Great powers and the Caspian Region s energy resources Matthias Adolf Caspian Energy Policy Research Group Environmental Policy Research Centre Free University Berlin Reform Group meeting: Energy & Climate Policy Towards a Low Carbon Future Schloss Leopoldskron, Salzburg, September, 18th 2008
Content The Caspian Region Interests of (Great) Powers PR China EU Russia U.S. Energy Policy in the PR China Conclusions
Strategic Ellipse
The Caspian Region
and how much oil and gas is there in the Caspian Region?
Caspian Region - Energy situation Oil and Gas Resources in the Caspian Region Oil (World share) Tsnd. Mtoe Natural Gas (World share) Trillion m 3 Azerbaijan 1.0 (0.6%) 1.3 (0.7%) Kazakhstan 5.3 (3.2%) 1.9 (1.1%) Turkmenistan 0.1 (< 0.1%) 2.7 (1.5%) Uzbekistan 0.1 (< 0.1%) 1.7 (1.0%) Total 6.5 (~ 4.0 %) 7.6 (4.3%) Source: BP: Statistical Review full Report Workbook 2008
Caspian Region - Energy situation Oil (2007) Production (Tsnd. bpd) Consumption (Tsnd. bpd) Armenia - 42 Azerbaijan 868 93 Georgia - 13 Kazakhstan 1,490 219 Kirgizstan - 10 Turkmenistan 198 107 Uzbekistan 114 119 Total 2,670 564 Source: BP: Statistical Review full Report Workbook 2008 Export capacity: 2.1 Mio. Bpd = ~ production in Iraq
Caspian Region - Energy situation Natural Gas (2007) Production Consumption (Billion m 3 ) (Billion m 3 ) Armenia - 1.3 Azerbaijan 10.3 8.3 Georgia - 1 Kazakhstan 27.3 19.8 Kirgizstan 0 1 Turkmenistan 67.4 21.9 Uzbekistan 58.5 45.6 Total 163.5 98.9 Source: BP: Statistical Review full Report Workbook 2008 Export capacity: 65 billion m 3 = ~ production in Netherlands
who is interested in the energy resources of the region?
PR China Economic and political influence for example Shanghai Cooperation Organisation Diversification of oil/natural gas imports: 80% of oil imports have to cross the Strait of Malacca which is controlled by the U.S. Investments in companies for example Petro-Kazakhstan, 4.18 billion US-Dollar in 2005
11/72 PR China
whether the PR China can realise it s ambitions depends on the interests of:
European Union Extension of political and economic influence: INOGATE (Interstate Oil and Gas Transport to Europe) TRACECA (Transport Corridor Europe-Caucasus-Asia)
European Union Central-Asia strategy 2007 (democracy, education, trade, security) Diversification of oil and natural gas Baku-Tbilissi-Ceyhan (Oil) Baku-Tbilissi-Erzurum (Natural Gas) Nabucco (Natural Gas) For example: Journey of Frank-Walter Steinmeier 2006/2007
15/72 European Union
but probably the success is on the side of:
Russia Political and economic influence to restore great power status Resources are needed to compensate for shortages in delivering natural gas to the European Union. 15 % of Russian energy exports are from Turkmenistan and Kazakhstan China good as customer, but bad as protagonist in the region For example: Journey of Putin 2007
so there is not much space in the region for the interests of:
USA
therefore there are very different interests in the realization of:
Pipeline dreams in the Caspian Region If all Turkmenian pipeline dreams are fulfilled, this would mean: Russia: +45 billion m 3 PR China: +30 billion m 3 Pakistan/India: +30 billion m 3 EU: +15 billion m 3 Altogether: +110 billion m 3 per annum Export today: Altogether: 45 billion m 3 (Russia) 6,5 billion m 3 (Iran) 51,5 billion m 3 per annum Where shall this increase in production come from?
because of this geopolitical and geoeconomical competiton in the Caspian Region, the Region will be fraught with crises and conflicts in the future.
but now: Special focus on the PR China: Energy market and consequences for the Caspian Region
Energy situation in PR China Since 1979: Average growth rate of GDP: 9.5% Since 1993: Net importer of oil Between 2000 and 2006: Average annual growth rate of energy demand: 9.8% (967 Mtoe 1,698 Mtoe) 2006: Share of world primary energy consumption: 15.6%
Energy situation in the PR China Source: IEA 2006: 516
Energy situation in PR China Source: IEA 2007: 516
to satisfy the growing demand China went out into the big, wi(l)de world
Zou shu qu! 2002 adoption of the going out! strategy Secure effective ownership of energy resources and transportation infrastructure to: secure energy supply reduce dependence on foreign companies diversify energy transportation routes
Zou shu qu! Strategy of procedure: Active, energy-centered way of commercial diplomacy within the key energy exporting regions Widening campaign by China s three major NOCs to secure equity investments in oil and gas fields abroad Diversified supply of long-term crude and LNG contracts from a broad range of exporters to meet future needs
this includes a secured access to the Caspian Region - But what can be done to reduce the conflict potential?
Conclusions PR China Cooperation in the region: Shanghai Cooperation Organization (SCO) Association of Southeast Asian Nations (ASEAN) Collective Security Treaty Organisation (CSTO) Energy cooperation between India/PR China Organizations like the SCO have the chance to develop common solutions for energy policy problems.
Conclusions PR China Reduction of Chinas energy import: Substitution of fossil by renewable energy resources Increase of energy efficiency High investments in research and development Rising of affordable technology transfer from western countries
Conclusions EU/U.S. Recommendations for the EU/U.S.: Dialogue with SCO Integration of Iran in western economical structure Cooperation with Indian, Chinese and other regional energy companies Dialogue on creation of world currency basket with Dollar, Euro, Yen (later on Ruble and Yuan)
Thank you for your attention!