The War of “pipes” in the Caspian Sea has come to a turning point. At the summit in Tehran on the 16th October, coastal countries (Russia, Kazakhstan, Turkmenistan, Azerbaijan, Iran) will try once again to agree on the territorial division of the seabed and the distribution of their huge energy resources.

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Today, the Russian state monopoly Gazprom purchases Turkmenistan’s natural gas (third rank after Russia and Iran stocks worldwide) at 70 euro per thousand mt3 and resells it at a double price. Why? The unresolved political Caspian status stops from building the ducts that could lead the Central Asia’s gas to Europe without having to pay “Moscow fees”. As the summit gets closer, Moscow has began a determined attack against US and EU. Threats of new projects and double games were introduced in the last four months in the great energy match around the Caspian Sea.

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Vladimir Putin has set his sights very high. Last May, the Russian president convinced the Turkmen president, Gurbanguly Berdymukhammedov, and the Kazhako Nursultan Nazarbaev to sign an agreement to carry their natural gas from Russia through the extension of the old USSR gas pipeline, Central Asia-Center (SA-Ts).

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Goal: to increase the import of foreign gas to be sold in Europe from 50 million to 90 million cubic mt. The action by Putin stunned Western diplomats, who have been enticing Berdymukhammedov and Nazarbaev for years in order to retain them as energy partners. Brussels and Washington took a further step: funding new feasibility studies’ on the Trans-Caspian corridor. In the Strategy Paper on Central Asia, presented in June, the European Commission announced its support for the euro area countries to develop new ways to obtain hydrocarbons. On August the 16th, the U.S.

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Agency for Trade and Development (USTDA) and the Azerbaijan state oil society (SOCAR) gathered in the capital Baku and examined double submarine interconnection that would pump central Asian gas and oil to the Azeri terminal and from there to Europe across Turkey. The crude oil will be introduced in the already operating oil pipeline, Baku-Tbilisi-Ceyhan, while the natural gas in the Baku-Tbilisi-Erzerum, which will be alledgely completed in 2008. Caspian natural gas pipeline plays a crucial role in the European strategy to diversify the sources of supply.

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Caspian natural gas pipeline plays a crucial role in the European strategy to diversify the sources of supply.The duct will be joint with Nabucco, the 3000km snake coming to Austria through the Balkans and Anatolia.

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Nabucco, 60 billion cub.mt.capacity per year, can be refueled by Central Asia and Iran (which will export’ 20mld cub. mt. in Europe thanks to a recent agreement with Turkey), would be the main alternative to Russian pipelines. It will be ‘completed no earlier than 2012, as well as the variant to Italy. The “TransCaspian” is estimated to cost 8billion euros and to have a 22billion cub.mt. capacity, even though a starting date of works is still unknown. The first feasibility study ‘was carried out in vain under the TACIS technical assistance programme in ’99 .

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We have yet to see if Moscow will be ‘more’ fast to finalize its diversion plans and if its opposition (supported by Iran) to Caspian ducts undermines the Tehran meeting. And ENI as

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We have yet to see if Moscow will be ‘more’ fast to finalize its diversion plans and if its opposition (supported by Iran) to Caspian ducts undermines the Tehran meeting. And ENI as the accomplice because of the two “pro-Russian” pipelines, as BlueStream and South Stream (see box). At present, the Central Asian republics prefer to keep the balance between Russia and the West, as highlighted in the second Eurasian Energy Forum in the kazhak capital Astana on the 6th and 7th September. So far, Kazakhstan (where hydrocarbon networks should theoretically converge towards the Caspian) officially claimed interest only for a possible underwater oil pipeline.

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One option considered necessary to evacuate the production of crude oil, which is estimated to exceed 120 million tons per year in 2019 when the Kashagan field is full. (see box). However, at the same time, the dictator President Nazarbaev, announced to strenghten the Caspian Pipeline Consortium Route (CPC) in order to increase oil export through Russia.

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Given the complicated situation, it is hard to say who will be the winner. Does ENI play a double game on gas? Eni-Gazprom agreement concluded on the 23th of June to build SouthStream, a gas pipeline in the Black sea from the port of Beregovaya, Russia, to Varna, Bulgaria, doubles BlueStream to Turkey and raises a series of critics. ENI reiterated the project is not ‘inconsistent with EU goals of supply diversification. As the matter of fact, the new pipeline will allow Gazprom and its Italian partner to sell in Europe 30billion gas cub.mt. twice the price paid to Central Asia. As suggested in the American weekly magazine Fortune, the South Stream will facilitate ‘the race of Moscow against the Nabucco pipeline on which the EU relies to import Turkmen gas bypassing Russia.

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Express way for ENI oil through Caspius sea. The crude oil extracted by ENI in the oil field in Kashagan, Kazhakstan (the biggest field worldwide found out in the last 20 years, 13 billions barrel stocks and managed by an ENI international consortium) will be able to reach Europe bypassing Russia.

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Kazhakstan and Azerbaijan are finalizing the 8th August agreement’s operating details on Trans-Caspian System. Waiting for the creation of the underwater Trans-Caspian oil pipeline, this requires oil to be carried by ship through Caspian sea, which will be in turn loaded in the BTC, the Azerbaijan gas pipeline, and eventually carried in Europe through Turkey.

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Today, Kazakhstan’s oil is carried by Russian trains to Novorossiisk port. From here, through the Black sea, it is carried to Burgas port, Bulgaria, and Alessandropolis, Greece. From 2010 (the starting date for the delayed oil extraction from Kashagan field) the expected production increase makes another alternative export solution necessary.

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Last January, a multinational oil companies Consortium (Agip, Total, Chevron, Exxon Mobil, Lukarco and the local company KazMunaiGaz) launched the Kazakhstan Caspian Transport System (KCTS). This requires the construction of a loading terminal at the port of Kuryk, Kazakhstan and an unloading one at BTC pipeline in Baku, a 600Km oil pipeline between Atyrau and Kuryk, and a fleet of oil tankers, which within the next four years could carry in Azerbaijan up to 500 thousand oil barrels per day (for a total amount of 23billions per year), which can be increased successively up to 1200 barrels per day (56billions per year). The cost of the project: 3 billion euro. BTC capacity, currently 1 million barrels per day, can be expanded up to 1.8 barrels for the oil transit from Kazakhstan.

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BTC capacity, currently 1 million barrels per day, can be expanded up to 1.8 barrels for the oil transit from Kazakhstan