Businessweek: Can Russia Block Georgian Energy Sales? - by Steve Levine

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Can Russia Block Georgian Energy Sales? - by Steve Levine

Washington has spent more than a decade of diplomacy and arm-twisting to erect what it calls an East-West Energy Corridor connecting the countries of the Caspian Sea with NATO ally Turkey. The result has been a network of oil and natural gas pipelines, ports, and tankers that can feed a million barrels a day to the world market. Washington has sought to expand and link that network directly to Europe, where Russia is currently the dominant supplier. But Russia's vigorous assault on Georgia—a key stretch of the energy route—has made the strategy seem less reliable, analysts say. Black Sea oil tankers that normally would be filling up with Baku crude, for example, were reported on Aug. 11 to be anchoring 15 miles offshore from the Georgian port of Batumi, where there was a rumor of a bombing by Russia.

Washington has spent more than a decade of diplomacy and arm-twisting to erect what it calls an East-West Energy Corridor connecting the countries of the Caspian Sea with NATO ally Turkey. The result has been a network of oil and natural gas pipelines, ports, and tankers that can feed a million barrels a day to the world market. Washington has sought to expand and link that network directly to Europe, where Russia is currently the dominant supplier. But Russia's vigorous assault on Georgia—a key stretch of the energy route—has made the strategy seem less reliable, analysts say. Black Sea oil tankers that normally would be filling up with Baku crude, for example, were reported on Aug. 11 to be anchoring 15 miles offshore from the Georgian port of Batumi, where there was a rumor of a bombing by Russia.

All the current lines will continue to operate. Russia won't interfere with them directly, analysts say. Its larger economic-political strategy of cementing its dominance of Europe's energy supply depends on not spooking the Europeans, who could then be encouraged to back the construction of more non-Russian energy pipelines, and thus dilute Russian power. But an expansion of Western influence—proposed trans-Caspian oil and natural gas lines from Turkmenistan or Kazakhstan, and a proposed natural gas line from Turkmenistan to Europe called Nabucco—may now be effectively dead. No Caspian President would gamble his survival by embracing such a project, analysts say. NOTE EU-Digest: This might finally get the EU to develop a single EU energy strategy whereby they can be on equal footing with the Russians when dealing on the issue of energy and eliminate the US influence in this area..