PD Dr. Lutz MezBerlin Centre for Caspian Region StudiesFreie Universität Berlin lutz.mez@fu-berlin.dewww.fu-berlin.de/bccare

European Energy Security and the Caspian Region

15th Meeting of the REFORM Group, Schloss Leopoldskron, Austria September 6-10, 2010

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Outline

- The EU as energy policy actor

- Caspian Sea – Oil and gas reserves and resources

- Most relevant questions and main problem

-

Geopolitics, Geo-economics and Caspian oil and gas-

Summary

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The EU as energy policy actor

- Growing energy import dependency (70% in 2030)

- Diversification of imports

- Restricted competence of EU institutions

- Diverging interests of EU member states (DK – NL, UK)

- EU member states and energy companies as importing and exporting actors (e.g. growing gas share in Germany + EU)

- EU neighbourhood policy

- EU as actor in conflict solution?

- Climate change and environmental policy

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Gas Balance of EU27

Source: BP 2009

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Main European Gas Suppliers

Source: BP 2009

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The NABUCCO Project

4,00047,570

1,770

4,520

33,530

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Supply Sources for Nabucco

Azerbaidschan10-14 bcm

Egypt Iran10-20 bcm

Iraq8-10 bcm

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Natural Gas Prices for the EU

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1991 – the Caspian Region evolves as an independent region

Important problem for the newly independent states: Integration in the world market

Existing rich oil and gas resources should stimulate the process

The birth of a new region

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World conventional oil and gas reserves

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Oil and gas resources of the Caspian Region

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Projection of oil production

1950 1960 1970 1980 1990 2000 2010 20200

50

100

150

200

250

300

Azerbaijan Kazakhstan Turkmenistan Uzbekistan Russia

Mt

projection

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1950 1960 1970 1980 1990 2000 2010 20200

50

100

150

200

250

300

350

Azerbaijan Kazakhstan Turkmenistan Uzbekistan Russia

bill. m³

projection

Projection of future gas production

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Most relevant questions and main problem

- How is the Caspian Oil & Gas exported to the World market?

- Why is the EU the largest donor county in the Caspian Region, with no relevant influence?

- What happens with the oil & gas profit?

Main Problem:

- Struggle for secure transit and transport

- Only two of the littoral states have access to the ocean

Solutions:

- Oil and gas pipelines (BTC, Nabucco, Bluestream, Southstream, TAP etc.)

- LNG

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The question rises: which countries could carry an effective transit function?

Until recently the situation suited mainly Russia, which used the existing soviet time infrastructure to secure its own dominant position on the regional markets.

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Geopolitics, Geo-economics and Caspian oil and gas

- Geopolitical Issues- Azerbaijan, Kazakhstan & Turkmenistan as „post-Soviet rentier states“ (Petrostate,

corruption etc.)

- Iran

- Russia

- United States

- PR China

- Turkey (as energy bridge)

- EU and EU member states (advantages & obstacles)

- Geo-economical aspects- Currency question (€/US$)

- Petrodollar/ €-Recycling

- Rent

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Problem of the Caspian Region

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The Eurasian Balkan

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Geopolitical Problems

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Gazprom Gas Purchaes in Central Asia

Source: http://www.gazprom.com/production/central‐asia/

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Gazprom’s Future Production

Source: http://eng.gazpromquestions.ru/index.php?id=7

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Gazprom’s Strategic Plans

Gazprom’s strategic plans: doubling export volumes, but no growth of domestic supplies

0

500

1000

2006 2010 2030

Central Asian imports

Independent gas producers

Gazprom's own production

Under a minimum case scenario, Gazprom's own gas production will not exceed 546 bcm in 2010 and 595 bcm in 2030; first deliveries of Yamal Peninsula gas may be postponed to 2017

GazpromGazprom’’s vision of gas supply sources to 2030s vision of gas supply sources to 2030((bcmpabcmpa; best case scenario); best case scenario)

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China is becoming a net import market for gas.

Source: BP 2009

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The future demand will be covert also through gas volumes from the Caspian Region – from 10 bcm in 2010 to possibly up to 40 bcm.

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Source: BP 2009

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Iran as Gas Transit Country

http://www.rogtecmagazine.com/uploaded_images/Eng_Map2_low‐702411.jpg

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Summary

- The regional dependence on transit countries for the marketing of the production, leads to the question if the political factors even allow a diversification of the transport routes and a production increase

- Resources, reserves and production potentials make the Caspian region attractive for potential buyers like China, India, EU, Russia or USA

- The regional geopolitical setting shaped by diverging interests of the involved actors hinders a smooth integration of the region in to the world market

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Thank you for your attention!

PD Dr. Lutz Mez Berlin Centre for Caspian Region Studies

lutz.mez@fu-berlin.de http://web.fu-berlin.de/bccare/