The new geostrategic reality has not been lost on the Kremlin, which has moved since the confrontation to assert further its control over burgeoning volumes of Caspian oil and natural gas produced by the former Soviet republics of Azerbaijan, Kazakhstan and Turkmenistan. According to Tbilisi, Moscow's new assertiveness threatens the future of the 1,094-mile, $3.6 billion Baku-Tbilisi-Ceyhan pipeline, opened in May 2006. BTC now provides 1 million barrels per day of Azeri oil to the global market.

During the conflict the Georgian media made much of pictures purportedly showing Russian bomb craters near the pipeline. On Aug. 9, the day after hostilities began, Georgian Minister of Economic Development Ekaterine Sharashidze claimed that Russian aircraft deliberately targeted the BTC segment traversing Georgia, but the claim was not independently verified.

BTC, however, had before the fighting began suffered a misfortune of its own. In an unexpected display of vulnerability, BTC's flow in eastern Turkey was disrupted by an explosion of unknown origin about 11 p.m. on Aug. 5 on the segment at Yurtbasi village. Valves 29 and 31 were closed as officials waited for the oil contained in the 4-mile segment to burn out. BTC operator BP subsequently declared force majeure, and the pipeline only resumed operations on Aug. 25, which deprived an energy-hungry world of approximately 17 million barrels of crude, an amount equivalent to about 20 percent of the world's daily consumption.

The bigger casualty of Russia's new assertiveness, however, is likely to be other proposed pipelines to tap Azeri, Kazakh, Turkmen and Uzbek natural gas and oil reserves. While no one in the West is saying so openly, the conflict, allied with Moscow's attempts to purchase future volumes of Caspian and Central Asian production, seems to marginalize further Western attempts to secure them.

Among the endangered proposals is the ambitious $5.8 billion, 56-inch diameter, 2,050-mile Nabucco natural gas pipeline, designed at its most extravagant to connect the Caspian region, Middle East and Egypt via Turkey, Bulgaria, Romania, Hungary with Austria and, further on, Central and Western European gas markets. For Washington, the pipeline would accomplish two of its major regional strategic goals, bypassing both Russia and Iran. If built as planned, the line would have an annual capacity of 31 billion cubic meters of natural gas.

Nabucco, supported by both the European Union and the United States, has a long history and was first proposed six years ago during discussions between Austria's OMV Gas and Turkey's Boru Hatlari ile Petrol Tasima, or BOTAS. Before the clash between Georgia and Russia, Nabucco's development phase was scheduled to last until the end of 2008, when financing was expected to be finalized, with construction tentatively scheduled to begin in 2009 and the pipeline scheduled to come online in 2012.

Even before the Caucasian strife, the Kremlin was working to undercut Nabucco with an alternative to supply Central Asian natural gas to southern Europe via its South Stream natural gas pipeline project. As envisaged, South Stream would have a similar capacity to Nabucco of 30 bcm of gas annually. A memorandum of understanding of constructing South Stream was signed in June in Rome. Allaying European fears of Russian monopolies, South Stream will be jointly financed, owned and operated by Gazprom and Italy's ENI energy firm with minority stakes offered to transit countries.

Even if Nabucco is eventually built, the nagging question remains of where the gas to fill it would come from, as the sole existing agreement for volumes was for 8 bcm of natural gas per annum after Azerbaijan's offshore Caspian Shah Deniz gas field entered its second stage of development in 2013. Nabucco promoters had hoped to secure the missing 22 billion bcm by acquiring both Kazakh and Turkmen natural gas, to be sent via a proposed undersea Trans-Caspian Gas Pipeline transiting the Caspian seabed from Turkmenbashi to Baku. In their reveries Nabucco boosters even believed that Egypt might be able annually to provide 3 bcm to 5 bcm of natural gas for Nabucco through the Arab Gas Pipeline from recently discovered reserves in the Nile Delta, while Iraq could contribute production from its Ekas field via the same pipeline.

The South Ossetia clash seems to have effectively doomed these hopes, as Western investment is unlikely to be forthcoming for either Nabucco or the Trans-Caspian Gas Pipeline so close to what was effectively a war zone.

The final nail in Western-proposed pipelines' coffin is that Russia has effectively blunted the most alluring aspect of Western offers for Caspian and Central Asian gas -- price. This year Gazprom's price for European consumers averaged $402 per 1,000 cubic meters, rising to $500 in June when oil prices peaked. Talks on pricing continue with Turkmenistan and Uzbekistan, and while a preliminary agreement apparently has been reached, no specific details have yet been released. Speaking to reporters in the Turkmen capital Ashgabat after the discussions, Russian Deputy Minister of Energy Anatoly Yanovsky said: "The price formula has been agreed. It consists of the European gas price, minus transport expenditures, minus Gazprom's transfer margin." Russian analysts have concluded that the available data translate to a price of $300 to $350 per tcm. To put this change into perspective, it is worth noting that Turkmenistan raised the price of gas sold to Gazprom from $100 to $150 per tcm on Jan. 1. Gazprom has effectively eviscerated EU and Western counteroffers of higher prices.

In the intertwined world of energy and geopolitics, it is the Ukrainians who likely will be the first to feel the wrath of Gazprom's New World Order for their temerity in attempting to join NATO. Kiev currently pays Gazprom $179.50 per tcm but has been put on notice that prices by year's end will reach European prices, which will put further pressure on the already fractious government as energy prices effectively double.

As for European and U.S. supporters of pipeline chimeras such as Nabucco, the handwriting seems to be on the wall for the most naive. Wall Street had best take its declining billions and look elsewhere for energy, as the Russian bear has effectively extended its paw over the Caspian for the foreseeable future.

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