Caspian Report - Issue: 08 - Fall 2014

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Dear Readers, CASPIAN REPORT 2 It is my utmost pleasure to introduce the 8th issue of the Caspian Report. Since our Summer issue, there have been significant geopolitical and economic developments, bringing profound challenges to the global policymaking. We have witnessed an almost 40 per cent decline in oil prices, from 115 USD per barrel to 65 USD due to weakening global demand; instability and the growth of the radical terror group ISIS in the Middle East; slowdown in global economic growth; and the Russia – West standoff over Ukraine. These major headlines from the past three months will of course continue to shape political and economic developments across the globe. Our current issue takes an in-depth look at some of these developments, from both the regional and global perspectives. Among the many factors behind the sharp decline in oil prices, the most influential one is the shale oil/gas revolution in the United States, which will also position the US as the world’s biggest oil/gas producer. One of our frequent contributors, Fatih Macit, has written a special analysis together with Holly Rehm, providing a unique perspective on unconventional gas production in the US and its potential impact on the global energy supply. Macit and Rehm acknowledge that the shale revolution in the US is indeed a tremendous development with huge potential to satisfy American energy demands. However, the prospects of high volume exports to European energy markets are relatively low, and are unlikely to assuage European concerns over energy security. The majority of US LNG exports are expected to go to Asian markets, which are more commercially attractive than Europe’s. Efgan NIFTI Editor-in-Chief Twitter: @enifti efgan.niḟtiẏev@hazar.org Our cover story, written by our Italian colleague Matteo Verda, provides a timely analysis of the global context affecting potential US LNG supplies. His article examines not only LNG supplies from the US, but also the global LNG markets that are showing robust growth. His analysis reveals that the majority of the demand
EDITORIAL comes from Asian markets, where Qatar has emerged as one of the primary suppliers. One of the biggest challenges for the LNG markets is the imbalance between the export, transport and regasification capacities. LNG import terminals in some regions are underutilised; in Europe, for instance, only one-third of the capacity is used. Some countries, such as Australia, are making heavy investments in order to increase their export potential. In the long term, Australia is expected to become the largest supplier of LNG in the world. As in our previous issues, we continue to closely follow the developments concerning the European and Caspian energy markets. There are a number of significant headlines worth keeping an eye on, among them European efforts to advance with the Energy Union and the opening of the Southern Gas Corridor. Articles by Manfred Hafner, Mubariz Hasanov, Arzu Yorkan, Thanos Dokos, Nino Kalandadze and Nicolo Rossetto illuminate the key issues around these two major drivers of Europe’s energy future. The protracted crisis in Ukraine is also another geopolitical flashpoint that requires attention. Another expert, Radu Dudau from Romania, analyses the Russian – Western standoff over Ukraine in the context of the potential implications for the Black Sea region. Mesut Hakki Casin and Roman Rukomeda provide a useful perspective on the recent China - Russia natural gas deal, reached at the peak of the Ukraine crisis, which has also had a major impact on EU-Russia energy relations. Faced with energy sanctions imposed by its biggest export market, Russia needs new customers for its large natural gas supplies: a deal with China is critically important for the Putin administration. IT IS MY UTMOST PLEASURE TO GREET YOU IN CASPIAN REPORT’S 8 TH ISSUE. SINCE THE SUMMER ISSUE SIGNIFICANT GEOPOLITICAL AND ECONOMIC DEVELOPMENTS EMERGED BRINGING PROFOUND CHALLENGES TO THE GLOBAL POLICYMAKING. I wish you a pleasant read, and look forward to presenting you with our Winter 2015 issue.
Page 1: CASPIAN PUBLISHED BY CASPIAN STRATE
Page 6 and 7: CASPIAN CASPIAN REPORT 4 06 FATIH M
Page 8 and 9: FATIH MACIT, HOLLY REHM 6 THE U.S.
Page 10 and 11: FATIH MACIT, HOLLY REHM 8 shale rev
Page 12 and 13: FATIH MACIT, HOLLY REHM 10 in the 1
Page 14 and 15: FATIH MACIT, HOLLY REHM 12 SINCE TH
Page 16 and 17: FATIH MACIT, HOLLY REHM 14 these tw
Page 18 and 19: FATIH MACIT, HOLLY REHM 16 LNG’s
Page 20 and 21: FATIH MACIT, HOLLY REHM 18 kets, pa
Page 22 and 23: MANFRED HAFNER 20 THE SOUTHERN GAS
Page 24 and 25: MANFRED HAFNER 22 THE DOCUMENT RECO
Page 26 and 27: MANFRED HAFNER 24 Notwithstanding t
Page 28 and 29: MANFRED HAFNER 26 TANAP, A PROJECTE
Page 30 and 31: MANFRED HAFNER 28 by the Shah Deniz
Page 32 and 33: MANFRED HAFNER 30 Snam Rete Gas has
Page 34 and 35: MANFRED HAFNER 32 THE ESTABLISHMENT
Page 36 and 37: MATTEO VERDA 34 LNG MARKET: TRENDS
Page 38 and 39: MATTEO VERDA 36 traditionally accou
Page 40 and 41: MATTEO VERDA 38 bcm), Brunei (9 bcm
Page 42 and 43: MATTEO VERDA 40 for transport vesse
Page 44 and 45: MATTEO VERDA 42 of the global LNG m
Page 46 and 47: MUBARIZ HASANOV 44 AN OVERVIEW OF E
Page 48 and 49: MUBARIZ HASANOV 46 Figure 1. Primar
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Page 52 and 53: Figure 7. Price of transport fuels
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Figure 10. Electricity generation i
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Figure 13. Breakdown of electricity
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THE SOUTHERN GAS CORRIDOR - WINDOW
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NINO KALANDADZE 58 become comprise
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NINO KALANDADZE 60 This picture mak
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NINO KALANDADZE 62 Security policy.
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NINO KALANDADZE 64 There are benefi
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NINO KALANDADZE 66 tion of Crimea b
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RADU DUDAU 68 THE UKRAINE CRISIS: L
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RADU DUDAU 70 RUSSIA HAS FREQUENTLY
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RADU DUDAU 72 Russia, which depends
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RADU DUDAU 74 WHAT INTERNATIONAL LA
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RADU DUDAU 76 THE NEAR FUTURE WILL
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RADU DUDAU 78 THE UKRAINIAN GOVERNM
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RADU DUDAU 80 parliament decided to
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Black Sea Serpents’ Island. RADU
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RADU DUDAU 84 (where Russia holds v
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RADU DUDAU 86 IN TERMS OF ENERGY, A
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WHY RUSSIA SIGNED A MAJOR GAS CONTR
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MESUT HAKKI CASIN 90 I will focus o
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Russian President Vladimir Putin sh
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Figure II: Russian energy infrastru
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Kazakhstan President Nursultan Naza
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MESUT HAKKI CASIN 98 economic devel
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Figure IV: China’s gas import sou
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THANOS DOKOS, THEODORE TSAKIRIS 102
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ARZU YORKAN 114 TURKEY’S RENEWABL
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ARZU YORKAN 116 is 12 th in the wor
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Figure 4: Solar Energy Potential At
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ARZU YORKAN 120 Figure 8: The share
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ARZU YORKAN 122 THE STRATEGY PAPER
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ARZU YORKAN 124 TURKEY HAS NOT YET
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CASPIAN
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THE EU AGREEMENT ON THE 2030 FRAMEW
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EU Commission President Jean Claude
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ROMAN RUKOMEDA 132 THE PHANTOM OF R
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Russia’s gas giant Gazprom CEO, A
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CASPIAN CALL FOR PAPERS 136 Caspian
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Caspian Report - Issue: 08 - Fall 2014

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