Two events that Energy Summit in Poland and Russian President Putin’s visit to Kazakhstan undoubtedly related to the definition of routing the flow of energy in the Eurasian space. May 11, Poland brought together the Presidents of Azerbaijan, Ukraine, Georgia and Lithuania. President of Kazakhstan Nazarbayev also was invited to the Polish initiative, but Putin’s visit in Kazakhstan failed his appearance at the summit.

Many analysts rated that Putin visit in Kazakhstan deliberately failures Poland initiative. The main objective, which Russia tried to prevent with Putin visit in Kazakhstan, is possible decision of summit on export of energy resources from Central Asia, bypassing Russia, following the example of Azerbaijan. This country, after construction of Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipeline, has been able to export own oil and gas with alternative to Russia routes to the world markets.

It might appear at first sight that Russia has achieved the desired result. In particular, Kazakhstan has stated that up to 80% or 42 million tones of oil exports, he plans to hold through Russia. At the same time, an agreement was signed between Russia, Kazakhstan and Turkmenistan in which they plan jointly to construct Caspian gas pipeline from Turkmenistan via Kazakhstan to the territory of Russia. As a result, Russia has ensured that the export of natural gas from Turkmenistan to the world market place through its territory.

These two factors can be shown as successful tactic to prevent energy supplies from Central Asian countries to the world markets, bypassing Russian territory. But in reality, however, is in a slightly different vein. First of all, the initiative of the energy summit in Krakow was proposed by Polish President Lech Kaczynski. For the first time he made such a proposal during his visit to Ukraine, where he once again expressed the interest of Poland to diversify energy supplies. Later, similar proposals have been offered by Polish President to his colleagues from Kazakhstan and Azerbaijan, during his visit to these countries.

Apart from these countries also Georgia and Lithuania took participation in summit. Georgia participated as the state which may play role of the major transit route for a possible diversification of energy supply routes from the Caspian basin. Moreover, this country was the first of consumers to reap the benefits of alternative energy supplies when Russia increased the price of natural gas deliveries and then she was able to buy gas from Azerbaijan avoiding economic crisis.

Lithuania, in turn affected from Russia refused to make its territory available for export Kazakh oil in the country. Kazakhstan planned to privatize refinery plant in that country and to undertake the production of oil products from their own oil. Following the refusal of Russia the only alternative route for oil imports for Lithuania will route which will run through Ukraine, Poland and Lithuania.

Concrete relocation, which should be consistent at the summit were providing alternative ways for the delivery of hydrocarbon resources from the Caspian region to Europe. In particular, bring of the intentions of the producers, transitors and consumers of energy in conformity with the Energy Charter, plans to prolong a pipeline of Odessa-Brody for Caspian oil till the cities Plotck and Gdansk, possible construction of additional pipeline from the Baku-Tbilisi-Ceyhan pipeline to the EU countries, including Germany.

It should be noted that in Krakow summit besides Azerbaijan and Kazakhstan others are importers of energy. And in this case, the non-participation of Kazakhstan can be seen by some tactical victory for Russia to derail the event. In this case lacking of guaranteed supply of energy from the Caspian region it’s impossible to think about possibility of realization of the idea holding a summit. But from the other side it’s not like seems from the first sight.

The summit in Krakow was primarily the personal initiative of the President of Poland. While on the agenda were the provisions relating to the overall EU energy policy, we can safely say that Poland is primarily followed the national interest in this case. Indeed, in case an agreement on the key issues of the summit the country would become a key actor in the development of alternative routes and would be a major transit hub.

The same applies to Georgia and Ukraine. Both countries have gone through a "velvet revolutions" and openly adopted a policy of full integration into European structures. Both countries already got confirmation for possibility of NATO accession. The projects which proposed for discussion in Krakow summit would enable those countries to obtain additional dividends in the process of integration with the EU. Since this states will play role of the transitors for the alternative energy supply in the EU states.

Azerbaijan after achieving alternative routes for exporting of own energy resources, this country has been able to independently conduct its own foreign policy and freely participated in the Energy summit without regard to Russia. Interest of Azerbaijan in participating in the summit is to explore the possibility of developing new alternative routes to export their energy to world markets.

Azerbaijan is ready to support any alternative routes based on two principles. First, the projects will not be financially burdened the country and the second will let to state organize own production of finished oil products in the markets of the countries to which the oil will flow.

Regarding the non-participation of Kazakhstan, the first and foremost reason for this is the official visit of President of Russia Putin to the country on May 10-15. Putin truly choose time for the visit and the signing of an agreement for the construction of the Caspian pipeline. This would be like saying that the summit plans were abandoned for the simple reason that the alternative routes would be impossible to find enough energy as hydrocarbons from Central Asian countries will be exported through Russia.

In my view both events absolutely have no relationship. Even if it were not predicted to energy summit in Poland, all of the agreements signed between Russia, Kazakhstan and Turkmenistan have been approved in any event. Firstly, it should be pointed out that with the signing of an agreement to build a pipeline Russia is not reached any new dividends, but only received additional guarantees for the existing arrangements to supply natural gas from Turkmenistan to Russia, which date back to the life of former President Samarmurad Niyazov.

The construction of the Caspian pipeline will primarily provide a stable import of this natural gas. In turn, the President of Turkmenistan Berdymuhamedov during the signing an agreement with Russia noted that the country does not withdraw from consideration and implementation of alternative export routes for Turkmen gas.

As for Kazakhstan, at first glance, it might appear that Russia has ensured that the country has moved away from alternative export routes for its oil. Quoting President Nazarbayev of Kazakhstan exported 52 million tons of oil, 42 million it plans to export through the territory of Russia. But it should not be forgotten that in the coming years the volume of oil exports from Kazakhstan will reach 100 million tons and the volume of oil Kazakhstan undoubtedly will seek new ways to deliver to the world markets.

This oil mostly will be produced by the Western companies, and therefore a decision on which route to export hydrocarbons will be taken in conjunction with these companies.

Kazakhstan itself has been an interest in Putin’s visit to the country. During the meeting, the presidents of those countries were considered to connect Kazakhstan to the Burgaz-Aleksandropolus pipeline project. In addition to that Russia intended to achieve a possibility the increase in crude oil supplies from Kazakhstan to Orenbourg oil refinery, located in Russia, in which privatization was very interested in Kazakhstan.

Another reason for the refusal of Kazakhstan from the Energy Summit is that the country still depends on Russia for the use of transport infrastructure to export oil. Kazakhstan has yet to opportunities to diversify supply, and therefore is a more prudent policy on this matter. At the moment, the question of increased pumping and the revision of tariffs on oil passes through the Caspian pipeline, the main export pipeline for Kazakh oil.

Russia is attempting to use this issue as an attempt to pressure Kazakhstan to implement its own national interests. In addition, if the projects described in Poland, Kazakhstan will be able to join until a few years later, when the oil is flowing into the Baku-Tbilisi-Ceyhan pipeline.

Summarizing an analysis of these two events, it should be noted that at this stage in the energy transport projects await another flight and should not. Poland, correctly identifying weaknesses in the common energy policy of EU assumed courage for promoting of its own policies. However, the question of other countries and EU members could decide not to support those countries. With regard to Russia, President Putin only correctly estimated the situation and in some decisive moves created an illusion collapse intention to create diverfikatsionnyh ways to bypass Russia. In the short term, it is possible, because both Kazakhstan and Turkmenistan in dire need of this country to export its own hydrocarbons. And until you have achieved specific projects towards west, such as Nabucco or trans pipeline, the leaders of the Central Asian countries will not risk putting forward their own initiatives in this regard. This will require active involvement in projects such as the EU as a whole and its members. Meanwhile, the two summits have what it had to in this situation.

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This commentary is from USAK’s Energy Review Newsletter
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