Today’s Wall Street Journal offered an excellent analysis of the pipeline race between Russia and the West in Central Asia, as alternatives to Kremlin-controlled energy are desperately sought and usually thwarted by adept maneuvering from Moscow. The piece is long, but worthy of a complete read by all interested.  As the article notes:

 “…During the Cold War, the balance of power was measured in nuclear warheads. Now a new kind of contest is playing out. The battlefield is Europe’s energy market. The objective is pipeline proliferation. And Russia is winning.

Europe is witnessing a race between two mammoth pipeline projects that would bring natural gas to the Continent from the Caspian and beyond. One of the plans — hatched in Europe, championed by Washington and named for a Verdi opera — has been hobbled by bureaucracy. The other, backed by the Kremlin, is rolling ahead with a speed and success that has surprised and frustrated the West. The outcome could shape energy supplies, and political influence, in Europe for decades to come.

…Soaring crude prices have catapulted Russia, holder of the world’s biggest natural-gas reserves, to the status of energy superpower. Gazprom already provides just under a quarter of the EU’s gas. With the bloc’s gas demand expected to climb, consulting firm Wood Mackenzie projects the Russian share to rise to one-third.

Increased Leverage

In Western capitals already worried by Gazprom’s dominance, some fear that additional pipelines will let Russia increase its leverage over its biggest customers. “This is all about Gazprom, a state-run monopoly, exerting monopoly pressure to restrict competition,” says Matt Bryza, U.S. deputy assistant secretary of state for European and Eurasian Affairs, who has led the losing battle to fend off South Stream. “The Russians want to maintain our allies’ dependence on Gazprom so as to keep gas prices high.”

With its gas supplies in hand, Gazprom expects to finish a feasibility study for South Stream by the end of this year, arrange financing and launch the pipeline in late 2013. The Nabucco consortium says its groundwork in Europe is nearly complete and it expects to start building in 2010 and begin pumping gas as early as 2012.

But Nabucco’s future is murky, and upcoming decisions by several key countries could determine its fate. The consortium’s negotiating position is in danger of being weakened by Gazprom, which has recently offered to pay Azerbaijan and Central Asian producers market rates for their gas. That puts the squeeze on Nabucco, which will be forced to fight harder to win supply deals and may find it difficult to secure financing for construction.

…Early on, Mr. Bryza identified Azerbaijan as the main potential source for Nabucco gas. He began courting Ilham Aliyev, the Caspian state’s authoritarian leader. The two had worked closely on BTC and enjoy a “warm relationship,” Mr. Bryza says. Some of Mr. Aliyev’s ministers attended Mr. Bryza’s wedding in Istanbul last year.

Mr. Bryza encouraged Mr. Aliyev to open up his vast gas reserves to fill Nabucco. He says the Azeri president was unsure there would be enough demand in Europe to justify the vast investments needed. Mr. Aliyev wanted clear signals from the often-divided Europeans that they were committed to buying his gas.

The Russians, meanwhile, began considering a rival plan. Their inspiration was Blue Stream, a costly pipeline Gazprom had built with the Italian energy giant ENI SpA that pumped Russian gas to Turkey along the bottom of the Black Sea…”