[This article appeared the same day as Cheney's front page speech slamming Russia. The hypocrasy is thick considering these Central Asia guys we're embracing are dictators who make Putin look like Thomas Jefferson.]
May 5 2006 Financial Times
Scramble to grab central Asia's gas By Isabel Gorst in Moscow
A proposed gas pipeline from central Asia across the Caspian Sea to Europe will get an important boost when Dick Cheney, US vice president, meets Nursultan Nazarbayev, the Kazakh leader, today.
Mr Cheney will seek to enrol Mr Nazarbayev's support for a scheme to bring Kazakh gas to Azerbaijan to join a new line to Turkey -- ending Russia's stranglehold on gas export routes out of landlocked central Asia.
During talks with Mr Nazarbayev, Mr Cheney will try to give a "big nudge" to oil and gas corridors linking Kazakhstan with Europe while "planting a big American flag in central Asia," said Glen Howard, the head of the Jamestown Foundation think-tank. "We are flexing our muscles a little bit," Mr Howard added.
The plan is one of a flurry of new pipeline schemes spanning central Asia and the Caucasus that are the counters in a geopolitical chess game playing out between the US, Russia and China for control over one of the world's last undeveloped oil and gas basins.
Mr Cheney's visit to Kazakhstan, coming hard on the heels of a trip to the White House by Ilham Aliyev, the president of Azerbaijan, underscores the strategic importance to the US of central Asia and the Caucasus at a time of increasingly strained ties with Russia.
Kate Hardin, Cambridge Energy Research Associates director, said "Europe and the US took a second look at the map" in central Asia after the crisis in January when Gazprom, the Russian natural gas giant, temporarily shut off gas supplies to Ukraine.
Mr Aliyev spent three days in Washington last week, stressing the importance of Azerbaijan as a reliable, secular Muslim ally that could offer oil and gas to Europe without being beholden to Russian transit routes. The US promoted construction of parallel oil and gas pipelines from Azerbaijan across Georgia to Turkey. Both will start up this year, marking a major strategic gain for the US in the Caspian energy arena.
Limited marketing opportunities exist in Turkey which has committed to import more gas than it needs from various sources, including Russia. But the broader plan is to establish Turkey as a transit highway to Europe, where Caspian gas will compete head-on with Russian supplies.
Gazprom's strategy is identical -- and it is ahead in the game. Vladimir Putin, Russian president, last November announced plans to expand a pipeline Gazprom built across the Black Sea to Turkey in 2003, that could provide extra supplies to southern Europe and Italy. Gazprom's new advance from Turkey, combined with another planned export route across the Baltic to northern Europe, would create a ring of pipelines around the continent that Gazprom's detractors regard as a noose.
With oil and gas export routes now established from Azerbaijan that exclude Russia, the US is shifting its focus to trying to offset Russian dominance over exports from Kazakhstan.
This is the second US attempt to bring central Asian gas into Europe. Lengthy negotiations of a scheme to pipe gas from Turkmenistan across the Caspian to Azerbaijan broke down in the 1990s mainly because Saparmurat Niyazov, the authoritarian Turkmen leader, kept changing the terms. US energy officials now regard Turkmenistan, the central Asian republic with the biggest gas reserves, as "a lost cause".
But there were other barriers to the Turkmen project that could rear their heads again. Russia claims Caspian subsea pipelines are environmentally unacceptable. Azerbaijan is reluctant to share access to the limited Turkish market with competitors from central Asia.
However, investors' misgivings about the high cost of offshore pipeline construction have evaporated against a backdrop of record oil and gas prices and frenzied concern about energy security.
Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies said: "With $60 oil these pipelines are affordable. If you don't build a pipeline you are not in the game."
A trans-Caspian gas pipeline would fit with Mr Nazarbayev's strategy to diversify Kazakh energy export routes. But the president is expected to keep all options open rather than commit to a project that would tip the delicate balance of Kazakhstan's energy relations with the US, Russia and China.
Russia would object to any pipeline that eroded its monopoly over central Asian gas export routes. Gazprom's strategy is to import growing volumes of central Asian gas to feed its low-price domestic market, thereby freeing up its own production for sale to more lucrative European customers.
China is also competing for central Asian gas and is willing to commit huge sums to pipeline projects. Kazakhstan proposes to build a gas line to China that could eventually serve as a transit hub for central Asian exports moving east to feed the world's fastest growing energy consumer.
Privately, Kazakh energy officials admit that the appearance of alternative gas pipeline proposals on the board may coax more generous export terms out of the Russians.
Additional reporting by Guy Dinmore in Washington