GUAM AND GLOBAL ENERGY POLICY
Abstract
It is absolutely clear that energy policy can be described as global if states scattered across the globe pursue similar interests in the energy sphere. Its entities are geographical regions with considerable proven or forecast resources of hydrocarbon and other energy and raw material sources, transportation means and routes, as well as a price-forming system and other eco-nomic parameters related to the functioning of the energy markets. In recent years, the Caspian-Black Sea region, a large part of Eurasia, has acquired more prominence as one of the entities of global energy policy. The area in which the active GUAM members are found has been and remains the place where East and West meet. It is also a corridor for the traditional and recent international transportation routes and transcontinental gas and oil pipelines that together create a powerful flow of energy resources indispensable for the regional countries intensified economic development and very important for the European and other states which receive fuel from the same source. The Caspian-Black Sea region is where global energy policy is formulated and implemented. Moreover, its impact is increasingly felt in the worldwide economic and political processes. The post-Soviet republics (Azerbaijan, Kazakhstan, Turkmenistan, Ukraine, Georgia, and Moldova) are coming to the fore together with the United States, European Union, Russia, Iran, Turkey, China, and Japan. Each of the states or blocs of states has interests of its own that should be defended. In the last fifteen years, defending national interests has frequently given rise to conflicts and crises. The region’s geopolitical location and its rich energy resources launched it into the center of the important developments. American experts have estimated the Caspian’s gas and oil supplies at nearly $4 trillion. The five Caspian states, the owners of the local gas and oil, have failed so far to agree on the methods and technology for their production, transportation to oil refineries, and marketing. It is no accident that the Organization for Democracy and Economic Development— UAM was formed in the region: it was set up to help each of its members realize its energy interests. Today, the members are pursuing this aim as they see fit.
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Former Soviet republics were seeking self-assertion in different ways: Azerbaijan, for instance, joined the CEF Treaty flank agreement enacted on 15 May, 1997, etc.
See: S.I. Pirozhkov, “Formirovanie modeli regional’nogo sotrudnichestva v sisteme GUAM,” in: Ukraina i prob-lemy bezopasnosti transportnykh koridorov v Chernomorsko-Kaspiiskom regione: Materialy I Mezhdunarodnoy nauchno-prakticheskoy konferentsii, Kiev, 1999, p. 23.
Below the discussion of the Turkmenian gas export is limited to the route to Azerbaijan as one of the GUAM members.
See: T. Juvarly, “Azerbaidzhanskaia neft: poiski ravnodeystvuiushchey,’ available at [http://www.sakharov-center.ru/azrus/az_014.htm].
See: S.R. Grinevetskiy, S.S. Zhiltsov, I.S. Zonn, Chernomorskiy uzel, Mezhdunarodnye otnoshenia, Kiev, 2007,p. 59.
Under the Gulistan Contract, it was planned to produce $50 billion-worth of oil at the ACG oil fields. Their fuel reserves were assessed as follows: over 600 million tons of oil (today BP, which operates the field, offers the figure of 800 million tons), 100 billion cu m of petroleum associated gas, and 100-150 billion cu m of natural gas. The project laid the foundation for Azerbaijan’s cooperation with West European companies. The total amount of investments poured into the project is assessed at the $20 billion level: Azerbaijan borrowed money from international companies and repaid with oil. I believe that by 2008 the republic will have repaid its debts, after which its share in the project will increase from the present 10 to 80 percent; the planned annual output will reach 50 million tons.
D. Berdzenishvili, “Mesto Gruzii v sisteme evraziiskikh transportnykh koridorov,” in: Ukraina i problemy bezo-pasnosti transportnykh koridorov v Chernomorsko-Kaspiiskom regione: Materialy I Mezhdunarodnoy nauchno-prak-ticheskoy konferentsii, pp. 35-36, 37.
On 21 November 2007, speaking at the Georgian-Turkish business forum in Tbilisi, President Saakashvili said that the presidents of Azerbaijan and Turkey shared his opinion that a single economic expanse and a free trade area were needed. “We are working together on a Turkish-Georgian-Azeri single economic and free trade area. The planned Baku-Tbilisi-Kars railway, transparent borders, visa free regime, and joint use of the Batumi airport will create even more favo-rable conditions,” available at [http://vz.ru/news/2007/11/21/126452.html].
See: S.R. Grinevetskiy, S.S. Zhiltsov, I.S. Zonn, op. cit., p. 25.
Unfortunately, Ukrainian interests might suffer in this case. However, in the absence of a coordinated energy policy and mechanism for its implementation within GUAM, this was a purely commercial plan.
The agreement registered in the Law of Ukraine of 17 September, 1997 (No. 739/97) has not yet been executed.
oday, there is an intention to send oil from Samsun to Ceyhan.
For more detail, see: D. Preiger, I. Maliarchuk, V. Dutchak, “The Ukrainian Part of the Eurasian Oil Transporta-tion Corridor: Yesterday and Today. What about Tomorrow?” Central Asia and the Caucasus, No. 3 (15), 2002.
It seems that the conflict began during the incident related to the Kiapaz hydrocarbon sources in the Caspian.
See: Neftegazovaia vertikal, No. 6, 2007, p. 55.
In 2000, Azerbaijan began buying more gas from Russia to lower the amount of oil processed at the local refiner-ies: in 2001, it bought 3.1 billion cu m and planned to buy 4 billion in 2002. This saved up to 2.5 million tons of oil that used to be burned as oil fuel at thermal power stations (see: Neft i kapital, No. 12, 2002, p. 53). In 2002, the ABB Lum-mus Global Inc. (American branch of ABB) was instructed to prepare feasibility studies for the readjustment of both Baku oil refineries to Kazakh and Turkmen oil with due account of the need to modernize the Dubendi sea terminal and to read-just the oil refining technologies based on Azeri oil. Having studied the projects, experts concluded that it would be better either to build a new refinery adjusted to the imported oil or rebuilt the existing plant—both options being very expen-sive. The project was dropped for want of money; the republic continued buying Russian gas. In 2006, Azerbaijan bought 4.5 billion cu m ($110 per 1,000 cu m). It was at that time that Gazprom invited Azerbaijan to switch in 2007 to the new price of $235 per 1,000 cu m. Azerbaijan refused and also stopped using the Northern oil route. Today, while Azerbaijan is looking for raw material for its refineries elsewhere, they are underloaded.
See: T. Tagiev, “Baku-Astana: druzia po raschetu,” Neftegazovaia vertikal, No. 17, 2007, pp. 24-27.
Neft Rossii, No. 4, 2006, p. 112.
The following companies are shareholders in the BTC: SOCAR (Azerbaijan) with 25 percent; British Petroleum (the U.K.), 30.1 percent; TPAO (Turkey), 6.53 percent; Unocal (the U.S.), 8.9 percent; Itochu (Japan), 3.4 percent; Amer-ada Hess (the U.S.), 2.36 percent; ENI (Italy), 5 percent; TotalFinaElf (France), 5 percent; INPEX (Japan), 2.5 percent;and ConocoPhillips, 2.5 percent.
[http://press.lukoil.ru/news/29745/].
See: R. Nitsovich, “Igry vokrug Kaspia,” UAenergy, 24 October, 2007.
R. Jangoja, “Strany GUUAM: sotrudnichestvo i konkurentsia.” GUUAM: problemy i perspektivy razvitia trans-portno-kommunikatsionnogo koridora: Materaily II Mezhdunarodnoy nauchno-prakticheskoy konferentsii, Kiev, 2000,p. 206.
In 2006, 64.9 million tons of oil and condensate were produced (105.5 percent compared with 2005); 57.1 mil-lion tons (113.7 percent) were exported. Three oil refineries refined 11.7 million tons. In the same year, 27 billion cu m of gas were extracted; it was planned to extract 29 billion cu m in 2007. In 2006, investments in the mineral-raw material sector reached $14.5 billion; about 80 percent of which went to the oil and gas sector (70 percent of the investments was spent on production; and 21 percent on prospecting). Unfortunately, there were no GUAM companies among the leading foreign companies (see: Neftegazovaia vertikal, No. 7, 2007, pp. 3, 9).
Under certain conditions, these developments might increase the amount of Kazakh oil moved across Ukraine (the present figure of 10 million tons a year might double); the national fuel and energy complex could take part in build-ing the necessary infrastructure for the new transportation route.
The program was supported by all the GUAM countries, as well as Albania, Armenia, Belarus, Bulgaria, Croatia,Greece, Kazakhstan, Kyrgyzstan, Macedonia, Rumania, Serbia, Slovakia, Tajikistan, Turkey, Turkmenistan, and Uz-bekistan.
See: Commission of European Communities. Black Sea Synergy-A new Regional Cooperation Initiative, Brus-sels, 11 April, 2007. COM (2007) 160 final, p. 5.
The Cabinet of Ministers of Ukraine endorsed the Conception by its decision of 25 May, 2006, No. 285-r.
See: Vremia novostey, 19 March, 2007.
According to [http://www.batopy.org.pl/doc./pressa] Moldova owes Russia $325 million for gas (the debts have accumulated since the early 1990s). The sum includes penalty provision but excludes the debt of Transnistria (which owes Russia $1.25 billion). Moldova imports about 75-80 percent of primary energy raw material of its total consumption; gas accounts for 45-51 percent.
Part of the gas pipeline Baku-Tbilisi-Erzurum (BTE) often called the South Caucasian line (its Azeri stretch is 442 km long, Georgian stretch being 248 km) is almost complete. It cost $1.2 billion, but it has not been commissioned because the Turkish stretch (280km long) is still under construction. According to the project, the pipeline should be commissioned in 2008; it is carrying capacity will be 7.8 billion cu m; it can be later increased to 20 billion.
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