More than 800,000 barrels of high-quality Caspian crude oil flow daily to the Mediterranean beneath this Georgian village, 42km from breakaway South Ossetia.
Bashkoi marks the closest point at which the BP-led Baku-Tbilisi-Ceyhan (BTC) pipeline — one of several criss-crossing the region — skirts the Russian-backed territory, underscoring the risks to investors with stakes in Georgia as an energy corridor to the West.
Last August’s five-day war over South Ossetia rattled nerves over the flow of oil and gas. Analysts cite current plans to expand BTC as evidence the worst fears were misplaced.
However, a year on, with the sides facing off over tense boundaries and no sign of a peace process, the risk of renewed hostilities remains high.
That threat could impact future projects, notably the US and EU-backed Nabucco gas pipeline plan, a 3,300km transit route to bring gas to Europe from the Caspian and Middle East by 2014.
Villagers in Bashkoi, a bumpy 110km drive west of the Georgian capital, recall seeing jets and Russian Mi-24 helicopter gunships during the war, and people fleeing the fighting.
“We still think about the possibility of another war with Russia,” said 45-year-old school librarian Ketino Devdariani.
“Do you think war will start?” she asked a visiting reporter.
Devdariani said she hoped Nabucco would be built nearby, providing a much-needed boost to the impoverished rural area, where some homes stand abandoned by villagers who left looking for work elsewhere.
Nabucco’s rationale is to reduce Europe’s energy dependence on Russia, but it has long been beset by problems over supply and financing.
A July 13 breakthrough transit deal between EU countries and Turkey “indicates confidence in Georgia as a transport corridor,” said Kate Hardin, head of Russian and Caspian Research at US-based Cambridge Energy Research Associates.
A new war, however, would renew doubts about the viability of Nabucco, which has yet to secure gas supplies from Azerbaijan. Instability in Georgia has already played into Azeri thinking about where to sell its gas, with Baku now looking to Russia as an attractive alternative.
“We still have no map for the pipeline and as a result there is no discussion yet about Georgia being a transit nation,” said Ana Jelenkovic, research associate at consulting firm Eurasia Group.
“If Azeri supplies are secured by the Nabucco consortium and pipeline construction discussions begin in earnest, then Georgia would be discussed as a potential transit nation,” Jelenkovic said. “I think at that point you might have that issue [instability in Georgia] raised.”
Georgia hosts major pipelines feeding oil and gas to Europe from the Caspian Sea, including BTC and gas counterpart Baku-Tbilisi-Erzurum. It also has three major Black Sea ports — Batumi, Poti and Supsa — handling oil products and crude.
The war shattered progress made since Georgia’s 2003 “Rose Revolution” to attract investment to the former Soviet republic under pro-Western President Mikheil Saakashvili.
Russia crushed a Georgian assault on South Ossetia, which like the rebel Black Sea region of Abkhazia threw off Tbilisi’s rule in the early 1990s after the collapse of the Soviet Union.
Poti was briefly held by Russian troops, and thousands of Russian soldiers remain in Abkhazia and South Ossetia, some 50km from Tbilisi at their nearest point.
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