The Energy Charter Can It Make a Contribution in East Asia and Eurasia?

Transcription

1 The Energy Charter Can It Make a Contribution in East Asia and Eurasia? Eurasian Pipelines Road to Peace, Development and Interdependencies Harriman Institute, Columbia University 30 November 1 December 2006 Tim Gould Senior Advisor Energy Charter Secretariat

2 The Energy Charter Treaty Signatories (51 Signatory Countries + EU: 47 ratifications), Pakistan invited to accede (November 2006) Observers (19 Countries, 10 International Organisations) 2

3 Primary Energy Demand by Region Developing countries become the biggest energy consumers within a decade Mtoe OECD Developing countries Transition economies Source: IEA WEO

4 CO 2 Emissions, Mt of CO OECD Transition economies Developing countries Source: adapted from IEA WEO

5 World Fossil Fuel Supply Gas % 20% trade as % of world demand Oil % 54% Coal % 11% Mtoe Production consumed within each region Traded between regions Source: IEA WEO

6 Why is Energy Different? Availability of hydrocarbons is determined by geology and by the sovereign decisions of resource-owning countries interdependence of states and other actors along the entire energy chain Energy projects tend to be highly strategic and capitalintensive, where risks need to be assessed and mitigated across a long time horizon particular risks linked to energy investment For natural gas and electricity and partly also for oil international trade is mainly linked to dedicated and fixed infrastructure need for disciplines regarding access, tariffs, non-interruptible supply Environmental impact of energy use global challenges require global responses 6

7 Contribution of the Energy Charter? Mechanism to mitigate non-commercial risks: Affecting investment in the energy sector; the only multilateral investment protection Treaty Affecting cross-border energy flows through pipelines and networks, especially energy resources in transit Accessible Forum for: Cooperation and knowledge-sharing on policies to improve investment climate and energy efficiency Development of (binding and non-binding) instruments to meet new energy challenges 7

8 Europe and the ECT Securing External Supply for the Internal Market Demand LNG Imports ~700 Pipeline Imports Local Prod in Bcm Source: Total,EON - Ruhrgas 8

9 The Energy Charter in Asia Signatories: Russia, Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan, Mongolia, Japan; Pakistan invited to accede (November 2006) Observers: Afghanistan, Bahrain, China, Iran, Korea, Kuwait, Oman, Pakistan, Qatar, Saudi Arabia, United Arab Emirates, ASEAN 9

10 Kazakhstan-China Oil Pipeline Samara Omsk RUSSIA Atyrau Kashagan Tengiz Aktau Karachaganak Kenkiyak Orsk 2. Kenkiyak- Kumkol (-Atasu) L = 752 km Feasibility Study planned PS Atasu Pavlodar PS 384 km 1. Atasu-Alashankou L = 962 km, d = 813 mm Initial capacity 10 mty. To be raised to 20 mty Kumkol Caspian Sea Kenkiyak-Atyrau Commissioned in 2004UZBEKISTAN L = 449 km, d = 610 mm Capacity TURKMENISTAN up to 12 mty Reverse Pumping envisioned Chardzhou IRAN Oil Pipelines Kazakhstan-China Pipeline Stages Possible Oil Supplies from West Siberia Resources for Atasu-Alashankou Shymkent KYRGYZSTAN Almaty Alashankou CHINA Urumqi 1 st stage: Construction of the Atasu-Alashankou Pipeline with 10 mty capacity 2 nd stage: - construction of the Kenkiyak-Kumkol section - modernization of the existing Kumkol-Karakoin-Atasu section - reverse of the Kenkiyak-Atyrau Pipeline - capacity expansion to 20 mty for Atasu-Alashankou section 10

11 Atasu-Alashankou Pipeline: Addressing the Energy Charter Principles Non-discrimination as to the origin, destination, and ownership of energy resources Guarantee of free access to the pipeline, acceptance and transportation of oil to China including transit Intentions to attract any resources, particularly, Russian oil supplies from West Siberia Rules for pipeline access All potential shippers are guaranteed equal access to the pipeline when capacity is available CNPC and KMG have priority rights of accessing the pipeline capacity Pipeline capacity, first of all, will be used to fulfill the obligations under long-term oil transportation agreements If one of the parties does not use its pipeline capacity in full, the other party has the right to use such unused capacity In case transportation volumes under contracts exceed the pipeline capacity, the rights for transportation will be executed according to the shares of KMG and CNPC in the Project Company Tariffs for transit/transportation The tariff should be competitive and non-discriminatory compared to other options for exporting oil from Kazakhstan The following principles are observed when calculating the tariff: Compensation of economically sound costs (including cost of financing); Payment of taxes and other duties imposed in accordance with the Kazakhstan laws; Profit made should ensure effective operation of the company (being a natural monopoly); The transportation option should be competitive compared to other options; The existing pipeline capacity should be utilized to full extent

12 Possible evolution of gas infrastructure in Northeast Asia

13 Russia and the Energy Charter One of the original signatories of the Treaty (1994) Applies the Treaty on a provisional basis Engaged in the Energy Charter s work Position has been that conclusion of the Energy Charter Protocol on Transit would open door to ratification but other issues also on the table Genuine interest in the substance of the Transit Protocol Energy Charter principles and related issues form part of the EU-Russia negotiations on a new bilateral legal arrangement 13

14 Recognising the Asian dimension of the Charter Leaders thoroughly discussed questions related to energy security, reiterating their earlier calls for multilateral measures to promote stable, effective, and transparent global energy markets, and agreed to cooperate in relevant international fora with a view to meeting these challenges. In this context, they noted the importance of the Energy Charter Treaty. From the Chairman s Statement on the meeting of Heads of State of the Europe-Asia Meeting (ASEM), which brings together the ten members of ASEAN, China, Japan, Korea, the Member States of the European Union and the European Commission, Helsinki, September