Russia Values Oil More Than War

One counterintuitive feature of the five-day war between Russia and Georgia is its minimal impact on the energy flows from the Caspian to world markets. There is always a legion of experts who would confidently assert that “It’s all about oil,” and no amount of hard evidence would shake this petro-geopolitical article of faith. There were indeed reports about airstrikes on the Baku-Tbilisi-Ceyhan, or BTC, pipeline, eagerly circulated by The Wall Street Journal, but those turned out to be just products of the desperate Georgian war propaganda. Traffic involving small tankers from Poti and Supsa was interrupted, but these ports have never had any strategic significance on the European energy map since the supertankers carrying Caspian oil to Europe are loaded in the deepwater terminal in Ceyhan. The fact that Russia did not try to completely shut down the South Caucasus energy corridor invites a re-evaluation of risks and longer-term consequences.
Moscow obviously did not want to cause any additional anxiety among European consumers. Nor did it want to deal Tbilisi any unnecessary trump cards for its blame game. From what is possible to deduce from scarce information provided by official sources, Russia’s restraint in targeting Georgia’s highly vulnerable energy infrastructure was confirmed to Turkish Prime Minister Tayyip Erdogan, who rushed to Moscow for meetings with President Dmitry Medvedev and Prime Minister Vladimir Putin the day after French President Nicolas Sarkozy negotiated the conditions for cease-fire. That visit had a peculiar context, since Russian reassurances were focused on the BTC pipeline that had in fact been shut down, but for a completely different reason — an explosion in the Turkish section of the BTC pipeline, most probably an attack by Kurdish insurgents, that interrupted the flow of oil for at least two weeks. Neither that emergency nor the combat operations had any noticeable influence on the oil price; it continues to slide to about $115 per barrel.

This trend is punishing Russia with lost profits measured in billions of dollars, but Moscow still prefers to keep energy business separate from the war matters. This compartmentalization is consistent with the pattern that emerged in the course of the second Chechen war. This conflict saw dozens of deadly terrorist attacks, but there was not a single attack on the oil terminals in Novorossiisk and Tuapse or on the strategic pipelines that crisscross the North Caucasus. The fact that the energy infrastructure is safe does not mean, however, that there is no impact from the war.

The Moscow Times