Fairy tales about geostrategy and energy strategies

Victor Lupu

During the latest months there’s been infinite more talk about geostrategies, energy strategies and energy security than in all the last years. However, the issues concerned are more uncertain than ever. In 2015 there are no certainties. The oil prices have raised by USD 9 per barrel from March until end of April, but the USD 65 level of the Brent crude oil is far from the level registered in August last year of USD 115 per barrel. Oil giants BP, Shell and ExxonMobil are most probably set to report, according to analysts, falling results by 50-60 percent. To all the unknown variables a new one added, i.e. Yemen, unimportant from the point of view of oil output, but of strategic importance when it comes to its position to the narrow strait of Bab el-Mandeb.

Meanwhile, the M&A market recorded a new move, the merger between Royal Dutch Shell and BG Group, most probably the most important to be registered this year. On the other hand, the US shale oil output recorded a downturn which led to the slight oil price increase on the world markets. The main victim of the international quotations is Russia. The fall in oil price corroborated with the US and EU sanctions following the annexation of Crimea have led to USD 25 billion losses for the Russian economy, as Premier Dmitry Medvedev was saying in April, losses expected to mount further. Moreover, the rouble’s fragility is to get more troubles ahead for Moscow.

While facing sanctions, Moscow is taking care of its geostrategic targets, whatever they may be. There’s plenty of speculation in this regard. For certain, Russian President Vladimir Putin seems to be pretty sure of himself and has recently accused the West, mainly the US, of supporting the separatist regions in North Caucasus in 2000. In a recently broadcast documentary, Putin claims Russia’s intelligence services intercepted at the time contacts between US officials in Azerbaijan and the separatists. Within the context of upcoming May 9 celebrations of the victory against Nazi Germany, the accusation is meant to bring impetus to Russian nationalists and to those doubting internal and foreign policies lately due to the economic crisis.

Nevertheless the wide context remains tensioned. The Russian separatists in Eastern Ukraine don’t look keen to see the conflict coming to an end, a conflict risking becoming, as anticipated, a chronic one. Tensions are also mounting in the Baltic States and Poland, following Russia’s move to locate Iskander missiles in Kaliningrad. At the same time, NATO has moved troops and equipment to Eastern Europe, Romania included, and is carrying out military drills in various formats. Sources say there are increasing tensions noticed at the Armenia-Azerbaijan border on the issue of Nagorno-Karabah, recently amplified by the elections in the region on May 3. A revived conflict here would most certainly affect EU’s plans for energy sources diversification.

The context being set, Romania can only bet on NATO and EU support as well as on clever foreign and energy policies. In recent months the Romanian army has conducted land, air and naval military drills with different NATO members. On the other hand, Romania is facing a fortunate situation – not being forced to import Russian natural gas. In view of diversifying the energy supply sources Romania signed in April, along with Bulgaria and Greece, the agreement on Vertical Gas Corridor. Interconnection with Hungary is anticipated in the west of the country. The Iasi-Ungheni pipeline connecting Romania and Republic of Moldova has already been inaugurated and put into operation in March.

In spite of optimistic prospects, there are lots of ‘working versions’ envisaging negative impacts. Analysts speculate that, although they are part of NATO and the EU, Romania’s neighbours are rather attracted by Russian cooperation, they criticise sanctions coming from Washington and Brussels and have different approaches in this regard. Let’s mention that Czech President Miloš Zeman is the only head of state in the region who specifically expressed his wish to take part to the May 9 celebrations of the victory against Nazi Germany in Moscow, no other western leader is set to participate. Returning to our neighbours, Hungarian PM Viktor Orban has signed an agreement with Moscow for the extension of the Paks nuclear plant and envisages a EUR 10 billion loan from Russia. Moreover, Orban is threatening he might block the set up of the EU Energy Union, part of Brussels’ strategy to reduce dependence on Russian gas. Bulgaria registers a positive general public opinion to Russia, as the annexation of Crimea and the conflict in eastern Ukraine have not changed the trend, a recent Alpha Research survey reveals. Bulgarians would rather blame the US than Russia for the negative evolutions, the survey says.

Hence, there are analysts saying Romania is almost surrounded by states favourable to Moscow. Hungary, Bulgaria, Serbia are Russia’s friends to which Austria would add, in the close vicinity. Austria – big investor in Romania – has huge state and commercial interests with Russia. Austrian economy is said to depend in a ratio of 80 percent on the oil, gas, mineral resources and wood coming from Russia. Vienna opposed to imposing economic sanctions against Russia. There are speculations the new OMV head is a close character to Gazprom and to the Russian President.

On the eastern border things are also unclear. There are theories saying Russia aims Odessa and southern Ukraine, a new unsolved conflict near Republic of Moldova would keep both Kiev and Chisinau far from NATO and the EU. For almost a year Ukrainian sources inform about an imminent set up of a so-called People’s Republic of Basarabia which would include areas mentioned above (Bugeac, Transnistria regions). If we are to add the constant tensions in neighbouring Moldova in the Gagauzia region, it looks like Russia’s access to the Danube’s mouths is not so difficult, some analysts say.

Within this complex and volatile framework, it’s hard to anticipate what the next moves would be and how would they affect Romania in one way or another. The geostrategic confrontations involve the great economic, military and energy powers. Although it consolidates its energy security by diversifying energy sources, Bucharest is after all a spectator when it comes to big moves on the international markets, themselves targeted by geostrategies. It remains to be seen what consequences will have the recent decision taken by the US to flood the gas markets, according to The Telegraph. “We anticipate becoming big players, and I think we’ll have a big impact,” said Ernest Moniz, the US Energy Secretary. “We’re going to influence the whole global LNG market.” Moniz said four LNG export terminals are under construction and the first wave of shipments may begin before the end of this year or in early 2016 at the latest.

Will this approach change the global energy geopolitics? Will this become a threat against the dominance of Russian gas in Europe and will it become another tough blow against Moscow?

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