Support for Kazakh pipeline faces backlash

By Andrew Beatty

Date: 08/06/06

The EU is to finance investigations into a new pipeline that would dramatically increase gas flows from central Asia to Europe.

Commission sources say feasibility studies could begin before the end of this year on a gas pipeline between Kazakhstan and Azerbaijan.

Russia opposes the construction of the pipeline. If built it would bring central Asian gas from the east side of the Caspian Sea across to Europe without going through Russia or Iran.

The investigation is one of the first practical steps taken by the EU to diversify energy supplies since the Russian energy dispute with Ukraine at the beginning of this year.

Although the pipeline would be built by privately funded businesses the EU initiative gives a strong political signal.

A recent EU report on the external aspects of energy security warned that some countries were increasingly willing to use energy as a political tool and recommended that the EU diversify its sources of energy.

Although the route has long been considered, in the past the pipeline has been deemed too expensive. High energy prices and strained ties with traditional suppliers have prompted a re-think.

But political opposition is strong. Russian officials raised concerns about the plan during the recent EU-Russia summit on 25 May, arguing that the pipeline would not be profitable. Moscow claims the pipeline would cost in excess of 20 billion euro to build and would not have enough gas to supply it. EU officials put the figure closer to 3bn euro.

"It is a bit of a game between Russia, Central Asia and the European Union" said Shamil Yenikeyeff, an expert on the Russian energy sector at the Oxford Institute of Energy Studies. "Russia has tried to undermine projects that do not go through Russian territory."

Russia, the US and EU are all paying considerable diplomatic attention to major producers around the Caspian Sea. Andris Piebalgs, the European commissioner for energy, visited Kazakhstan with industry representatives in May, the first visit of an EU energy commissioner to the country. Russian President Vladimir Putin recently announced that Russia would pay more for Kazakh gas and has reportedly invited the President of Kazakhstan Nursultan Nazarbayev to meet G8 leaders at their summit in St Petersburg in mid-July.

But any proposals to build the pipeline are also likely to face opposition from environmentalists and human rights groups.

The Kazakh authorities have been accused of human rights abuses and international observers said elections in 2005 were not free and fair.

Article reports that the EU was to finance investigations into a new pipeline that would dramatically increase gas flows from central Asia to Europe. Sources within the European Commission say feasibility studies could begin before the end of 2006 on a gas pipeline between Kazakhstan and Azerbaijan.