Recently the 14th Caspian Oil and Gas Exhibition and Conference was held in Baku. Participants represented world oil companies and governments of various countries stressed the strategic importance of the availability of energy resources in the countries of the Caspian Sea.

Today, oil and gas deposits in the region are estimated as the third largest after the Middle East and Russia. Especially these resources are of great concern to the EU; a major consumer of hydrocarbons in the Eurasian space.

The EU urgently needed to build infrastructure to diversify of its supply of natural gas, mostly obtained from Russia. Already there is pipeline Baku-Tbilisi-Erzurum, through which Turkey will ship natural gas from the Azerbaijani Shahdeniz field. Greece and Italy began negotiations on the possible purchase of the gas, which can be exported to these countries through Turkey.

It is planned to complete the construction of the necessary infrastructure for this. For this reason construction of pipeline between Ankara and Athens are already planned. The pipeline can pump nine billion cubic meters. gas per year, but in perspective capacity of pipeline could be increased up to 20 billion cubic meters. gas per year.

Nevertheless, the volume of gas that could offer Azerbaijan the EU, where demand has been steadily increasing, as well as the power of the pipeline may seem inadequate. European countries need of additional volumes of gas that can be imported from Central Asian countries such as Turkmenistan, Uzbekistan and Kazakhstan.

In order to transport gas from these countries need additional infrastructure projects such as construction of gas Trans Caspian pipeline and NABUCCO.

However, recently signed by Russia, Kazakhstan and Turkmenistan agreement on the construction of Caspian gas pipeline to export Turkmen gas through Russia could destroy the possibility of putting these projects into reality.

The fact is that Turkmenistan, which produces up to 60 billion cubic meters gas per year, in agreement with Russia to export to the country annually 50 billion cubic meters gas per year. In addition, Russia hopes to revise and extend its contract until 2028, as well as to raise the level of import of Turkmen gas to 90 billion cubic meters gas per year. In other words, if the alternative projects to the west there is a risk, there was additional volumes of Turkmen gas to fill the first Trans Caspian pipeline which capacity calculated at the level of 30 billion cubic meters gas per year.

Moreover, the lack of accurate information about the quantity of gas in Turkmenistan increases the risk by a costly transport projects. That issue was a major topic of discussion at a conference held in Baku. The conference will consider the possibility of increasing rentability and thus implement the two projects. In particular, the unresolved legal status of the Caspian Sea, which may also become a stumbling block to the project of Trans Caspian pipeline, but co-chair of the OSCE Minsk Group on the Karabakh settlement Matthew Bryza, said that this should not be a serious impediment.

Coastal countries for quite a while implementing various power projects in the Caspian Sea and the unresolved status does not prevent their success. Mathew Bryza also said that the attractiveness of the planned projects is that the cost of transporting gas through the proposed pipeline will be significantly lower than for transportation through Russia, which could increase the attractiveness of these projects for Central Asia.

According to Bryza, these projects can not be affected signed a contract for the construction of the Caspian pipeline because it affects the export of gas from the producing fields connected with Russia on contracts, as new transportation corridors planned to export gas from the fields located in western Kazakhstan and Turkmenistan.

In addition, while in Baku was held an international conference, respectively U.S. Assistant Secretary of State for South and Central Asia Richard Boucher and first deputy Secretary Stephen Mann visited Kazakhstan and Turkmenistan.

It is likely that one of the main reasons for the visit of the two officials from the United States is well acquainted with the region, holding talks with the guidelines for consideration of these countries with their capacity to export its energy bypassing Russia.

Interestingly, the United States have shown greater interest in the establishment of a diversification for export of gas to Europe than the EU itself. The lack of an established foreign and energy policy does not allow the European Commission to take a more active part in the negotiations.

While the EU has signed memorandums on cooperation in the field of energy from Azerbaijan and Kazakhstan, the main mechanisms proposed by the European Commission are economic. In particular, the willingness of alternative transports corridors. But realization of these projects and has a strong political context, because in the short term it would be naive to believe that the implementation of economic projects will provide dividends to its creators. The project is now able to develop alternative ways Russia, which is already supplying a third of European gas demand and this, is continues to grow.

Although this alternative would bring for its establishers some economic profits in the first place still is the political importance of these projects. Absence of the EU some effective political instruments for the purpose to achieve its objectives forced this organization to seek political support of his partner, the United States, which is also seriously interested in alternative ways, and therefore actively lobbied the common interests besides the governments of the Central Asian countries.

For your comments:

rovsen@azerimail.net

This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energy
To subscribe email to energyreview@turkishweekly.net