Who has gas?

President Putin’s cancellation of the South Stream pipeline project leaves parts of the Balkans vulnerable to a supply disruption and without sufficient future gas supplies. This is a rare opportunity for the European Union and the United States. South Stream would have tied Serbia, Bulgaria and others umbilically to a Moscow that is hard to like and unreliable. Sanctions and lower oil and gas prices killed the project. Finance had already killed its Western-backed competitor, Nabucco. Now what is needed is some active diplomacy to ensure that any future projects undermine Russian pretensions in the Balkans.

So where else might the gas come from? The planned TANAP/TAP (Trans-Anatolian Natural Gas/Trans-Adriatic) pipeline will bring gas to the Balkans (Turkey, Greece, Albania and Bulgaria) as well as Italy from Azerbaijan and eventually Turkmenistan. Construction is supposed to begin in 2015. This is a good but partial solution for 2020 and beyond.

There are many additional options, at least in the long term: Croatia and Montenegro have contracted for exploration in the Adriatic, where it is known deposits exist. Libyan gas already enters Europe through the Italian peninsula not far from the Balkans. Eastern Mediterranean gas lies not far away, and Iraqi gas not all that much farther.

Of these options, Libyan gas is in principle the quickest and easiest, not least because it is already flowing close by. Caveat emptor, as always: Libyan gas production has not recovered to prerevolution levels, though ongoing political instability has affected gas supplies less than oil production.  Once Libya achieves a modicum of stability, it might be possible to build a pipeline from Italy to the Balkans that could be fed in the future by Adriatic gas, once that is developed. Israeli/Greek/Cypriot gas is a longer shot, but not impossible if the political knots ever get untied. Iraqi gas, shipped either from Kurdistan or the Sunni-majority provinces of Anbar and Ninewa, would be geopolitically a great way to tie Iraq to Europe, but shipment to Turkey may well prove the more economical proposition.

In the meanwhile, the Balkans have quite a bit to worry about if Russian gas is constricted or cut off anytime during the rest of this decade. That is unlikely this year because of lower prices, which increase Moscow’s incentive to export in order to maintain revenue (and commitments have already been made). Liquefied natural gas, which might come from Qatar or eventually even the US, may provide some insurance. The EU is backing a terminal in Croatia,but that option is expensive and won’t be built for years.

For the near term, the EU has been encouraging a market-based approach as well as pipeline interconnections and storage, so that gas can be stored and shipped more readily to and around the Union, including to the Balkans, should the need arise. That is the kind of solution that has worked so well in the US, which has built enough interconnections to make the entire country a single gas market:

US gas pipeline network
US gas pipeline network

Europe isn’t so far off from that, but the Balkans clearly need more connectivity:

European gas pipeline network
European gas pipeline network

There is no one solution to the gas problem in the Balkans. Wise heads should be pondering how to make sure that whatever menu of options is chosen is economically viable and has the kinds of geopolitical impact the US and Western Europe will find beneficial. That means diversification and resilience above all, with reduced dependence on Russia. Moscow would make far less trouble in countries like Bulgaria, Bosnia, Serbia and Montenegro if the Balkans had alternative sources of gas.

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