’t until the 2006 gas crisis that the rest of Europe actually started to care about what was going on in Ukraine,” recalled Bartuska, who mediated yet another dispute between Russia and Ukraine this January. Many more Europeans began to view Russia not as a reliable supplier of gas but as an aggressive petrostate that privileged its political organizations over its commercial obligations.

    Almost overnight, support for Nabucco grew dramatically throughout Europe. But the gas shut-offs also added new impetus to Nabucco’s Russian-backed rival, South Stream. Whereas Nabucco’s supporters saw warning signs in Ukraine about Russian aggression, others saw a corrupt, untrustworthy transit state disrupting Russia’s reliable supply of gas. As Dmitry Rogozin, Russia’s ambassador to NATO, put it: “It’s clear that if Europe wants to have guaranteed natural gas supplies, as well as oil in its pipelines, then it cannot fully rely on its wonderful ally, Mr. Yushchenko.” The Italian energy company Eni led the way, signing on to South Stream in 2007.

    And then, of course, there is Germany, where Gerhard Schröder is hardly Russia’s only friend. At the same Houston conference where I saw Schröder, I attended a small breakfast for energy company officials and experts. At the first mention of transit security, Reinier Zwitserloot, a spry German of about 60, shot up and shouted, “The most reliable transit state is the Baltic!” He went on: “As far as I am concerned, Nabucco is nothing but an opera!” I later learned that Zwitserloot had recently been awarded the Order of Friendship of the Russian Federation, Moscow’s highest honor for non-Russian citizens.

    In this opera, Turkey has been cast in one of the leading roles. With its indispensable geographic position between the oil and gas reserves of Iraq, Iran, and the Caspian, it is an absolute certainty that Turkey will host major pipelines sooner or later. If Nabucco succeeds, Turkey could be the biggest winner, both economically and geopolitically — a fact not lost on Russia or Europe. Or Turkey.

    Until the gas wars began, Turkey had a weak hand: It had been rebuffed for EU membership and depended on Russia for a majority of its natural gas. But now, with the country’s gas demand skyrocketing and Turkish supply contracts with Russia set to expire, Turkey has not been shy in reminding Europe that it has options. “What is important is to gain natural gas,” said Taner Yildiz, Turkey’s minister of energy. But doing it through Nabucco, he added, “is not obligatory.” Turkey’s ambassador to the United States has pointedly called the EU “the biggest impediment to progress on Nabucco’s development.”

    When I sat down in late April with Cuneyd Zapsu, a founding member of Turkey’s ruling Justice and Development Party and a longtime counselor to Prime Minister Recep Tayyip Erdogan, he was openly frustrated with Europe’s wavering about the pipeline. “Turkey has been ready to sign the deal,” he told me. “But every time the consortium agrees, [our Nabucco partners] throw a new term in.”

    Zapsu understands Turkey’s delicate but fortuitous position. “Everyone is trying to make Turkey the enemy,” he said. But shifting his gaze out the window and down onto the Bosporus where Europe and Asia meet, Zapsu just smiled. “Everyone loves us.”

    The mood is less one of love than of fear in several other countries where Nabucco would run, as Russia has aggressively stepped up its efforts to block the pipeline. Next door to Turkey in Bulgaria — the poorest member of the EU and a transit state for both the Nabucco and South Stream pipelines — Ognyan Minchev, head of the Institute for Regional and International Studies, told me how Moscow threatened the Bulgarians in 2006. Scrap an agreement with Gazprom and sign a new contract with higher prices for Russia and lower transit fees for Bulgaria, they were told, or else the gas would be cut off. “The Bulgarian government is obedient to Russia,” Minchev said. “Bulgaria has put the entire energy system in Russian hands.”

    Further along the Nabucco route, in Hungary, Laszlo Varro has similar fears. At dawn one day in April, the tall Hungarian led his small dog around a hilltop park overlooking Budapest, recounting how the Russian energy giant Surgutneftegaz had recently acquired a decisive stake in the Hungarian energy firm MOL, where Varro is head of strategy. “It is one of the least transparent energy companies — in Russia,” he said. Varro’s concern, he explained, is that no one really knows who is behind Surgutneftegaz — or rather, he quickly added, that “everyone knows who is behind the company since no one knows.” Others in Hungary suspect the same, and one major newspaper spelled it out in a recent headline: “Mr. Putin, Declare Yourself.”

    Surgutneftegaz is run by Vladimir Bogdanov, an oligarch who managed Putin’s 2000 presidential campaign in western Siberia. The secretive Surgutneftegaz has offered almost twice the market value for its shares in MOL. Varro and others see a sinister reason for this seemingly illogical behavior: MOL is a Nabucco consortium member, and by buying this stake, Surgutneftegaz can cut off funding for the pipeline and cripple it in Hungary.

    Russian firms are making similar acquisitions in Austria, which is the proposed end of the road for both Nabucco and South Stream. Centrex Europe Energy & Gas, an opaque gas trading firm with ties to Gazprom, makes its money buying cheap gas from Russia and reselling it for profit in Austria. The German magazine Stern recently traced Centrex’s profits back to a company registered to a phony address at a drab Soviet-style housing block in Russia. And yet, Centrex recently entered into a partnership with Gazprom Germania to take a 20 percent stake in Austria’s Baumgarten trading platform and storage facilities, where the two rival pipelines will literally terminate. Considering that Gazprom already holds a 30 percent share in Baumgarten, this means that Russia’s state-run energy company now controls half of the most important gas storage and distribution system in central Europe — and the future terminus of Eurasia’s competing southern pipelines.

    Not every country in Europe is so concerned about Russia, however. In Serbia, I was installed at the far end of a conference table opposite Mrakic Dusan, the state secretary for energy and mines. After an initial back and forth, Dusan interrupted me. “Where are the hard questions?” he demanded. So I asked him if Serbia is inviting unacceptable risks by signing a partnership with Gazprom. “We have a great contract with Russia,” Dusan insisted. I asked him if he worries that Gazprom has an unsound financial and strategic position. “After 2030, only Russia, Qatar, Iran, and Turkmenistan will still have gas. With Russia in control, this ‘gas-OPEC’ will control world supplies.” Dusan rubbed his chin as he spoke, revealing a large fancy watch. I asked where he got it. Smirking, he responded before the translator could finish.

    “Putin.”

    For the last few years, veteran U.S. diplomat Steven Mann, the State Department’s coordinator for Eurasian energy diplomacy, watched as Americans and Europeans struggled to turn Nabucco from grandiose idea to gas-delivering reality. But when he finally left the job earlier this year, he told author Steve LeVine to beware “Nabucco hucksterism” — a condition he defined as occurring when political enthusiasm for an energy deal gets out too far ahead of its commerical viability. “There have been quite a number of officials who know very little about energy who have been charging into the pipeline debate,” Mann told LeVine. “Nabucco is a highly desirable project, don’t get me wrong. But there are other highly desirable projects besides Nabucco,” he added. “And the overriding question for all these projects is, Where’s the gas?”

    For Nabucco to be initially viable, most energy experts agree, the gas will need to come from the former Soviet state of Azerbaijan — 283 billion cubic feet of gas per year, to be precise, roughly 25 percent of the pipeline’s capacity. Indeed, without Azerbaijan and its major natural gas supplies, Nabucco is a non-starter.

    Russia knows this too, so it has been doing everything in its power to deny Nabucco gas from Azerbaijan, buying it to replenish Russia’s declining production. In April, Russian President Dmitry Medvedev hosted Azeri President Ilham Aliyev in Moscow to discuss Russian purchases of Azerbaijan’s gas. And then in June, they inked an agreement in which Azerbaijan promised to sell Russia up to 500 million cubic feet of gas — at well over market rate — from its offshore gas field, Shah Deniz.

    If there were still any doubt about how far Russia would go to fight for its interests in the Caucasus, Azerbaijan need only look at Georgia, which is still reeling from Russia’s invasion last summer. It is the key transit state between Azerbaijan and Turkey, hosting two pipelines that bring oil and gas from the Caspian to Turkey. By attacking its small neighbor, Russia effectively warned not only Georgia but the whole neighborhood.

    But in recent months, Nabucco’s European supporters have started to get their acts together, and Azerbaijan has begun to take notice of that, too. In May, the EU signed a deal of its own with Azerbaijan, which committed to building energy and trade links directly with Europe. This was arguably a more valuable agreement than the one Azerbaijan later signed with Gazprom, which offered not money but only vague pledges that may or may not be met.

    Then, on July 13, beneath the crystal chandeliers of an Ankara hotel ballroom, the prime ministers of Turkey, Bulgaria, Romania, Hungary, and Austria signed a Nabucco treaty describing exactly how the pipeline would operate and how tariffs would be calculated. Several days after the announcement that Nabucco had hired Joschka Fischer, who is beloved by many in Turkey for his passionate support for its EU membership, Turkey had dropped a major demand that it had insisted on for months, and the path to the deal was cleared. This was a major breakthrough, and it led Natig Aliyev, Azerbaijan’s energy minister, to remark: “I am sure that the project will be realized successfully.” When that day comes, Azerbaijan will enjoy both higher prices for its gas and a lifeline to the West.

    Also in attendance in Ankara was Iraqi Prime Minister Nuri al-Maliki, whose country looks increasingly likely to play a large role in supplying Nabucco — possibly larger than that of Azerbaijan. By some estimates, Iraq could provide more than 500 billion cubic feet of natural gas per year by 2014, when Nabucco is expected to be up and running. All of the major players — Arab Iraqis, Kurdish Iraqis, and the Turks next door — want to see Iraqi gas heading north through Turkey and into Europe. Recently, a Hungarian and an Austrian energy firm, both Nabucco consortium members, made deals to take 10 percent apiece in the $8 billion Pearl Petroleum gas project in Iraqi Kurdistan. It now seems distinctly possible that a pipeline named after Nebuchadnezzar, the ancient ruler of Babylon, might ultimately owe its success to Iraq.

    When Gerhard Schröder signed on with Gazprom in 2005, the smart money in the gas war was on Moscow. Now that picture is changing, if slightly. There is a sense that the Kremlin overplayed its hand both in the gas shut-offs to Ukraine and in the Georgia war last summer. Indeed, U.S. Vice President Joe Biden recently echoed this view of Russia’s energy power play. “[Russia’s] actions relative to essentially blackmailing a country and a continent on natural gas, what did it produce?” he pointed out. “You’ve now got an agreement [Nabucco] that no one thought they could have.” At the same time, the global recession has hit Russia particularly hard, and Gazprom’s profits fell 84 percent in the fourth quarter of 2008, making it Russia’s biggest debtor, rather than the world’s biggest company, as it once bragged it would become.

    And Nabucco’s European supporters finally seem to be taking their own side in this fight. They now have a heavyweight rainmaker in Fischer, who is going toe to toe with his old boss Schröder in the struggle for influence in the path of the pipelines. The recent EU agreement with Azerbaijan and the fanfare-laden treaty signing in Turkey are contributing to the sense that Europe is leveling the playing field with Russia. “We have started to confound the skeptics, the unbelievers,” European Commission President José Manuel Barroso said in July. “Now that we have an agreement, I believe that this pipeline is inevitable rather than just probable.”

    And yet, if recent experience teaches anything, it is not to count Russia out, especially when so much is at stake. When I raised this issue with Russian Energy Minster Sergei Shmatko at a meeting in Bulgaria in April, he shot me a threatening glare and cautioned against planning for an energy future without Russia, unless the Europeans were fully prepared to deliver it. “We have an expression in Russia,” Shmatko told me. “Don’t sell the skin off a bear before you kill it.”