Struggle for the energy resources of Central Asia: possibilities for the EU
Nowadays the problem of diversification of energy supplies is extremely important for the European Union. The EU becomes more and more dependent on imported energy resources and, as a consequence, on a few suppliers, mainly Russia and the countries of the Middle East. The latter cannot be considered as a secure source because of instability and unpredictability of the situation in the region. The energy conflict between Russia and Ukraine in winter 2005-2006 produced fears that the former can use energy as an instrument in order to exercise political pressure and strengthen its positions on the international scene. Central Asia with its large energy resources seems to be an opportunity for the EU to reduce growing dependence on Russian and Middle Eastern resources and to strengthen its negotiating position. But the question is to what extent the EU can rely on Central Asian resources if it is realistic at all.
First of all, the EU is not the only interested party in Central Asian resources. It faces a strong competition with Russia and China, which have already managed to sign contracts in order to secure supplies from the region.
Recently Russian Gazprom has significantly strengthened its positions in Central Asia.
– Firstly, it concluded a five-year contract on gas transportation through the territory of Kazakhstan in 2006-2010.
– Secondly, a five-year agreement with Uzbek Uztransgaz for transportation of Uzbek and Turkmen gas through the territory of Uzbekistan in 2006-2010.
– Thirdly, an agreement with Turkmenistan on buying all its export gas (60-70 bln. cubic metres per year) for twenty-five years starting from 2007.
– Furthermore, in May 2007 Russian, Kazakh and Turkmen Presidents agreed on building a gas pipeline from Turkmenistan to Russia through Kazakhstan around the Caspian Sea. The initial capacity of this pipeline is planned to be 10 bln. cubic meters of gas per year by 2009-2010 and then 20-30 bln. cubic meters annually by 2012.
– Moreover, the Presidents also agreed to expand the capacity of an existing pipeline pumping Turkmen gas to Russia through Kazakhstan and Uzbekistan to 90 bln. cubic meters (at present Gazprom imports about 42 bln. cubic meters of Turkmen gas per year ).
What concerns oil cooperation, Russian and Kazakh Presidents agreed to expand the existing pipeline carrying crude oil from Kazakhstan’s Tengiz field to the Russian port of Novorossiysk. And Russian President Vladimir Putin agreed to Kazakhstan’s participation in the project Burgas-Alexandroupolis.
China is an emerging power in Central Asia. Little by little, it increases its presence in energy sector of the republics.
– In 1997 China and Kazakhstan agreed on building an oil pipeline from Aktau to China. The pipeline is under construction, and its part Atasu-Alashankou has been already built. In 2005 China National Petroleum Corp. (CNPC) bought PetroKazakhstan, one of the main oil-producing companies in Kazakhstan.
– In 2006 China and Turkmenistan signed a thirty-year contract for supplies of 30 bln. cubic metres of Turkmen gas a year to China. A pipeline for transporting gas is supposed to be built by the beginning of 2009.
– In 2004 CNPC and Uzbekneftegaz agreed on joint exploration in Uzbekistan. Moreover, Uzbekistan announced its intention to build a gas pipeline to China with capacity of 30 billion cubic metres a year, which is half of its annual gas production.
EU achievements are rather modest. After the collapse of the USSR, when Moscow lost its exclusive control over the region and the republics became open to foreign influence, as they urgently needed investment for economic and political stabilisation, there were favourable conditions for the EU to strengthen its positions in the region and start realisation of strategic energy projects. Though European companies did not miss opportunities given by participation in energy projects in the region (for example, Italian ENI, British-Dutch Royal Dutch/Shell and French TotalFinaElf joined the projects of Kashagan shelf oil field and ENI together with British Gas - Karachaganak oil field), at the political level Central Asia was not considered as a priority. The EU did not have an elaborated and long-term strategic vision towards the region. Weak attempts were made by way of the programmes TRACECA (Transport Corridor Europe-Caucasus-Asia) and INOGATE (Interstate Oil and Gas Transport to Europe). The goal was to diversify energy supplies to Europe. In 2004 these programmes were transformed into the Baku Process, but it produced no significant result in the absence of sufficient attention and support.
One more obstacle in dealing with supplies from Central Asia is the geographical position of the region. The supplies from the region go mostly through Russian territory, which means under Russia’s control as this country refuses to sign the Transit Protocol of the Energy Charter. Central Asian republics are interested in diversification of energy supplies as it let them pursue more independent foreign policy, and already now they develop alternative routes, but China seems to be a more attractive partner for them than Europe. There are two main reasons for it:
– The first one is geographical. China has the common border with the region, even though not with all the republics (for example, with its possible gas partner Turkmenistan).
– Second is economic with political implications. Both China and the EU provide financial assistance to the region and make investments, but Chinese help has purely economic character without any explicit or implicit requirements concerning democratisation and human rights. On the contrary, an important component of the EU cooperation with Central Asian republics is spreading of democratic values, which is considered by the ruling elites as a threat. As all the regimes in countries-potential energy suppliers (Kazakhstan, Turkmenistan, and Uzbekistan) are authoritarian, cooperation with Russia and China is more preferable for them because it gives also political guarantees and possible protection against “velvet revolutions”.
Nevertheless, Central Asian republics do not reject the possibility of supplies in western direction, which they can use to show other partners their room for manoeuvre and get more concessions from them. Supplies to the West can be realised through participation in the projects of two pipelines - Baku-Tbilisi-Ceyhan (oil) and Baku-Tbilisi-Erzurum (gas) - built in 2006 and 2007 correspondently to transport Caspian resources bypassing Russia. It is the USA that inspired and actively supported building of these pipelines to reduce Russia’s influence on former Soviet republics and deprive China from the Caspian resources. From the very beginning the attempts were made to persuade Central Asian republics, in particular Kazakhstan and Turkmenistan, to join the projects, as Azerbaijani reserves are not considered enough for profitability and long life of the projects.
The partial success was achieved with Kazakhstan that joined Baku-Tbilisi-Ceyhan and transports its oil by tankers through the Caspian Sea. Kazakhstan has the most developed cooperation with the West, which is expressed in dozens of western companies working there, mainly because its government tries to pursue more open policy and present the country as a part of the European world (an eloquent example is Kazakh President Nazarbaev’s vain endeavours to get the OSCE chairmanship in 2009). This republic also has fewer problems concerning the process of democratisation in comparison with Turkmenistan and Uzbekistan. But Kazakhstan’s obligations related to the recent agreements with Russia and joint projects with China raise doubts concerning its further participation in the “pro-Western” projects because it will hardly manage to fulfil all its obligations despite the plans to increase extraction of energy resources.
Turkmenistan both under the former presidency and the present one does not exclude participation in the project of Trans-Caspian pipeline to supply its gas to Baku-Tbilisi-Erzurum, but still there is no progress, while cooperation with Russia is increasing and China becomes a promising partner. Moreover, Russia tries to maintain its positions in the region not only in a positive way through energy contracts (which seems to be a “zero-sum game”), but also in negative way through prevention of alternative routes, in particular Trans-Caspian pipeline, using environmental argument and uncertainty of legal status of the Caspian Sea. Furthermore, cooperation with Turkmenistan is rather delicate question for the EU. The republic became a totalitarian state under Turkmenbashi’s ruling and dealing with such a regime could undermine EU reputation of supporter of democratic values in the world.
Uzbekistan became a rogue state at the West after events in Andijan in 2006, so under present conditions involvement of this country in join projects with the EU is not under discussion.
To sum up, now, when the importance of the region for the EU is a recognised fact, its positions in Central Asia are too weak in comparison with Russia and China. The situation when EU competitors have already concluded profitable contracts on energy supplies from the region is aggravated by absence of significant means of EU influence on the region. The EU has neither international organisation in Central Asia under its guidance in contrast to Russia and China (EurAsEC and Shanghai Cooperation Organisation) nor military base, as Russia and the USA. In such a situation the EU needs to clearly determine its position towards the region and to start negotiation on concrete aspects of participation of Central Asian republics in the projects of alternative pipelines. The question of democracy is of vital importance, but the EU should take into consideration that the region is not isolated and the EU is not the only player there. The republics have an opportunity to develop relations with the actors that just ignore the “democratic component”. So if ideological considerations become a restraint for EU activization in Central Asia, it won’t help to democratise these republics and at the same time it will deprive the EU from economic gains, leaving a possibility to benefit from the cooperation with the region to other powers.
(2007)
