Over in the northeastern quarter of the globe, the post-South Ossetian war cowerfest continues. The latest to step up and cower in Russia's presence is BP, who broke down and ceded more control to the Russian government over its huge investment in Siberia. The news is relatively good to BP shareholders: the project could have been completely nationalized, like Yukos' and Royal Dutch Shell's investments. With a quarter of BP's energy reserves in jeopardy, the threat was considerable. But despite Russia's apparent leniency, the message to the West is clear: we're tolerating existing investments, but don't think about making anymore.
The EU is acutely aware of this, but they're impotent (considering that domestic liberalization of land use, transportation, and energy is absolutely not an option). The EU energy chief said that the EU must pursue the Nabucco link to the BTE pipeline from the Caspian, and continues to heroically insist that the pipeline will be built, when all signs point to it not:
The EU has signed agreements with Turkmenistan, Azerbaijan, Kazakhstan, and Ukraine to help develop their energy supplies with a view to future imports. It is also eyeing Egypt and Iraq as possible future suppliers.
But Azerbaijan is now in talks with Russian energy giant Gazprom OAO to sell gas to Russia, throwing Azeri supplies to Nabucco into doubt.
Russia's invasion of Georgia highlighted the vulnerability of Azerbaijan's gas link to Nabucco, the Baku-Tbilisi-Erzurum (BTE) pipeline across Georgia to Turkey.
But Piebalgs stressed the EU's continued support.
"This does not change our minds, or I think the EIB's [European Investment Bank,] that this project should be supported," he said.