Central Asia Energy Game
In the 19th century, Russian and British diplomats, officers, and spies sketched maps of central Asia, carving political boundaries into the steppes and mountains as they played “The Great Game” to win control of the region. Today, there is a new map of central Asia, pored over by governments and oil company executives. It is known as “hub and spoke.” The hub is the Caspian Sea, and the spokes are the multiple pipe-lines emanating from it, representing potential export routes for the vast oil and gas resources that lie beneath.
Today’s superpower struggle is over not the land itself but the hydrocarbons under it-believed to be among the world’s largest untapped fossil fuel resources. And there are some new players. While Russia still seeks to maintain control over its former satellites, China, with its seemingly endless thirst for energy, has entered the region with a vengeance. The United States, always looking for alternatives to buying oil from the Arab-dominated Organization of Petroleum Exporting Countries, has also made it a mission to loosen Russia’s grip on energy resources in the area, while keeping China and Iran from exerting too much influence over their neighbors. “It is the one non-Persian Gulf, non-OPEC, major resource holder, but there is no other neighborhood bounded by such big interests,” says Frank Verrastro, a former oilman now at the Center for Strategic and International Studies. “Everyone is jockeying for position.”
That’s because the stakes have suddenly shot up. In the past year, hurricanes in the Gulf of Mexico took vast quantities of oil off the world market, and global demand surged. As the price of oil neared $80 a barrel, all three players raced to open key pipelines in the region. At the same time, in the post-9/11 world, central Asian countries-wedged between China, Afghanistan, Iran, and Russia-gained a new strategic importance.
Russia is the world’s second-largest producer and exporter of oil, after Saudi Arabia, and the largest producer of natural gas. For a long time, its state-owned monopoly, Gazprom, could buy gas in central Asia for $65 per thousand cubic meters and sell it in Europe for four times as much. Its strategy was to import increasing amounts of cheap gas from Central Asia and sell its own production to a more expensive European market. But senior U.S. administration officials say that by 2009, Russia will be unable to meet its contracts in Europe unless it gets significant quantities of central Asian gas.
On January 1, Russia turned off the gas taps on Ukraine, after ending subsidies to and raising prices on the former Soviet republic (which had just ousted a pro-Russian president) by 400 percent. This affected gas deliveries to western Europe, which gets 25 percent of its gas from Russia and whose energy demand is expected to double between 2000 and 2030. “Russian pressure on its southern neighbors in the energy sector has been relentless from the time of independence,” says Fred Starr, chairman of the central Asia-Caucasus Institute of Johns Hopkins University. “But last autumn, it moved from being one of many tools of Russian foreign policy to being the main tool. It has become a petrostate.”
ยป Source: U.S. News
