Conditions are changing quickly in Ukraine. By the time this article goes to press further shifts and developments are likely to have taken place which could alter the regional political and security landscape considerably.
However, despite the uncertainty of the current environment, there are key developments which are almost certain to take place over the coming months. Some of these could have a notable impact on the energy sector in the region.
Russia will not be able to tolerate a stable, economically strong, liberal, democratic Slavic state on its border. It would pose too much of a risk to its own internal stability as it might ignite pro-Western unrest in Moscow, St Petersburg and other cities.
This will remain a major factor motivating Russia in its stance towards Ukraine and is why Moscow will continue to pressure Kiev and hold on to territory it has seized.
Energy will likely be very close to the epicentre of the dispute. Depending on the possibility of further negotiations, Ukraine may face a cold winter if Moscow continues to use its oil and gas supplies as a political tool to apply further leverage.
Russia’s actions have also had a notable impact on its relations with other countries in the region referred to as its “near abroad”. Former Soviet States have either sought closer links to Moscow, as in the case of Armenia, or they have pulled away, seeking to distance themselves from a potential aggressor.
Some of the biggest implications of this shift in international relations will likely be felt among the region’s oil pipelines, both those currently in use, and those planned for construction.
The Moscow-backed South Stream pipeline is unlikely to proceed in its current form, given increased concerns over Russian influence in Bulgaria, as well as increasing weariness among the energy companies backing the project.
Conversely, Gazprom will look to restructure its relationship with Germany vis-à-vis the North Stream pipeline should Germany continue to re-export gas to Ukraine.
Other pressure points in the region include the frozen conflicts affecting countries which have seemingly pulled away from Russia.
Azerbaijan appears to have grown closer to the West as a result of the Ukraine situation. A deterioration in Russian-Azeri relations could lead to a deliberate rekindling of tensions and possible violence in the disputed region of Nagorno-Karabakh.
Despite its distance from Azerbaijan’s Caspian Sea oil fields, the political pressure will be keenly felt in the country nonetheless, particularly as portions of two notable pipelines, the Baku-Tbilisi-Ceyhan and South Caucasus pipelines, lie only 40km away from the conflict zone.
Russia’s actions in Ukraine have even raised concerns in Kazakhstan, although the country has strongly backed Russia’s planned Eurasian Customs Union.
The majority of Kazakhstan’s northern provinces are ethnically Russian and Kazakh diplomats have privately expressed concerns that Russia may therefore look to support federalisation in the country.
As well as increasing Russia’s direct influence over the decision-making apparatus in the Kazakh state, this will also ensure that Kazakhstan does not switch its preference for exporting energy resources from Russia to China.
One final concern for any organisation looking to establish long-term projects in Russia’s near neighbourhood is that any former Soviet Union country which becomes drawn into conflict with Russia will almost certainly lose sovereign territory. The risk of forced abandonment of assets could be notably high in certain contested areas.
As a result of Russia’s actions in Ukraine, the energy industry across the former Soviet Union faces an increasingly uncertain environment. Renewed debate, both among former Soviet states and the West, over the path of future energy infrastructure is likely unavoidable.
Should Russia continue to pursue divisive foreign policy in its “near abroad”, security risks will continue to increase across the valuable energy corridors in the Caucasus and Central Asia which will have a knock-on effect on a region stretching from Great Britain to China.
John Drake is the head of intelligence and Max Hess is an intelligence analyst at AKE Group.
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