Promoters of a pipeline linking Europe to Central Asia and the Middle East could have chosen a less inflammatory name than Nabucco, the title of Verdi’s opera about the plight of Hebrew slaves held captive by a cruel Babylonian king.

Europe’s main concern is about being held captive by Russia, which has been making overtures to gas suppliers on the fringe of European markets, notably Algeria and Iran.

What irks the Kremlin is not the pipeline market for gas, which suffers little from competition, but the new market for liquefied natural gas. LNG is more like oil it is flexible and there is already the glimmerings of a traded market in the frozen gas in the Atlantic Basin, with cargoes diverted en route to seek higher prices in different ports.

Russia knows little of LNG. It has no experience of the technology, but it is aware that LNG expansion projects targeted at European markets are under construction in Nigeria, Algeria, Egypt and Qatar. More importantly, two thirds of the world’s existing LNG supply contracts are up for renegotiation over the next five years. Given Russia’s ambition to consolidate and expand its position in Europe, would it not be helpful to secure agreement with rival gas suppliers about the terms on which these contacts are renewed?

Oddly, the key issue is not price but flexibility. Many gas contracts have destination clauses that prevent the cargoes from being resold and diverted. A competitive traded gas market, something that Gazprom would rather avoid, requires the removal of destination clauses. When President Putin talks of coordinating supplies, he means reducing flexibility. You sell to him; we sell to her.

Nabucco is unlikely to help unless Gazprom can be persuaded to let it. The pipeline goes across Russia’s frontier and the Russians regard Turkey as their bailiwick. It is at their mercy all the way.

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