This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energy
To subscribe email to energyreview@turkishweekly.net
Just three weeks ago an Italian-Turkish Consortium has started to build Samsun-Ceyhan Crude Oil Pipeline, which is expected to carry Caspian region’s rich oil resources to World Markets, especially to the West. It is planned to transport 1.5 million barrels of oil per day from Black Sea to Mediterranean through a secure and feasible route with this project.
However, the balance in the region has changed with Putin’s visit to Central Asia. In their meeting Nazarbayev and Putin agreed to carry Kazak oil to Europe via Russian territory.
Mainly the conclusions below can be derived from this development;
Firstly, this kind of an agreement would have significant impacts on European Energy Security. Today, the biggest hydrocarbons supplier of Europe is Russia and Europe’s primary aim is to diversify its suppliers for the sake of energy security. One of the alternatives is Caspian region with its promising vast energy reserves. In this framework, an EU delegation visited Central Asia on the last week of March 2007. However, they could not take concrete steps as Putin did during this visit. Now, taking control of these resources, Russia not only economically but also politically will become a more powerful country against the western block and if EU continues to take non-concrete steps, instead of decreasing their dependency to Russia they would become more dependent to this country.
Secondly, Kazakhstan’s oil reaches currently via Russia to World Markets mainly from Tengiz to Novorossiisk and from Atyrau to Samara (Russia). Deciding to sell its oil resources also Kazakhstan becomes dependent to Russia. In this way, Russia turns into a monopoly for EU and monopsony for Kazakhstan.
Thirdly, the US and Turkey are another dimension of this picture. Having an important route like Baku-Tbilisi-Ceyhan; Turkey has started to construct another pipeline with a great capacity. However, it is known that for the feasibility of these pipelines some new oil, apart from the Azeri’s, to fill these up should be found. Kazakhstan is an important actor in this sense, but promising stake in Burgas Alexandroupolis and new capacity for transferring Kazak oil, it seems that Putin succeeded to bind up this country to Russia.
On the other hand, the US policies towards Central Asia seems that would be negatively affected from these new developments, since both Kazakhstan and Turkmenistan while moving away from the US getting closer to Russia.
To sum up, impacts of Putin’s visit to Russia would continue to be discussed in the future. In the perspective of countries in the region, they want to sell their resources and turn it into money. It could be said that they might be acting pragmatist but the results would get clearer in the future for all of the actors in the region.
Source: Financial Times
For the oil markets, gasoline has become one of the main indicators that affect prices. In the beginning of the last week with the speculation of “refiners will increase output of the motor fuel before the peak-demand driving season” (Shenk, M. Bloomberg) oil prices decreased more than $2 both in Brent oil and WTI. However, due to concerns about refinery outputs it rose again and Brent became $65.35 and WTI $62.06.
The week before was favorable for the stocks in the US. Both crude oil and gasoline stocks increased. It was the first time ever increase for gasoline after 12 weeks of decline in stocks. Even though the increase in crude oil stocks was impressive, almost 5.5 million barrels, the stock level (341 million barrels) is lower than the last year’s values (347 million).
For this week, according to a Bloomberg’s Survey 17 of 45 analysts expect a rise in prices and 13 of them expect a fall. Gasoline, political and economic disruptions would be effective on oil prices. Blurred Iran issue is another important aspect for the markets.
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This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energy
To subscribe email to energyreview@turkishweekly.net
