Feature

Scenes from the Violent Twilight of Oil

It succors and drowns human life. And for the last eight years, oil -- and the people and places that make it -- was my obsession.

Across the globe, oil is invoked as an agent of destiny. Oil will make you rich, oil will make you poor, oil will bring war, oil will deliver peace, oil will shape our world as much as the glaciers did in the Ice Age.

But how?

Oil is not a machine that can be disassembled or schematized for comprehension. It is a liquid. How do you coax secrets from a liquid? To know a person, you talk to him. To know a country, you visit it. To know a religion, you study sacred texts. Oil defies these norms of interrogation. It is a commodity that is extracted, refined, shipped, and poured into gas tanks with few people seeing it. It has no voice, body, army, or dogma of its own. It is invisible most of the time, but like gravity, it influences everything.

Over the course of eight years, I tried to solve this puzzle by talking with people who worked in the industry, visiting people who were touched by its operations, and taking a look not only at oil fields but the battlefields they have spawned. I met with oilmen in Houston, princes in Riyadh, lobbyists in Washington, roughnecks in Baku, warlords in the Niger Delta, leftists in Caracas, billionaires in Moscow, environmentalists in Quito, generals in Baghdad, traders in Manhattan, wildcatters in Midland, and diplomats in London. If you have conversations with people such as these, the topics you discuss include not just politics and economics but history, geology, geography, chemistry, engineering, physics, climatology, ecology, accounting, law, corruption, culture, psychology, anthropology, greed, envy, disease, ego, and fear. The world of oil is an intellectual as much as a physical space, and my years of journeying took me through a crude world that is as dark and amazing as the liquid that casts a spell on all of us.

NIGERIA

The canoe that carried me into the Niger Delta had an outboard engine that conked out several times before reaching Tombia, which was then the latest target in Nigeria's long-running oil war. Tombia was a shambles, half its homes burned or bombed beyond repair. A dozen survivors came to the creek, and their manner was not warm. They were young men, fighters, some with soiled bandages. Fingers and hands were missing; limbs were swathed in pus-caked gauze. Government forces had attacked Tombia in the brutal way they usually do, with helicopter gunships strafing anything that moved and speedboats disgorging soldiers who shot their way through town. A dozen people were reported killed, and most of the town's population was too frightened to return -- but in any event, there was not much to return to.

The leader of these survivors, whose nickname was Prince, angrily pointed out the town's destruction with the stump of what used to be his right hand. Even the Lutheran cathedral, St. Stephen's, was destroyed. Its timid pastor, living in a shack and shivering from malaria or fear of the bitter youths who now ruled this wasteland, said it had been constructed by British missionaries in 1915. A sign by the church declared in English, "Tombia is dedicated to God. Jesus the King over the land. Holy ghost in charge."

A boy who looked 12 years old and was blind in one eye stood in front of a house that had burned to its concrete foundation. His older brother had been killed, he said, and the town was now dead and his river was dead too, tainted by oil. Because of the pollution, he could not possibly catch enough fish to nourish himself and his dead brother's family. He was angry and hopeless; the result was listlessness. The government, the Army, Royal Dutch/Shell, the warlords, the writer who would leave in a few minutes -- they would not help. His only hope was, it seemed, the Holy Ghost.

I returned to the canoe and it was not long, just an hour or so, before I reached Oro Sangama. Its defining feature was apprehended on first inhalation -- a heavy odor of sewage that had fused with humidity to form a fecal mist. It existed because Sangama's residents relieved themselves in a creek just a few steps from their homes; the creek was dead, or nearly so, as was the sickly jungle around it.

Oro Sangama had another peculiar feature: There was a steady roar around it, like the sound of a giant flamethrower. Across the fetid creek stood a natural gas plant operated by Shell. The village was in the shadow of its largest flare, which shot into the air a plume of fire. As darkness fell, Sangama became illuminated by the flare's reddish glow and remained lit in this fashion until the sun rose in the morning. The Martian light was deadly rather than helpful because the flare spews into the air a cocktail of toxic substances.

Soon I was greeted by King Tom Mercy, leader of the local Ijaw community. He wore a T-shirt and a frown. "This is where the oil and gas comes out," he said. "They could give us water, give us light, give us scholarships, give us jobs. We would not quarrel with anyone again. We have tried everything, used lawyers and dialogue, and we see there is no way. The next thing is violence. We don't care if everyone dies; we will burn it."

Aboard his canoe the next day, we moved through mangrove creeks in which there was no screeching of monkeys, no hippos or crocodiles in the water, no butterflies floating in the air. Between the war and the pollution, this was both a dead zone and a killing zone. At some spots, the shoreline was shaved of vegetation and fenced off, to protect flares and pits that burned off excess oil and gas. The earth in these places was, quite literally, on fire.

This journey required, for comprehension, the imagination of a science fiction devotee. We passed a small island known as Little Russia. The origin of its name was not clear, but the island served a distinct purpose -- it was where prostitutes lived, servicing the needs of soldiers and oil workers. On its shore, young women stood in the shade of shacks fronted with empty beer bottles and off-kilter picnic tables. The girls waved.

The smell of oil was strong, even when wells or flares were not visible. Where did it come from? I looked down and saw a film of oil on the river. At a flow station where fluids dripped into the water from a tangle of metal pipes that had the appearance of industrial art, a Shell sign said, "Keep Nigeria Safe and Clean." The canoe stopped in front of six wellheads coated in oil that fell, drop by drop, into the water. If a match was thrown into the river, we would be engulfed in flames.

"How can we expect to catch fish?" King Tom asked.

His anger was no performance.

"Let's go," he ordered.

We soon passed a patrol boat with unsmiling soldiers.

"You see how we live."

HOUSTON

One evening I joined more than a thousand oil executives in a Houston ballroom that was large enough for a jumbo jet or two. The pinstriped diners were served plates of mixed salad, grilled salmon, and chocolate mousse by overworked waiters whose service was as gentle as cowboys heaving bales of hay to livestock. This was the gala evening of an annual oil conference at the Westin hotel. Drawn from across the globe, the men and just a few women in the chandeliered cavern constituted an oilpalooza.

The attraction on this February evening in 2003 was a chemical engineer from South Dakota. Since 1963 he had worked for just one company, eventually becoming its chairman and chief executive. He made everyone else in his hard-bitten industry seem gentle. He was gruff even to members of Congress and scoffed at global warming long after scientists proved it. Greenpeace called him the "Darth Vader of global warming." He was superficially unappealing too, with a misshapen lip, an ample belly, and a set of jowls that cartoonists would judge absurd. But in the oil industry you do not need to be pretty or kind to succeed, and this oilman had succeeded beyond anyone's imagining. Lee Raymond had turned ExxonMobil into the largest and most profitable corporation in the United States. He was rewarded with an astounding $686 million in compensation during his 13-year tenure as chief executive, which breaks down to about $144,000 a day, or more than $6,000 for every hour he worked, slept, ate, or golfed.

But Raymond was nearly unknown outside the environmental lobby that despised him, the financial industry that swooned over him, and the oil industry that feared him (Exxon's executive suite was known as "the God Pod"). Think of the tycoons who are part of the contemporary lexicon -- Gates, Murdoch, Buffett, Jobs -- and realize that absent from their ranks is the man who oversaw one of the most profitable multinationals of the 20th century. I wanted to see him on this evening because he was not just at the highest echelon of his industry's ruling class, but seemed its epitome.

After the mousse plates were cleared, Raymond lumbered onto the ballroom stage. The crowd offered a round of applause that was more akin to a handshake than a hug. In this industry, there was no need to feign love; grudging respect would do. His speech was an industrial mission statement. His listeners, who included ministers, princes, and CEOs, were reminded of how vital their work was, how underappreciated they were, how they must labor harder than ever, how the future will be grander than the already-blessed present. A video screen enlarged Raymond's presence to superhuman proportions. It was part Tony Robbins, part Billy Graham, with a whiff of a mumbling Leonid Brezhnev.

Invoking a sacred industrial purpose, Raymond recited his version of the inspirational commandments of the oil world:

"We all have a tremendous opportunity and a responsibility to improve the quality of life the world over. Virtually nothing is made without our energy and our products.

"Our industry's best years lie ahead, surpassing even the greatest achievements of the century gone by.

"We condemn the violation of human rights in any form and believe our stand on human rights sets a positive example for countries where we operate."

The audience's reaction was ritualized, less a genuine wave of applause than an obligatory simulation. I was reminded that in this brutal business, it was best to save your enthusiasm for crushing a rival rather than congratulating him.

VENEZUELA

Venezuela, which has the world's seventh-largest oil reserves, is a classic example of what economist Joseph Stiglitz calls "a rich country with poor people." Caracas, the capital, is surrounded by coils of barrios; voters from these impoverished areas are the electoral base for President Hugo Chávez, who promises to create true prosperity from the oil riches. I stopped by Miraflores, the presidential palace, to see how Chávez was performing the trick that eluded so many of his predecessors.

The Miraflores event was part of the great game of our times -- the superpower search for steady supplies of energy. China, which didn't import much petroleum until 2000 yet is now the second-largest importer after the United States, was doing whatever it could to win the friends and resources it needed. To woo Caracas, China had just agreed to help launch a communications satellite on favorable terms. In a conference hall at the palace, Chávez was getting ready to break this news to the world. Onstage, several executives from the China Great Wall Industry Corporation sat beside the stout Venezuelan president.

After the Chinese and Venezuelan anthems were sung, Chávez launched into a speech of the sort that is his trademark -- a presidential stream of consciousness. He congratulated the Chinese for being clever at math and saluted their women for being so beautiful. He thanked the Chinese government for training Venezuelans in satellite technology, saying they were teaching Venezuela "how to fly." As a visual aid, he flapped his arms like wings. He added that the Chinese had learned to fly under "the great Mao Zedong," and because Chávez drew inspiration from Mao's one-party, one-truth pedigree, he smiled broadly and exhorted, "Long live the Chinese revolution!"

The Chinese businessmen, as rigorously mercantilist these days as John Rockefeller was in his time, gazed at Chávez. They didn't seem to know whether the desired response was sardonic smiles or clenched fists, but their expressions veered toward the safe harbor of nodding approval. One of them adjusted the volume on his translation headset as Chávez said, "We don't want to earn money out of this. We're not capitalists. This is about the survival of our country and the destruction of capitalism. Capitalists are generating death!"

Yet capitalists are still buying oil from Venezuela, and lots of it; most of Venezuela's oil exports go to the United States. A president can flap his arms in Caracas and hold his nose at the United Nations and promise to remake his nation, but reality is crude in many ways. There is a saying that Venezuela does not have good or bad presidents, just presidents who serve at times of high or low oil prices. Chávez, running for president in 1998 as the main political parties all but collapsed from decrepitude, had the great luck of being elected when oil sold for $12 a barrel. As his presidency began, prices started climbing, on their way to more than $140 by 2008. Venezuelans had seen this before -- presidents who became popular by increasing public spending and who became unpopular when the oil boom ebbed. Chávez's announcement at Miraflores -- indeed, his entire presidency -- had the feel of what Venezuelan scholar Fernando Coronil described as a state limited to "magic performances, not miracles."

Magic can obscure reality but not make it disappear.

SAUDI ARABIA

When our paths crossed, Mohammed Ibrahim Abdul Aziz was 20 years old. He seemed young for his age -- his sparse facial hair gave him the look of a teenager. He had studied at King Saud University in Riyadh but had not been inspired by his teachers and had not been hopeful of finding work after graduation. The paradoxes of Saudi Arabia include the fact that it has oceans of oil but not an economy that offers jobs its citizens want. This is one of the problems of the oil industry: It generates lots of cash but very little work. Mohammed dropped out of school and like many Saudi youths spent his spare time cruising the Internet. When I asked which fundamentalist Web sites he'd visited, Mohammed couldn't remember precisely because there were so many, all extolling the glory of doing battle against infidels.

I met Mohammed in Samarra, Iraq, where he had gone to fight Americans in 2005. He had been captured a few days before our encounter, and he had certainly seen better days. He was wearing a green frock covered in mud and his eyes were bloodshot. He had been interrogated almost nonstop. A soiled bandage was wrapped around his head; he said he was injured when the car he was traveling in, with two members of his insurgent cell, was attacked by Iraqi soldiers. It was just as probable that he had been roughed up but did not want to say so. We talked in an office in a library that had been converted to a detention center. A desk in our midst had bloodstains down its side. From parts of the detention center I was not allowed to visit, I could hear prisoners screaming and retching.

Mohammed's career as a holy warrior had lasted a few weeks. He had no skills to offer the insurgency because he had never fired a weapon or built a bomb, did not know his way around Iraq, and could not even blend into a crowd because his Saudi accent gave him away. When he realized his insurgent cell was led by a man who seemed more interested in stealing cars than killing Americans, he wanted out. His capture came as a relief, which is why he had not been tortured to the edge of death -- he was more than happy to tell everything he knew.

"I made a mistake," Mohammed said. "I just hope I will be allowed to go back to Riyadh. I want to leave."

He would not be going home soon. A U.S. military advisor, dressed in jeans and with a pistol strapped to his thigh, was monitoring my talk with Mohammed. The Iraqi who interpreted, also with a pistol on his hip, was an overweight police official. The Saudi, the American, and the Iraqi in this room were in a deep mess, as were their homelands. There were many reasons, and a core one was evoked when Mohammed ventured a guess as to why Iraq had been invaded.

"The Americans want to control Iraq's resources," he said. "They came here for oil."

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Feature

The Great Pipeline Opera

Inside the European pipeline fantasy that became a real-life gas war with Russia.

When Joschka Fischer's lucrative new job as the "political communications advisor" to a consortium of European energy companies was leaked to a German business publication this summer, there was one comment that stood out. "Welcome to the club," said Gerhard Schröder, an even more highly paid advocate for the other side in Europe's increasingly politicized energy war.

Schröder's remark was short, snide -- and very much to the point. For eight years, the two men had led Germany together, with Schröder ruling as its center-left chancellor and Fischer as his foreign minister. Their long-running partnership had survived a particularly complicated era in post-Cold War Europe, and publicly Fischer had always been supportive, even telling Der Spiegel that Schröder "will go down in the history books as a great chancellor."

But since their coalition government collapsed in 2005, Schröder's controversial work has led to an ever-more-public breach between the former allies. Less than one month before leaving the chancellorship, Schröder used his office to guarantee a $1.4 billion loan (later turned down) for a Kremlin-backed natural gas pipeline that would connect Russia to Germany via the Baltic seabed. Then, just days after stepping down, Schröder accepted a senior post with the pipeline consortium run by Russia's state gas monopoly Gazprom. The deal was a huge scandal inside Germany, where Schröder had already been known for years as Genosse der Bosse -- "comrade of the bosses."

The chancellor's move to the Kremlin energy payroll inspired a wave of alarm in Europe over its potentially dangerous dependence on Russia for natural gas. Moscow supplies about a third of the European Union's gas -- Europe's preferred heating source -- and some of its countries are 100 percent dependent on Russia. What's more, Europe's annual gas consumption is set to rise 40 percent by 2030, further stoking those fears about Russia. Several times in recent years, the Kremlin has abruptly cut off gas deliveries after disputes with key transit countries such as Ukraine, leaving millions of Europeans shivering in the winter cold.

Schröder had been reliably pro-Russia while in office, even famously calling the KGB-spy-turned-president Vladimir Putin a "flawless democrat." Although Fischer did not criticize his boss publicly at the time, more recently he has been openly dismissive. Schröder's idea of Putin as a democrat, Fischer told the Wall Street Journal, "was never my position." Asked later by Der Spiegel what he found "most objectionable" about Schröder's tenure, Fischer replied succinctly: "His position on Russia."

This summer, Fischer made the breach with Schröder official: He signed up with a rival consortium -- energy companies from Turkey, Bulgaria, Romania, Hungary, and Austria that have joined together to build the $11 billion Nabucco natural gas pipeline. Nabucco would bring gas from Middle Eastern and Caspian fields across Turkey's Anatolian plateau, and north into Europe. The pipeline is backed and partly funded by the EU and is strongly supported by the United States. Perhaps most importantly, Nabucco would completely bypass Russia. Such an energy strategy, Fischer has argued, is urgently needed to stop Moscow's "divide-and-conquer politics."

Moscow, not surprisingly, is pulling out all the stops to scuttle the project. It is seducing pliant politicians and resorting to old-fashioned bullying, especially in the states that Nabucco transits. It is acquiring stakes in European energy companies, often through questionable shell companies, that could complicate Nabucco's completion. It is buying up natural gas in Central Asia and the Caspian, even paying up to four times more than in previous years, to deny supplies to Nabucco. And it has proposed a rival pipeline, called South Stream, which would flow from Russia across the Black Sea to Bulgaria and the Balkans and fork, with one spur running west to Italy and the other north to Austria.

In many ways, Schröder and Fischer personify the intense struggle -- some call it a war -- over Europe's energy future. On one side are those countries most worried about their dependence on Moscow, especially the former communist countries of Central and Eastern Europe. On the other are countries such as Italy and Germany and leaders such as Schröder, who see closer ties with Russia as both a mercantilist opportunity and a strategic imperative. When I caught up with Schröder at a conference in Houston earlier this year, he was quick to brush aside concerns about Moscow. "There is no reason to doubt the reliability of Russia as a partner," Schröder said. "We must be a partner of Russia if we want to share in the vast raw material reserves in Siberia. The alternative for Russia would be to share these reserves with China."

This gas war is especially hard-fought because of the physical nature of the prize itself. Unlike oil, which can be put onto tankers and shipped anywhere, gas is generally moved in pipelines that traverse, and are thus tethered to, geography. Because a pipeline cannot be rerouted, producers and consumers sign long-term agreements that bind one to the politics of the other, as well as to the transit states in between. In this way, today's gas war is a zero-sum conflict similar to the scramble for resources that divided Eurasia in the 19th century. And now, as then, commerce is taking a back seat to politics.

That is what I found when I set out this spring to travel the pipeline routes, encountering along the way a rogue's gallery of cynical politicians, murky middlemen, insistent executives, and innumerable technocrats, each eager to shape the decision. But the real question that will determine Nabucco's future -- a question vividly on display in every country the pipeline will touch -- is whether Europe has the stomach to fight as hard for its interests as Russia does for its own.

Liberetto: Today's gas war is a zero-sum conflict similar to the scramble for resources that divided Eurasia in the 19th century. Planned pipeline Nabucco would carry up to 1.1 trillion cubic feet of natural gas a year from the Caspian Basin to Vienna, traversing many a former Soviet satellite along the way. A competing Russian project, South Stream, would flow from Russia across the Black Sea and ultimately terminate in Italy and Austria.

One evening in 2002 in Vienna, a small group of Austrian energy executives took their colleagues from Turkish, Hungarian, Bulgarian, and Romanian firms to see a rarely performed Verdi opera. It recounted the plight of Jews expelled from Mesopotamia by King Nebuchadnezzar. The officials had spent the day sketching out a plan for a 2,050-mile pipeline that could transport up to 1.1 trillion cubic feet of natural gas every year across their countries and into European markets. The sources of this gas would not be Russia, but Azerbaijan, maybe Iran one day, and with a U.S.-led war against Saddam Hussein looking increasingly likely, possibly the gas fields of northern Iraq. The opera they attended that night was called Nabucco, and that is the name they gave their pipeline.

The original impetus for the project was just business: The Turks and Austrians saw it as a way to get new supplies of gas from the Caspian and Middle East -- not to mention lucrative transit fees for moving it across their territories into Europe. But politics soon entered into it, as Nabucco won early moral support from Russia skeptics in Central and Eastern Europe. They saw the pipeline as a historic opportunity to build a new lifeline to the West while weakening Russia's grip on them. Many worried, as former Estonian Prime Minister Mart Laar wrote, that "Russian leaders regard their energy assets as tools of foreign-policy leverage and envisage a future in which resource competition may be resolved by military means." The main energy firms in Bulgaria, Romania, and Hungary -- all countries that would host Nabucco -- signed on to help build the pipeline.

The big powers of Western Europe, however, were less dependent on Russian gas and far less willing to antagonize Moscow by bringing non-Russian gas into Europe through former Soviet satellites. Italy, under Silvio Berlusconi, and Germany, under both Schröder and his successor Angela Merkel, dragged their feet on Nabucco. France, with its nicely diversified supply of energy, had little appetite for changing the status quo. Together, these countries blocked any effort within the European Union to allocate funding for Nabucco or even make support for the pipeline a common policy. This resistance infuriated the European Union's newest members, and it still rankles. "The EU role has been weak," Mihaly Bayer, Hungary's special representative for Nabucco, told me. "The EU coordinator for Nabucco, Jozias van Aartsen, simultaneously serves as the mayor of The Hague!" Bayer thundered when we talked in his Budapest office. "When I assumed my post, I sent him multiple letters offering my assistance. I even spent two days in The Hague trying to meet with him. He ignored me."

This east-west deadlock held until 2006, when events started to push in Nabucco's favor. The reason had everything to do with Ukraine, which has clashed repeatedly with Russia in recent years.

Eighty percent of natural gas from Russia travels to Europe through Ukraine, across an energy infrastructure built by the Soviet Union after the 1956 Hungarian uprising. The main pipelines converge in Ukraine before fanning out into Eastern Europe, and were key to the Kremlin's strategy of controlling its Warsaw Pact satellites. The route went through Ukraine because Soviet planners never imagined a day when Ukraine would not be ruled by Moscow. But when that day did arrive, on Aug. 24, 1991, Russia's hold on Ukraine did not end. It just grew more complex, and gas remained a central means of control.

How this unfolded was explained to me in Kiev by Bohden Sokolovsky, an energy advisor to Ukrainian President Viktor Yushchenko, over a breakfast of vodka, blintzes, and cigarettes. It all came down to two things, Sokolovsky said, "Otkat and deriban" -- roughly translated, kickbacks and theft. As Soviet assets and state-run energy companies were privatized in Ukraine in the 1990s, apparatchiks and businessmen on both sides of the border concocted elaborate schemes to get in on the action. They manipulated prices and parceled out kickbacks. The deals were "obviously corrupt," recalled a senior advisor to former Ukrainian President Leonid Kuchma. "But it was a great deal for Ukraine."

Many Europeans disliked their dependence on Ukraine. "The very basis of the gas business in Ukraine is graft," Vaclav Bartuska, the Czech Republic's ambassador at large for energy security, told me. But the desire to do something about it only really materialized with the gas disputes that broke out between Ukraine and Russia after the 2004 Orange Revolution. Ukrainian protesters had just successfully contested an election marred by fraud and voter intimidation, ultimately preventing the Kremlin-favored candidate from taking power. Soon after, the new president, Yushchenko, sought to steer Ukraine into a Euro-Atlantic orbit. This was a direct threat to Russia's influence over its main point of entry into European gas markets. So Putin countered that if Ukraine wanted to be a Western country, it would have to pay the far higher Western price for gas. When Kiev refused to pay those higher prices in the winter of 2006, Moscow shut off gas shipments to its neighbor for four days, denying fuel to millions of other Europeans as well.

"It wasn't until the 2006 gas crisis that the rest of Europe actually started to care about what was going on in Ukraine," recalled Bartuska, who mediated yet another dispute between Russia and Ukraine this January. Many more Europeans began to view Russia not as a reliable supplier of gas but as an aggressive petrostate that privileged its political organizations over its commercial obligations.

Almost overnight, support for Nabucco grew dramatically throughout Europe. But the gas shut-offs also added new impetus to Nabucco's Russian-backed rival, South Stream. Whereas Nabucco's supporters saw warning signs in Ukraine about Russian aggression, others saw a corrupt, untrustworthy transit state disrupting Russia's reliable supply of gas. As Dmitry Rogozin, Russia's ambassador to NATO, put it: "It's clear that if Europe wants to have guaranteed natural gas supplies, as well as oil in its pipelines, then it cannot fully rely on its wonderful ally, Mr. Yushchenko." The Italian energy company Eni led the way, signing on to South Stream in 2007.

And then, of course, there is Germany, where Gerhard Schröder is hardly Russia's only friend. At the same Houston conference where I saw Schröder, I attended a small breakfast for energy company officials and experts. At the first mention of transit security, Reinier Zwitserloot, a spry German of about 60, shot up and shouted, "The most reliable transit state is the Baltic!" He went on: "As far as I am concerned, Nabucco is nothing but an opera!" I later learned that Zwitserloot had recently been awarded the Order of Friendship of the Russian Federation, Moscow's highest honor for non-Russian citizens.

In this opera, Turkey has been cast in one of the leading roles. With its indispensable geographic position between the oil and gas reserves of Iraq, Iran, and the Caspian, it is an absolute certainty that Turkey will host major pipelines sooner or later. If Nabucco succeeds, Turkey could be the biggest winner, both economically and geopolitically -- a fact not lost on Russia or Europe. Or Turkey.

Until the gas wars began, Turkey had a weak hand: It had been rebuffed for EU membership and depended on Russia for a majority of its natural gas. But now, with the country's gas demand skyrocketing and Turkish supply contracts with Russia set to expire, Turkey has not been shy in reminding Europe that it has options. "What is important is to gain natural gas," said Taner Yildiz, Turkey's minister of energy. But doing it through Nabucco, he added, "is not obligatory." Turkey's ambassador to the United States has pointedly called the EU "the biggest impediment to progress on Nabucco's development."

When I sat down in late April with Cuneyd Zapsu, a founding member of Turkey's ruling Justice and Development Party and a longtime counselor to Prime Minister Recep Tayyip Erdogan, he was openly frustrated with Europe's wavering about the pipeline. "Turkey has been ready to sign the deal," he told me. "But every time the consortium agrees, [our Nabucco partners] throw a new term in."

Zapsu understands Turkey's delicate but fortuitous position. "Everyone is trying to make Turkey the enemy," he said. But shifting his gaze out the window and down onto the Bosporus where Europe and Asia meet, Zapsu just smiled. "Everyone loves us."

The mood is less one of love than of fear in several other countries where Nabucco would run, as Russia has aggressively stepped up its efforts to block the pipeline. Next door to Turkey in Bulgaria -- the poorest member of the EU and a transit state for both the Nabucco and South Stream pipelines -- Ognyan Minchev, head of the Institute for Regional and International Studies, told me how Moscow threatened the Bulgarians in 2006. Scrap an agreement with Gazprom and sign a new contract with higher prices for Russia and lower transit fees for Bulgaria, they were told, or else the gas would be cut off. "The Bulgarian government is obedient to Russia," Minchev said. "Bulgaria has put the entire energy system in Russian hands."

Further along the Nabucco route, in Hungary, Laszlo Varro has similar fears. At dawn one day in April, the tall Hungarian led his small dog around a hilltop park overlooking Budapest, recounting how the Russian energy giant Surgutneftegaz had recently acquired a decisive stake in the Hungarian energy firm MOL, where Varro is head of strategy. "It is one of the least transparent energy companies -- in Russia," he said. Varro's concern, he explained, is that no one really knows who is behind Surgutneftegaz -- or rather, he quickly added, that "everyone knows who is behind the company since no one knows." Others in Hungary suspect the same, and one major newspaper spelled it out in a recent headline: "Mr. Putin, Declare Yourself."

Surgutneftegaz is run by Vladimir Bogdanov, an oligarch who managed Putin's 2000 presidential campaign in western Siberia. The secretive Surgutneftegaz has offered almost twice the market value for its shares in MOL. Varro and others see a sinister reason for this seemingly illogical behavior: MOL is a Nabucco consortium member, and by buying this stake, Surgutneftegaz can cut off funding for the pipeline and cripple it in Hungary.

Russian firms are making similar acquisitions in Austria, which is the proposed end of the road for both Nabucco and South Stream. Centrex Europe Energy & Gas, an opaque gas trading firm with ties to Gazprom, makes its money buying cheap gas from Russia and reselling it for profit in Austria. The German magazine Stern recently traced Centrex's profits back to a company registered to a phony address at a drab Soviet-style housing block in Russia. And yet, Centrex recently entered into a partnership with Gazprom Germania to take a 20 percent stake in Austria's Baumgarten trading platform and storage facilities, where the two rival pipelines will literally terminate. Considering that Gazprom already holds a 30 percent share in Baumgarten, this means that Russia's state-run energy company now controls half of the most important gas storage and distribution system in central Europe -- and the future terminus of Eurasia's competing southern pipelines.

Not every country in Europe is so concerned about Russia, however. In Serbia, I was installed at the far end of a conference table opposite Mrakic Dusan, the state secretary for energy and mines. After an initial back and forth, Dusan interrupted me. "Where are the hard questions?" he demanded. So I asked him if Serbia is inviting unacceptable risks by signing a partnership with Gazprom. "We have a great contract with Russia," Dusan insisted. I asked him if he worries that Gazprom has an unsound financial and strategic position. "After 2030, only Russia, Qatar, Iran, and Turkmenistan will still have gas. With Russia in control, this 'gas-OPEC' will control world supplies." Dusan rubbed his chin as he spoke, revealing a large fancy watch. I asked where he got it. Smirking, he responded before the translator could finish.

"Putin."

For the last few years, veteran U.S. diplomat Steven Mann, the State Department's coordinator for Eurasian energy diplomacy, watched as Americans and Europeans struggled to turn Nabucco from grandiose idea to gas-delivering reality. But when he finally left the job earlier this year, he told author Steve LeVine to beware "Nabucco hucksterism" -- a condition he defined as occurring when political enthusiasm for an energy deal gets out too far ahead of its commerical viability. "There have been quite a number of officials who know very little about energy who have been charging into the pipeline debate," Mann told LeVine. "Nabucco is a highly desirable project, don't get me wrong. But there are other highly desirable projects besides Nabucco," he added. "And the overriding question for all these projects is, Where's the gas?"

For Nabucco to be initially viable, most energy experts agree, the gas will need to come from the former Soviet state of Azerbaijan -- 283 billion cubic feet of gas per year, to be precise, roughly 25 percent of the pipeline's capacity. Indeed, without Azerbaijan and its major natural gas supplies, Nabucco is a non-starter.

Russia knows this too, so it has been doing everything in its power to deny Nabucco gas from Azerbaijan, buying it to replenish Russia's declining production. In April, Russian President Dmitry Medvedev hosted Azeri President Ilham Aliyev in Moscow to discuss Russian purchases of Azerbaijan's gas. And then in June, they inked an agreement in which Azerbaijan promised to sell Russia up to 500 million cubic feet of gas -- at well over market rate -- from its offshore gas field, Shah Deniz.

If there were still any doubt about how far Russia would go to fight for its interests in the Caucasus, Azerbaijan need only look at Georgia, which is still reeling from Russia's invasion last summer. It is the key transit state between Azerbaijan and Turkey, hosting two pipelines that bring oil and gas from the Caspian to Turkey. By attacking its small neighbor, Russia effectively warned not only Georgia but the whole neighborhood.

But in recent months, Nabucco's European supporters have started to get their acts together, and Azerbaijan has begun to take notice of that, too. In May, the EU signed a deal of its own with Azerbaijan, which committed to building energy and trade links directly with Europe. This was arguably a more valuable agreement than the one Azerbaijan later signed with Gazprom, which offered not money but only vague pledges that may or may not be met.

Then, on July 13, beneath the crystal chandeliers of an Ankara hotel ballroom, the prime ministers of Turkey, Bulgaria, Romania, Hungary, and Austria signed a Nabucco treaty describing exactly how the pipeline would operate and how tariffs would be calculated. Several days after the announcement that Nabucco had hired Joschka Fischer, who is beloved by many in Turkey for his passionate support for its EU membership, Turkey had dropped a major demand that it had insisted on for months, and the path to the deal was cleared. This was a major breakthrough, and it led Natig Aliyev, Azerbaijan's energy minister, to remark: "I am sure that the project will be realized successfully." When that day comes, Azerbaijan will enjoy both higher prices for its gas and a lifeline to the West.

Also in attendance in Ankara was Iraqi Prime Minister Nuri al-Maliki, whose country looks increasingly likely to play a large role in supplying Nabucco -- possibly larger than that of Azerbaijan. By some estimates, Iraq could provide more than 500 billion cubic feet of natural gas per year by 2014, when Nabucco is expected to be up and running. All of the major players -- Arab Iraqis, Kurdish Iraqis, and the Turks next door -- want to see Iraqi gas heading north through Turkey and into Europe. Recently, a Hungarian and an Austrian energy firm, both Nabucco consortium members, made deals to take 10 percent apiece in the $8 billion Pearl Petroleum gas project in Iraqi Kurdistan. It now seems distinctly possible that a pipeline named after Nebuchadnezzar, the ancient ruler of Babylon, might ultimately owe its success to Iraq.

When Gerhard Schröder signed on with Gazprom in 2005, the smart money in the gas war was on Moscow. Now that picture is changing, if slightly. There is a sense that the Kremlin overplayed its hand both in the gas shut-offs to Ukraine and in the Georgia war last summer. Indeed, U.S. Vice President Joe Biden recently echoed this view of Russia's energy power play. "[Russia's] actions relative to essentially blackmailing a country and a continent on natural gas, what did it produce?" he pointed out. "You've now got an agreement [Nabucco] that no one thought they could have." At the same time, the global recession has hit Russia particularly hard, and Gazprom's profits fell 84 percent in the fourth quarter of 2008, making it Russia's biggest debtor, rather than the world's biggest company, as it once bragged it would become.

And Nabucco's European supporters finally seem to be taking their own side in this fight. They now have a heavyweight rainmaker in Fischer, who is going toe to toe with his old boss Schröder in the struggle for influence in the path of the pipelines. The recent EU agreement with Azerbaijan and the fanfare-laden treaty signing in Turkey are contributing to the sense that Europe is leveling the playing field with Russia. "We have started to confound the skeptics, the unbelievers," European Commission President José Manuel Barroso said in July. "Now that we have an agreement, I believe that this pipeline is inevitable rather than just probable."

And yet, if recent experience teaches anything, it is not to count Russia out, especially when so much is at stake. When I raised this issue with Russian Energy Minster Sergei Shmatko at a meeting in Bulgaria in April, he shot me a threatening glare and cautioned against planning for an energy future without Russia, unless the Europeans were fully prepared to deliver it. "We have an expression in Russia," Shmatko told me. "Don't sell the skin off a bear before you kill it."

Illustration by Sean McCabe for FP; Map by Katherine Yester; Sergei Supinsky/AFP/Getty Images