European Tribune - Community, Politics & Progress.

The Balkans Pipeline Poker

by DoDo
Wed Mar 14th, 2007 at 09:18:55 AM EST

In yesterday's Salon, Fran quoted the IHT:

BUDAPEST: As the European Union struggles to achieve a common energy security policy, the Socialist-led government of Hungary has broken with the bloc by joining forces with Gazprom, the Russian energy giant, to extend a pipeline from Turkey to Hungary.
The joint project would compete directly with an EU plan to construct its own pipeline to reduce dependence on Russian energy supplies.
Starting in Turkey and crossing Bulgaria and Romania, the extended Gazprom pipeline, called Blue Stream, would follow almost the same route as the EU project, cost just as much and be finished at about the same time.
The immediate advantage to Hungary in joining the Russian project was unclear, because Budapest could end up contributing to the construction of competing pipelines.

Um, er. From what I read up on this as dutiful reporter for ET, the joint project is not new but one year old, there was no final decision for either project, and the game has more players with less clear-cut differences.

The competition concerns the supply of the EU with gas from the Southeast.

One competitor is the "Nabucco" project: a pipeline promoted by the Turkish, Bulgarian, Romanian, Hungarian and Austrian energy companies whose network it would touch on. If I got the details right, the main promoter is Austria's OMV.

Since the pipeline would primarily enable imports from Iran and Central Asia bypassing both Russia and Ukraine, the project is endorsed both by the "supply diversification" afficiados in the EU, and, paradoxically (given Iran's role), US Great Game players. However, the project owners emphasize that the pipeline would be open to Russian gas transit, too.

The other competitor would be an extension of "Blue Stream", Gazprom's Russia-Turkey trans-Black-Sea pipeline, which would enable Russia to bypass its quarrelsome neighbours as transit countries to the EU.

Why does the Hungarian government, one filled with Atlanticist neolibs, ride both horses?

To make certain that Hungary is on a pipeline.

On one hand, the Nabucco project is struggling. Its relatively small project participants have trouble bringing up capital, and they just failed to get France's Total onboard as sixth consortium member. As the IHT article quotes PM Gyurcsány:

"Which of these two pipelines exists?" asked Gyurcsany, whose company joined the Union in 2004. The Blue Stream line already runs under the Black Sea to Turkey.
"The Nabucco has been a long dream and an old plan," he said. "But we don't need dreams. We need projects."
"The single problem with Nabucco is that we cannot see when we will have gas from it," Gyurcsany said. "If someone could say to me definitively, you would have gas by a certain time, fine, but you can only heat the apartments with gas and not with dreams."

But there is more. There is the political uncertainty in connection with Iran (also mentioned later in the article). What's more, Iran has other choices as export target than Europe -- and recently, Iran and Russia made a strategic agreement over coordinating their strategic development for gas exports, which reduces the potential for supplier competition.

On the other hand, the primary target of the Blue Stream extension would be Italy. This means the route isn't fixed -- and Gasprom has potential transit countries in competition. After all, the Blue Stream extension could also take a route across Greece and then up on the bottom of the Adriatic Sea.

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The Balkans Pipeline Poker | 10 comments (10 topical, 0 editorial, 0 hidden)

Re: The Balkans Pipeline Poker (none / 1)

I wonder if our experts here (starting with Jérôme) and posters from other affected countries can pitch in with more details or corrections.

In the meantime, I give my personal comment: I think the Hungarian government would do good investing heavily into building insulation and efficient thermostats in offices and apartment blocks, plus some deep geothermal, than another pipeline.

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.

by DoDo on Wed Mar 14th, 2007 at 05:58:47 AM EST

Poker indeed (4.00 / 3)

Pipeline poker is always a game of poker and bluff. 99% of what is publicly said is bullshit, knowledgedly or not.

Players like to keep otions on the table to reempt choices, or to force choices by others.

But if you look at the underlying reality of supply and demand (which is what a pipeline connects, after all), a lot of the fluff goes away.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Wed Mar 14th, 2007 at 08:55:42 AM EST
[ Parent ]

Re: Poker indeed (4.00 / 2)

But if you look at the underlying reality of supply and demand (which is what a pipeline connects, after all), a lot of the fluff goes away.

What does that mean in this case?

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.

by DoDo on Wed Mar 14th, 2007 at 01:27:11 PM EST
[ Parent ]

Re: The Balkans Pipeline Poker (none / 1)

Just discovered the IHT's strange typo:

"Which of these two pipelines exists?" asked Gyurcsany, whose company joined the Union in 2004.

Company? Country!

Is this some strange Freudian slip?

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.

by DoDo on Wed Mar 14th, 2007 at 06:14:26 AM EST

Re: The Balkans Pipeline Poker (4.00 / 3)

the Hungarian government, one filled with Atlanticist neolibs

But read the newspaper, DoDo, read!

the Socialist-led government of Hungary

Strange you should get things wrong with your own company.

Er, country.

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 14th, 2007 at 07:16:47 AM EST

Re: The Balkans Pipeline Poker (4.00 / 2)

I think "Atlanticist Neolibs" describes the current state of European Social Democracy rather well.

"It's the statue, man, The Statue."

by Migeru (migeru at eurotrib dot com) on Wed Mar 14th, 2007 at 07:21:06 AM EST
[ Parent ]

Re: The Balkans Pipeline Poker (none / 1)

Could be. I was in fact (though it may not be obvious) sniggering at the NYT/IHT's framing of "Socialist-led" being in cahoots with the Russians...

I wonder when and how they'll re-introduce "the Iron Curtain"?

When locusts move on, they leave nothing behind

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 14th, 2007 at 07:27:13 AM EST
[ Parent ]

Re: The Balkans Pipeline Poker (none / 1)

LOL :-)

Such spin is almost boring to point out. But now that you put the spotlight on it, I checked and noticed that they mention János Kóka (whom they wrote with typo as "Koko", which would either be the nickname of cocaine or the nickname of an once successful lightweight boxer in Hungary), but fail to point out that he is from the (neo)liberal coalition partner Free Democrats, the former liberal oppositionaries' party, in fact Mr. Kóka (an insufferable yuppie) is currently running for party leadership (with the endorsement of the current one).

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.

by DoDo on Wed Mar 14th, 2007 at 07:35:38 AM EST
[ Parent ]

Re: The Balkans Pipeline Poker (4.00 / 4)

I sent the following LTE to IHT:

Dear Editors,
As published, the article "Hungary chooses Gazprom over EU" by Judy Dempsey (IHT, March 12) doesn't do justice to its subject, neither in its presentation, nor in its facts, and certainly not in its depth.
First of all, after the players are introduced with omissions that almost seem like cherry-picking, a less informed reader could be forgiven to think that the Hungarian political landscape consists of pro-Russian post-communists and a pro-EU, pro-US right-wing opposition.
The article fails to mention that also quoted economy minister János Kóka (not Koko) is a member of junior coalition parner Free Democrats, the strongly pro-free-markets, pro-EU, pro-US heir to the onetime pro-Western liberal opposition movement. What's more, the accession of PM Gyurcsány's country (not company...) to the EU happened under the current coalition with fervent support of both parties in it, who also lent a markedly uncritical support to the current US government during the Iraq war; while it was the right-wing opposition that forced the withdrawal of Hungarian troops from Iraq in parliament, and that opposition also tolerated strongly Eurosceptic elements in their midst.
The title dramatised to the extent of being untrue. There has been no decision for Gazprom's Blue Stream pipeline extension over the rival Nabucco project. Nor is support for the first new, the Hungarian government follows the dual track for a year now. The only thing new is an interview with PM Gyurcsány, which should be interpreted as one move in a long poker game.
To make more sense of this game, the article could first have pointed out some more problems faced by the Nabucco project. There is the recent failure to secure the support of a big partner (French Total). Beyond the geopolitical risk of a US (or Israeli) attack on Iran, there is also the fact that Iran and Russia recently agreed to coordinate their export development, which doesn't bode well for European hopes of diversification and supplier competition.
Finally, for the Hungarian government, there is a much more realistic risk in this poker game than having to finance to two pipelines actually built: not being passed by a new pipeline at all. The article omits to mention that the main target of the Blue Stream extension would be Italy, not Hungary or others along the way. And to serve that market, alternative routes are possible: for example, all across Greece and then up North under the Adriatic Sea.
sincerely

*Traitor*, n.
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.

by DoDo on Wed Mar 14th, 2007 at 12:58:52 PM EST

Re: The Balkans Pipeline Poker (none / 0)

What bdo they mean by, "alternate routes are possible, for example through Greece to Italy?"

Possible, or already being planned and built?

http://article.nationalreview.com/?q=OTg1MjA2ZjBmN2UwYjhhNDBjNTM0N2YyMjhkNzVjZjg=

Note the TGI part of the equation.

by Upstate NY on Wed Mar 14th, 2007 at 04:56:49 PM EST

The Balkans Pipeline Poker | 10 comments (10 topical, 0 editorial, 0 hidden)

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