Nabucco pipeline in doubt

Europe and America will drop Georgia from a new oil and gas project after Tbilisi's attacks on South Ossetia. That's according to industry analysts, who believe the vast new Nabucco gas pipeline project, which deliberately bypasses Russia, will now be qui

Tbilisi was planned as the hub of EU and US projects to cut dependence on Russian oil and gas.The Nabucco and Trans-Caspian gas pipelines were to extend the existing Georgian route through to Turkmenistan and Western Europe. Construction of Nabucco was slated to start in 2010.

Georgia's invasion of South Ossetia has turned that progress on its head. On Tuesday BP shut an oil pipeline and a natural gas pipeline running from the Caspian through Georgia because of the war. Experts say that foreshadows a greater pullout of Western energy interests from Georgia, starting with Nabucco. Lev Snykov, Vice-President at VTB Capital says Nabucco is at risk.

“Nabucco is a huge, huge multinational project and I'm sure there are high risks that it would be postponed.”

Rival Russian gas pipeline projects South Stream and Pre-Caspian are ready to fill the gap. Konstantin Batunin, Oil and Gas Analyst at Alfa-Bank says they are more certain than the alternatives.

“Those projects being pursued by Russia they have a future.  But all those projects involving Georgia they used to be kind of vague in the past, now they're getting even more vague.”

At the crossroads of Europe and Asia, Georgia pipes 1% of the world's oil and gas, earning ten cents in fees for every dollar it transits. But President Saakashvili's erratic behaviour is wiping out Tbilisi's strategic and geographic advantages.