Frank Umbach: EU decision on talks with Azerbaijan and Turkmenistan to realize Nabucco is unprecedented

Oil&Gas Materials 16 September 2011 15:02
Frank Umbach: EU decision on talks with Azerbaijan and Turkmenistan to realize Nabucco is unprecedented

Azerbaijan , Baku, Sept. 16 / Trend E.Tariverdiyeva /

The decision of the EU and to speak with one voice in the negotiations with Azerbaijan and Turkmenistan to realize the Nabucco project is in many ways unprecedented, Frank Umbach, Head of the Programme "International Energy Security" at the
Centre for European Security Strategies, Munich-Berlin & Associate Director at the European Centre for Energy and Resource Security (EUCERS), King's College, London, believes.

"Firstly, it highlights the concerns of the EU of becoming not too dependent on Russia and its sole monopoly supplier of Gazprom - in particular after the Nord Stream pipeline has just launched its operation. Secondly, the EU has recognized that under specific circumstances, national member states and individual European oil and gas companies are too weak towards state-owned national oil and gas companies and important producer/exporting countries", Umbach told Trend.

While bilateral gas contracts may bring benefits for individual member states, it may have direct and indirect negative impacts on other EU member states as in the case of Nordstream if one analyses the original bilateral contract between Germany and Russia ( Nordstream has become a rather European project only during the last years), Umbach said.

Thus coordination and speaking with one voice is not just important for the internal market but even more for the EU's energy foreign policy, Umbach believes.

"Unfortunately, the EU often lacked that during the past years despite some improvements. But improving coordination and increasing coherence in its energy foreign policies will bring collective benefits for all EU-27 member states and enhance the EU's position for becoming a strategic played on the global scene", Umbach said.

If successful, the EU's entire position in its wider foreign policies as well as future external trade will also benefit from increased coordination and coherence as the EU's new energy foreign policy strategy ("The EU Energy Policy: Engaging with Partners beyond our borders") has highlighted at the beginning of September", Umbach added.

"Thirdly, it is the more important to speak with one voice as the EU's gas production is falling and the need to address and to cope with rising gas imports is increasing. ", Umbach said.

Umbach underscored, that the implementation of the Southern Corridor project and its strategic relevance for the diversification of the EU's future gas imports is dependent on new transmission infrastructure, such as Nabucco and a Trans-Caspian Gas Pipeline for supplying Turkmen gas across the Caspian Sea.

A collective stance increases the chances of importing gas from both Central Asia and the Caspian region as well as from the Middle East (Iraq and in the future also Iran, if the political conditions change in Teheran), Umbach said.

"Fourthly, the contest between the Nabucco-gas pipeline and the two smaller, but also less expensive projects (such as the Trans-Adriatic Pipeline and the Interconnector-Turkey-Greece-Italy) - vying for a share of around 20 bcm that Azerbaijan has pledged for the EU's Southern Corridor - has intensified during the last months as the October 1 deadline for the parties to submit tariff proposals to the consortium developing the second phase of Azerbaijan's Shah Deniz gas field is looming at the near horizon. An additional 10bcm gas per year from Turkmenistan in addition to Azerbaijan's promised 10 bcm would significantly improve the realization of the Nabucco pipeline", - Umbach said.

Regarding the Caspian sea status Umbach said Azerbaijan and Turkmenistan have a strategic interest to maintain a stable relationship with Russia and Iran, Umbach said.
But both have also a strategic interest to diversify their oil and gas exports, particularly Turkmenistan which is much more dependent on Russia than Azerbaijan, Umbach added.
"Turkmenistan already follows Kazakhstan's "multivector energy and foreign policy" and has expanded its energy exports to China in order to reduce its dependencies on Russia. From the point of international law, many experts see no problem in building a sub sea Trans Caspian gas pipeline between their Exclusive Economic Zones, particularly as progress is being made in bilateral relations", Umbach said .

But politically, there was a former understanding of not going ahead with projects without the political agreement of all sides in regard to the unresolved status of the Caspian Sea, Umbach added.
"But it has also becoming clear for both Azerbaijan and Turkmenistan that Russia is using that previous understanding to block any diversification of Azerbaijan's and Turkmenistan's diversification of exporting their oil and gas exports . And it won't have any interest to agree with Azerbaijan and Turkmenistan in the future to allow exports to Europe. And of course, citing environmental reasons to block a subsea Caspian gas pipeline by Russia is not credible any way giving its record of environmental policies at home and abroad", Umbach added.