NATO’s Energy Security Strategy: Break Russia’s control over European gas markets.

NATO’s Energy Security Strategy: Break Russia’s control over European gas markets.(Phantomreport).Source: NGE
In a new minority staff report for the US Senate’s committee on foreign relations, the writers noted that “Russia’s Gazprom has been forced to change its domestic strategy, including abandoning its flagship Shtokman project in the Arctic, and it has had to contend with plummeting market value and a new EU antitrust investigation. These trends give the US an unprecedented opportunity to advance broad natural gas diversification and break Russia’s control over European gas markets,”
Six days after report’s release, on December 18, 2012, the Atlantic Council organized a meeting with the report’s authors in Washington. Marik String, the committee’s deputy chief counsel, and Neil Brown, the committee’s senior professional staff member, were accompanied by David Koranyi, deputy director of the Atlantic Councils’ Patriciu Eurasia Center, and Adnan Vatansever, an independent analyst.
The report examined the development of the southern energy corridor and presented the US’ strategic interests in linking the nations of the Caspian Sea region with European and global markets. Strategically, the southern energy corridor occupies the US agenda because energy is considered an obstacle to NATO countries being politically and economically independent from Russia and Iran. This vulnerability is thus a factor undermining the US’ own bilateral relationships and weakening its own multilateral diplomatic and military forces.

As expected, discussion on potential new energy supply included shale gas in the US. The question was whether shale gas could pressure Russia’s long-term contracts. Brown highlighted the “LNG for NATO Act”. Introduced by Richard Lugar, a Republican senator from Indiana and the foreign relations committee’s ranking member, the bill aims to reduce NATO allies’ vulnerability to over-dependence on Russian and Iranian gas supplies. 
Under the bill’s framework, the US would do much more to promote LNG-shale trade with NATO allies. Brown pointed out that in Turkey’s case main suppliers continue to be Russia and Iran, and insisted on the necessity of Turkey shifting its gas market.
Following a question from the floor on Iran, the controversial situation of Iran’s sanctions and theNational Iranian Oil Company’s 10% share in Shah Deniz gas field was discussed. Brown pointed out that this is a narrow exemption for the Shah Deniz consortium and that Iran is only a passive investor in the project.
In addition to these political and strategic approaches, David Koranyi and Adnan Vatansever took time to underline the situation’s economic and financial realities.
Koranyi examined the southern energy corridor from the perspective of changing regional growth rates. He noted that five years ago the question was the sources of gas, but today conjecture has completely reversed due to Europe’s economic stagnation and Iraq and Turkey’s economic growth. For Koranyi, the southern corridor would profit more from Turkey and Iraq’s energy demand than Europe’s. He continued by discussing Turkmenistan, noting his skepticism regarding short-term solutions to problems in the Caspian Sea region. He concluded by endorsing Nabucco West.

Vatansever shifted the scale of the problem, saying “today the real risk is the price. Technical or physical disruption risks are overestimated by everybody, including Gazprom. They use this scare to justify huge pipeline projects. But the real problem is the price.” He then noted that Eastern and Central European countries are getting overpriced Russian gas. As an example, he noted Bulgaria, which pays more than Greece for the same gas from Russia because of a fear of disruption.
Vatansever forecasted an increase in Russia’s gas prices processes in near future, pointing to three factors to justify his belief. The first is that Gazprom’s new export strategy is very ambitious and costly, due to colossal projects like North Stream and South Stream. Moreover, some of these pipelines will be underutilized, making their operation costs much more expensive than market prices. Finally, Gazprom has begun losing domestic gas contracts. For Vatansever, these three factors will directly influence export gas prices, to the detriment of European consumers.
Following questions, discussion of economic approaches gave way to geopolitical discussions, with an emphasis on the strategic role of the triangular coalition between the United States, Turkey, and the European Union that favors trans-Caspian natural gas flows to Europe.Hmmmm........Switching the 'dependency' from Russia to Turkey doesn't sound like a good solution.Read the full story here.