What Role For The Blacksea Region in EU's Energy Strategy
The European Union is urgently drafting for release within the month a Green Paper on Energy, which may be the first in a series of Energy Papers from Brussels. The move responds to the twin problems that suddenly alarmed the EU and the United States in recent weeks: Three rounds of interruptions in energy deliveries from Russia to Europe, coupled with a continuing slide into European overdependence on Russian supplies.
Officially, Brussels and Washington are only beginning sotto-voce to acknowledge those two sides of that problem. But they have yet to focus on the dangerous nexus now forming between disruptions by Russia or in Russia and growing dependence upon Russia. Of those three interruptions, two were man-made in Russia but occurred in the Black Sea region, highlighting this region's key role in Western energy security.
Compounding Moscow's leverage as supplier, its middleman-monopoly on eastern Caspian hydrocarbons is a novel type of leverage, usable on the producer countries as well. Additionally, Moscow seeks footholds in downstream infrastructure of European countries for a third type of leverage.
The winter's events have highlighted these long-neglected, but now mounting, risks to the energy security of the enlarged West and its partners in Europe's East. The relevance of EU policy will hinge on identifying these risks and calling for the development of a common energy security strategy. This must be based on diversification of supply sources, with direct access via the Black Sea region to the eastern Caspian as a major objective; and on ensuring national or EU control (as opposed to Russian control) of energy transport systems in Europe.
The EU's initiative must also stipulate consultation and coordination with the United States toward an overall Western strategic concept and measures for energy security. The Paper ought to clarify that energy security has become a key dimension to overall Euro-Atlantic security, and on that basis propose the establishment of a standing EU-United States consultative mechanism that can evolve into a policy-planning framework.
Were the EU to stop short of proposing a Euro-Atlantic approach, then consideration might be given to asking NATO to initiate such an approach to energy security. A start to discussion of this problem within NATO would seem to be a natural development. The alliance has rapidly evolved into a multidimensional security organization; energy security has become more critical to the enlarged West's overall security than at any time in modern history; and NATO remains the principal trans-Atlantic consultation and policy-making forum.
The EU is moving piecemeal toward its declared long-term goal of a common foreign and security policy; but it has never proposed to develop a common energy-supply policy or at least an energy-security strategy. Such a step can no longer be delayed after this winter's experience. The Energy Paper is the right vehicle for announcing that goal and proposing the necessary institutional format.
Any EU strategy must recognize the centrality of Caspian oil and gas to the problem of diversification away from dependency on Russia. However, preliminary indications suggest that the Paper will focus mainly on diversifying the types of energy being used, and less so on diversifying the oil and gas supply sources in general or obtaining direct access to Caspian reserves in particular. While conservation and saving, greater use of renewable sources, and adding storage capacity on EU territory are all necessary measures, it would be unrealistic to expect any significant decline in hydrocarbon requirements for at least the medium term.
A viable strategy for supply diversification should aim to link the EU with the transit and producer countries in the Black Sea and Caspian basins. The EU Paper can clarify Western energy interests in this area as opening direct access to eastern Caspian supplies, not through Russian territory; and ensuring that countries traditionally carrying Russian energy to Europe -- mainly Ukraine and Moldova -- do not lose control of their transit systems to Gazprom or other Russian interests. At the moment, the first goal has not yet been declared, and the second goal is in jeopardy as Moscow began setting the stage this winter for ultimate transfers of control over those transit systems.
Transit projects indispensable to EU and overall Western energy security (as defined above) and vital to anchoring the countries of Europe's East include, among other proposals:
1) a Trans-Caspian westbound pipeline for Turkmen gas via the Black Sea region. The 1990s proposal for 16 to 32 billion cubic meters annually looks un-ambitious in retrospect. EU and other requirements (e.g., Ukrainian and Balkan) and the gas export potential of Turkmenistan -- meanwhile augmented by that of Kazakhstan, and Uzbekistan -- warrant a higher target;
2) a Kazakhstan-Azerbaijan oil transport system to feed into the Baku-Tbilisi-Ceyhan pipeline, with a ramification from Tbilisi to a Georgian Black Sea port. These can become the main non-Russian routes for Kazakhstan's super giant Kashagan oilfield's output. Transport to Baku by five medium-capacity tankers, as proposed, can provide a short-term palliative. The necessary solution will be a westbound pipeline on the Caspian seabed;
3) expansion of the Shah Deniz (Azerbaijan)-Tbilisi-Erzurum (Turkey) gas pipeline. Proven reserves at Shah Deniz considerably exceed the earlier estimates. Turkey's role will change from that of a consumer to that of transit country for Azerbaijani gas;
4) extending the Odessa-Brody oil pipeline into Poland, expanding its projected annual capacity to a commercially more attractive figure than the 9 million tons initially proposed, and ensuring supplies of Kazakhstan oil via the Black Sea to Odessa for this pipeline.
A Black Sea-Caspian focus would highlight the opportunities for common EU-U.S. policies on energy security. The timing seems ideal for the forthcoming EU Green Paper on Energy to recommend joining forces with the United States to reactivate the major projects drafted in the 1990s for direct access via the Black Sea region to Caspian oil and gas. Those are: the EU's Traceca (Transit Corridor Europe-Caucasus-Central Asia) project, practically abandoned at inception, and the U.S.-initiated East-West Energy Corridor, which is only materializing from Azerbaijan to Turkey, but stopped short of extending as planned in the 1990s to the far larger eastern-shore reserves in Kazakhstan and Turkmenistan.
In the intervening decade, European and overall Western energy requirements have increased, even as supply risks posed by rogue or war-torn countries -- and, this winter, by an unreliable Russia -- are multiplying. The EU Paper ought to make clear that monopolization of access to Caspian hydrocarbons is unacceptable (a principle that can also form a basis for EU-U.S. policy coordination) and that the EU has legitimate, indeed pressing, interests in obtaining direct access.
Once it defines the main policy goals, the Energy Paper ought to recommend real empowerment of existing EU instruments for implementation: the Energy Commissioner's office, the EU's Special Representatives for the regions, and the EU missions in energy-producing and key transit countries.
Those instruments have long been disabled in the Black Sea and Caspian regions due to the absence of a common energy policy in Brussels. Thus, EU Council spokespersons insisted that Ukraine and Moldova's gas problems with Russia this winter were bilateral issues, seemingly ignoring the adverse impact on EU transit interests. The EU Energy Commissioner inaccurately characterized the Russia-Ukraine gas crisis as a commercial dispute, and described Russia as a reliable long-term supplier even after the second and third rounds of supply shortfalls, caused by never-explained sabotage of three supply lines in the North Caucasus and an ostensibly "unforeseen" deep freeze in Siberia, respectively.
A credible Energy Paper needs to demonstrate that the EU means business in the Black Sea and Caspian regions. Brussels must include energy supply and transit as high priorities in the mandates of its Special Representatives for the South Caucasus and Central Asia and of its missions in Ukraine, Georgia, and Kazakhstan. The EU can also propose launching and institutionalizing discussions with Turkmenistan and Uzbekistan on commercial development of their energy deposits and a European alternative to the Russian monopsony.
The EU also needs to step in with expert assistance to Ukraine and Moldova as these re-negotiate their gas agreements with Russia under pressure. Russia seeks to extend its dominance over gas transit to EU countries by acquiring incremental control over Ukraine's pipeline system and full control over Moldova's, leveraging the supplier's monopoly. Ukraine now apparently wishes to extricate itself from the dangerous five-year agreements it signed in January and February with Gazprom and RosUkrEnergo; while Moldova faces the March 31 expiry of its interim agreement with Gazprom. At Chisinau's initiative, Kyiv and Chisinau jointly requested the EU in January to provide advice on the formation of market prices for gas supplies and transit and to delegate expert observers to the Ukraine-Russia and Moldova-Russia negotiations. The EU missed that unprecedented opportunity in January. It must seize it now.
Preventing a transfer of Ukraine's gas transit pipelines to some form of "joint" Russian-Ukrainian control (as a guise for Russian de facto control) is a major EU interest in Europe's East. Moscow holds out two rationales for such a transfer: price and debt relief, and investment for the pipelines' modernization in Russian co-ownership. Such a transfer would increase Gazprom's market dominance in the EU as a whole and would place Ukraine's immediate neighbors in the EU under pressure to cede portions of their national infrastructure to the monopoly supplier. Meanwhile, Ukrainian authorities' gross mismanagement of gas negotiations with Russia (and of energy policy generally) translates into political and strategic vulnerability of the country, which in turn jeopardizes Western geostrategic interests throughout Europe's East and the Black Sea region.
Before Ukraine's energy predicament deepens any further, the EU can immediately offer to send a task force of experts to Kyiv for an overall assessment of the situation. The assessment process could soon evolve into an EU-Ukraine standing consultative mechanism that could help formulate an energy strategy of Ukraine, map out energy sector reforms, plan the modernization of its aging transit systems for gas and oil to the EU, and consider the formation of a European investment consortium to overhaul those systems as an alternative to a Russian-dominated consortium.
By Vladimir Socor
http://www.jamestown.org/edm/article.php?article_id=2370833
Officially, Brussels and Washington are only beginning sotto-voce to acknowledge those two sides of that problem. But they have yet to focus on the dangerous nexus now forming between disruptions by Russia or in Russia and growing dependence upon Russia. Of those three interruptions, two were man-made in Russia but occurred in the Black Sea region, highlighting this region's key role in Western energy security.
Compounding Moscow's leverage as supplier, its middleman-monopoly on eastern Caspian hydrocarbons is a novel type of leverage, usable on the producer countries as well. Additionally, Moscow seeks footholds in downstream infrastructure of European countries for a third type of leverage.
The winter's events have highlighted these long-neglected, but now mounting, risks to the energy security of the enlarged West and its partners in Europe's East. The relevance of EU policy will hinge on identifying these risks and calling for the development of a common energy security strategy. This must be based on diversification of supply sources, with direct access via the Black Sea region to the eastern Caspian as a major objective; and on ensuring national or EU control (as opposed to Russian control) of energy transport systems in Europe.
The EU's initiative must also stipulate consultation and coordination with the United States toward an overall Western strategic concept and measures for energy security. The Paper ought to clarify that energy security has become a key dimension to overall Euro-Atlantic security, and on that basis propose the establishment of a standing EU-United States consultative mechanism that can evolve into a policy-planning framework.
Were the EU to stop short of proposing a Euro-Atlantic approach, then consideration might be given to asking NATO to initiate such an approach to energy security. A start to discussion of this problem within NATO would seem to be a natural development. The alliance has rapidly evolved into a multidimensional security organization; energy security has become more critical to the enlarged West's overall security than at any time in modern history; and NATO remains the principal trans-Atlantic consultation and policy-making forum.
The EU is moving piecemeal toward its declared long-term goal of a common foreign and security policy; but it has never proposed to develop a common energy-supply policy or at least an energy-security strategy. Such a step can no longer be delayed after this winter's experience. The Energy Paper is the right vehicle for announcing that goal and proposing the necessary institutional format.
Any EU strategy must recognize the centrality of Caspian oil and gas to the problem of diversification away from dependency on Russia. However, preliminary indications suggest that the Paper will focus mainly on diversifying the types of energy being used, and less so on diversifying the oil and gas supply sources in general or obtaining direct access to Caspian reserves in particular. While conservation and saving, greater use of renewable sources, and adding storage capacity on EU territory are all necessary measures, it would be unrealistic to expect any significant decline in hydrocarbon requirements for at least the medium term.
A viable strategy for supply diversification should aim to link the EU with the transit and producer countries in the Black Sea and Caspian basins. The EU Paper can clarify Western energy interests in this area as opening direct access to eastern Caspian supplies, not through Russian territory; and ensuring that countries traditionally carrying Russian energy to Europe -- mainly Ukraine and Moldova -- do not lose control of their transit systems to Gazprom or other Russian interests. At the moment, the first goal has not yet been declared, and the second goal is in jeopardy as Moscow began setting the stage this winter for ultimate transfers of control over those transit systems.
Transit projects indispensable to EU and overall Western energy security (as defined above) and vital to anchoring the countries of Europe's East include, among other proposals:
1) a Trans-Caspian westbound pipeline for Turkmen gas via the Black Sea region. The 1990s proposal for 16 to 32 billion cubic meters annually looks un-ambitious in retrospect. EU and other requirements (e.g., Ukrainian and Balkan) and the gas export potential of Turkmenistan -- meanwhile augmented by that of Kazakhstan, and Uzbekistan -- warrant a higher target;
2) a Kazakhstan-Azerbaijan oil transport system to feed into the Baku-Tbilisi-Ceyhan pipeline, with a ramification from Tbilisi to a Georgian Black Sea port. These can become the main non-Russian routes for Kazakhstan's super giant Kashagan oilfield's output. Transport to Baku by five medium-capacity tankers, as proposed, can provide a short-term palliative. The necessary solution will be a westbound pipeline on the Caspian seabed;
3) expansion of the Shah Deniz (Azerbaijan)-Tbilisi-Erzurum (Turkey) gas pipeline. Proven reserves at Shah Deniz considerably exceed the earlier estimates. Turkey's role will change from that of a consumer to that of transit country for Azerbaijani gas;
4) extending the Odessa-Brody oil pipeline into Poland, expanding its projected annual capacity to a commercially more attractive figure than the 9 million tons initially proposed, and ensuring supplies of Kazakhstan oil via the Black Sea to Odessa for this pipeline.
A Black Sea-Caspian focus would highlight the opportunities for common EU-U.S. policies on energy security. The timing seems ideal for the forthcoming EU Green Paper on Energy to recommend joining forces with the United States to reactivate the major projects drafted in the 1990s for direct access via the Black Sea region to Caspian oil and gas. Those are: the EU's Traceca (Transit Corridor Europe-Caucasus-Central Asia) project, practically abandoned at inception, and the U.S.-initiated East-West Energy Corridor, which is only materializing from Azerbaijan to Turkey, but stopped short of extending as planned in the 1990s to the far larger eastern-shore reserves in Kazakhstan and Turkmenistan.
In the intervening decade, European and overall Western energy requirements have increased, even as supply risks posed by rogue or war-torn countries -- and, this winter, by an unreliable Russia -- are multiplying. The EU Paper ought to make clear that monopolization of access to Caspian hydrocarbons is unacceptable (a principle that can also form a basis for EU-U.S. policy coordination) and that the EU has legitimate, indeed pressing, interests in obtaining direct access.
Once it defines the main policy goals, the Energy Paper ought to recommend real empowerment of existing EU instruments for implementation: the Energy Commissioner's office, the EU's Special Representatives for the regions, and the EU missions in energy-producing and key transit countries.
Those instruments have long been disabled in the Black Sea and Caspian regions due to the absence of a common energy policy in Brussels. Thus, EU Council spokespersons insisted that Ukraine and Moldova's gas problems with Russia this winter were bilateral issues, seemingly ignoring the adverse impact on EU transit interests. The EU Energy Commissioner inaccurately characterized the Russia-Ukraine gas crisis as a commercial dispute, and described Russia as a reliable long-term supplier even after the second and third rounds of supply shortfalls, caused by never-explained sabotage of three supply lines in the North Caucasus and an ostensibly "unforeseen" deep freeze in Siberia, respectively.
A credible Energy Paper needs to demonstrate that the EU means business in the Black Sea and Caspian regions. Brussels must include energy supply and transit as high priorities in the mandates of its Special Representatives for the South Caucasus and Central Asia and of its missions in Ukraine, Georgia, and Kazakhstan. The EU can also propose launching and institutionalizing discussions with Turkmenistan and Uzbekistan on commercial development of their energy deposits and a European alternative to the Russian monopsony.
The EU also needs to step in with expert assistance to Ukraine and Moldova as these re-negotiate their gas agreements with Russia under pressure. Russia seeks to extend its dominance over gas transit to EU countries by acquiring incremental control over Ukraine's pipeline system and full control over Moldova's, leveraging the supplier's monopoly. Ukraine now apparently wishes to extricate itself from the dangerous five-year agreements it signed in January and February with Gazprom and RosUkrEnergo; while Moldova faces the March 31 expiry of its interim agreement with Gazprom. At Chisinau's initiative, Kyiv and Chisinau jointly requested the EU in January to provide advice on the formation of market prices for gas supplies and transit and to delegate expert observers to the Ukraine-Russia and Moldova-Russia negotiations. The EU missed that unprecedented opportunity in January. It must seize it now.
Preventing a transfer of Ukraine's gas transit pipelines to some form of "joint" Russian-Ukrainian control (as a guise for Russian de facto control) is a major EU interest in Europe's East. Moscow holds out two rationales for such a transfer: price and debt relief, and investment for the pipelines' modernization in Russian co-ownership. Such a transfer would increase Gazprom's market dominance in the EU as a whole and would place Ukraine's immediate neighbors in the EU under pressure to cede portions of their national infrastructure to the monopoly supplier. Meanwhile, Ukrainian authorities' gross mismanagement of gas negotiations with Russia (and of energy policy generally) translates into political and strategic vulnerability of the country, which in turn jeopardizes Western geostrategic interests throughout Europe's East and the Black Sea region.
Before Ukraine's energy predicament deepens any further, the EU can immediately offer to send a task force of experts to Kyiv for an overall assessment of the situation. The assessment process could soon evolve into an EU-Ukraine standing consultative mechanism that could help formulate an energy strategy of Ukraine, map out energy sector reforms, plan the modernization of its aging transit systems for gas and oil to the EU, and consider the formation of a European investment consortium to overhaul those systems as an alternative to a Russian-dominated consortium.
By Vladimir Socor
http://www.jamestown.org/edm/article.php?article_id=2370833
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