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Energy Security: Potential for EU-GCC Cooperation and beyond that a 200-mile exclusive economic zone (EEZ). If the Law of the Sea convention were applied to the Caspian, full maritime boundaries of the five littoral states bordering it would be established based upon an equidistant division of the sea and undersea resources international sectors. If the Law were not applied, in other words if the basin is considered a lake, the Caspian and its resources would be developed jointly – a division referred to as the condominium approach. After more than a decade since the breakup of the Soviet Union, the five littoral states have not agreed on whether to characterize the Caspian as a sea or a lake.” 20 Russia favors the median line solution where the Caspian Sea is divided according to a line running across the seabed at the same distance from both opposite shores. Russia, Kazakhstan and Azerbaijan have already agreed (in 1998 and 2001) to divide the Northern part of the Sea based on this criterion. Iran presents a roadblock as it demands that the Sea be divided equally between every coastal country (20 percent of the sea surface and seabed for each of them). Finally, what is most important for the purpose of building the Trans-Caspian Pipeline is an agreement between Turkmenistan and Azerbaijan as the pipe would connect those two countries. They have agreed that the section of the Sea shared Figure 2. Major Caspian Existing and Potential Pipelines Source: Platts (cited in chapter 5.2.3) 2 between them should be divided according to the median line principle, but they have disagreed on the exact position of that line. Consequently, it must be remarked that there is no viable solution to fill in Nabucco in Central Asia and over the short term. From that perspective, a pipeline originating from the Gulf and reaching Turkey directly could be a satisfactory solution. In the perspective of the Gulf countries, a last solution to create the fourth corridor is through Iraq and Turkey. Central Asian resources were not used to their maximum potential due to the inclusion of those countries in the Soviet Union. The disintegration of the USSR has, so to speak, brought those resources to a market in need of an alternative to the Middle East concerning oil and to Russia concerning gas. It is therefore logical that this attracted the attention of all the surrounding powers. First of all, Russia still has very strong ties in the region and has the advantage of being connected to those countries by the Soviet gas network. Presidents Vladimir Putin and then Dmitry Medvedev have been active in strengthening these ties. Secondly, Europe sees Central Asia as a means to reduce the dependence on Russia. Finally, China could tap Eastern Siberian reserves; but China is unlikely to accept being dependent on Russia. Therefore, it will try to access Central Asian resources. Central Asian countries represent a potential for new diplomatic ties for Beijing and they offer China the possibility to create a sort of buffer zone on its Western border. 21 • In any case, China is slowly extending its network in the region and has increased trade with those countries in the past years. The Turkmenistan-China pipeline has been completed and is now operational and connects Kazakhstan, Uzbekistan and Turkmenistan to China. There is no reason that the project will not be fully implemented, and it could allow the supply of up to 40bcm/yr of gas to China in a few years. Therefore, one realizes that Central Asian countries can play three games, with three different actors. It would be a mistake to see those countries as flexible and powerless as they were right after the events of 1991. The simple fact
that Russia and China have started an upward move regarding the prices they offer for Central Asian gas proves that both Kazakhstan and Turkmenistan will take advantage of their position to maximize the revenues from their natural resources. Despite European and American eagerness to open up the region, the physical and geopolitical variables at play seem to have established a tripartite game between China, Russia and the Central Asian states, thus excluding European interests. The successful completion of a Trans-Caspian pipeline or Iranian bypass could change the nature of the game and increase the attractiveness of European markets; but the pre-requisite for these solutions to be implemented is that Central Asian countries commit themselves to directly supplying the West. This is a vicious circle, from which an exit remains distant. Turkmenistan embodies the major difficulties inherent in dealing with Central Asia. Any pipeline aiming at bypassing Russia would necessarily enter into direct competition with the Central Asian Center transmission system inherited from the Soviet period. For such a project to receive the green light, it would need to be profitable. For Turkmenistan, it would mean the disadvantage of having to pay for it, while the pipeline to Russia already exists and is amortized; but, at the same time, the project would also present it with the advantage of avoiding Russian intake prices and transit fees and supplying end markets directly. For the partner company or country, it presents the disadvantage of having to fund an Figure 3. The Future Turkmenistan-China Pipeline Source: Platts (cited in Chapter 5.2.3) Geopolitical Issues of Europe’s Future Gas Supply extremely expensive project and not being sure that Turkmenistan will fully respect its commitments. Moreover, Russia and Turkmenistan have apparently solved their disputes over prices for the time being, and Russia probably acknowledges the importance of remaining the principal buyer of Turkmen gas. Under those circumstances, the prospects of connecting Turkmenistan more directly to Southern Europe and the Balkans seem significantly compromised. This is even truer since a new and cheaper export destination has opened eastward, in China. 3.the Gulf and the security of europe’s Gas supplies The Gulf region holds the largest gas reserves in the world, is significantly unexplored (concerning gas), and its gas resources lie geographically closer to Europe than Russian resources. Gulf countries could become the major source of supply for a potential fourth corridor and for filling up Nabucco, if dealing with Central Asia proves unsuccessful for the EU. Unlike Central Asia, Gulf countries enjoy easy access to the high seas and are not constrained with previously existing infrastructure; transit risks are thus much smaller than for other regions. Moreover, gas is generally found in large deposits thus making the extraction much easier than in countries such as Nigeria. On the other hand, in terms of economic and political characteristics the countries of the region – both those with major export potential and those whose resources are limited – differ substantially. Iran and Qatar possess the world’s second and third largest reserves, respectively; Saudi Arabia, the UAE and Iraq also possess large reserves. Despite promising prospects, Gulf countries offer mixed insights concerning export potentials and geopolitical stability. Three variables can be highlighted: • Domestic consumption • Internal political stability • Foreign relations stability
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Gulf Research Center Foundation
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Contents Introduction 5 I. The Euro
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Energy Security: Potential for EU-G
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Page 73 and 74: SESSION IV: LNG and Gas Supplies to
Page 75 and 76: had a drastically different vision
Page 77 and 78: now, China has preferred the LNG op
Page 79 and 80: considered an issue. Though the bor
Page 81: 70bcm/yr by 2020. Even if only a fr
Page 85 and 86: (Parliament) which favors the use o
Page 87 and 88: of unconventional gas, has already
Page 89 and 90: Geopolitical Issues of Europe’s F
Page 91 and 92: • • • • • • • • •
Page 93 and 94: SESSION V: Renewable Sources in EU-
Page 95 and 96: • technologies, overall technical
Page 97 and 98: Figure 2: Overview of Opportunities
Page 99 and 100: onshore (378 TWh/yr), large-scale h
Page 101 and 102: world. Hence, renewable energy supp
Page 103 and 104: case. Figure 8 shows the developmen
Page 105 and 106: Overview of RES Characteristics and
Page 107 and 108: keep the RES surcharges for the ene
Page 109 and 110: in the electricity sector, particul
Page 111: References • • • • • •
Page 124: Gulf Research Center Foundation
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