Energy Security and its Regional Approaches: Caucasus Energy Gate Dimension

 Energy Security and its Regional Approaches: Caucasus Energy Gate Dimension

 By: Gordana Krutii

The International Energy Agency defines energy security as “the uninterrupted availability of energy sources at an affordable price”. Energy security has many dimensions: long-term energy security mainly deals with timely investments to supply energy in line with economic developments and sustainable environmental needs. Short-term energy security focuses on the ability of the energy system to react promptly to sudden changes within the supply-demand balance. Lack of energy security is thus linked to the negative economic and social impacts of either physical unavailability of energy or prices that are not competitive or are overly volatile.

S. Haighighi thinks, it is imperative to distinguish between the two sources, oil and gas since they have different characteristics from the perspective of energy security. Unlike oil, gas is relatively difficult to store and gas transportation infrastructure is rigid in nature (for the time being). This means that a physical link between producer and consumer is required and the number of alternative routes to the consumer is limited. Moreover, unlike the global oil market, the gas market is regional. A global oil market implies that disruption of oil supply in one part of the world may affect the whole world whereas gas disruption does not necessarily have worldwide repercussions. This is again due to the fact that firstly, the costs of gas transportation are higher than oil, and delivery systems are inflexible, and secondly, gas development in one country or region is isolated (due to a lack of easy switching between routes) from the development of other regions, which suggests that disruption in one region does not necessarily influence another. 

Energy security can be ensured through local adequacy—abundant and varied forms of indigenous energy resources. But for countries that face local shortages, as most do, energy security can be enhanced through:

■ The ability, of the state or of market players, to draw on foreign energy resources and products that can be freely imported through ports or other transport channels and through cross-boundary energy grids (pipelines and electricity networks). This is increasingly aided by energy treaties and charters and by investment and trade agreements.

■ Adequate national (or regional) strategic reserves to address any transient interruption, shortages, or unpredictably high demand.

■ Technological and financial resources and know-how to develop indigenous renewable energy sources and domestic power generating facilities to meet part of local energy requirements.

■ Adequate attention to environmental challenges.

■ Diversification of import sources and types of fuels[1].

“The Caucasus is the area of energy resources and transportation routes, the gates to Central Asia, Iran’s neighbor, and Russia’s “soft underbelly”. The importance of all this is strengthened by the transit nature of the region, which connects the East and the West, the South and the North. Regional security is undermined by `frozen` conflicts and uncontrolled territories, where the routes of weapons, drugs, and human trafficking cross.” as Leila Alieva summarized in her analysis.

This part of the Black Sea region, (South Caucasus) which is situated on the crossroads of the biggest energy consumers and the biggest energy providers – has been called to play a special role in the functioning of the energy security network on the Eurasian continent. The Black Sea has a great potential of becoming a major route of movement of gas and oil from the Middle East and Central Asia to Europe. South Caucasus, in particular, is emerging as key to the diversification of energy-transit routes between the energy supplying and energy-consuming countries[2].

The importance of the South Caucasus in both a European and global security context has been repeatedly discussed since the end of the Cold War. In the period when Armenia, Azerbaijan, and Georgia were part of the Soviet Union the region was seen as the underbelly of the Soviet superpower, the sometimes forgotten frontier between the Communist world and NATO. Turkey’s army of over half a million, propped up by NATO’s nuclear and conventional arsenal, was matched in kind on the Soviet side by the large and prestigious Trans-Caucasian Military Command of the USSR Armed Forces[3].

A special role in Caucasus’ Energy security plays its the intention to be energy hub so to imply a land territory attracted inter communicative energy functional entities and their concentration quality that determines the Hub’s development factors in aegis of the energy geopolitics.

From this perspective, Azerbaijan has the best chances as it has the necessary technical facilities. Karadaghi and Kalmaz gas storage tanks with a total of 3.5 billion cubic meter capacity. Access to the Caspian Sea in combination with its own resources, which can be used in some disruptions of gas\oil from the partners, makes its position attractive for investors and helps to make the general security of the region stronger.

As a confirmation of this point, the UN-accredited global energy body has published a report titled "World Energy Trilemma 2013: Time to get real - the case for sustainable energy investment".

According to the report, the energy sustainability index ranks countries on the basis of the comparative analysis of the energy situation in that country and is based on three factors: energy security, energy equity, and environmental sustainability. Depending on the achievements in each dimension, the countries are given scores of A to D. Azerbaijan got a BCD rating.

Azerbaijan ranked 32nd position in terms of energy security indexes, outpacing the other South Caucasus countries; Armenia was ranked 95th and Georgia was ranked 106th.

Azerbaijan ranked 74th in the accessibility and affordability of energy supply across the population and 98th in the environmental sustainability index.

Azerbaijan, an energy-rich South Caucasus country, will turn into one of the world's largest exporters of hydrocarbons due to the realization of its far-reaching plans on gas production and supply.

In 2012, Shah Deniz is projected to produce 18 billion cubic meters of gas, a large part of which will be transported to Europe. The number of states purchasing gas from Azerbaijan will rise substantially. Greece, Bulgaria, Italy, Romania, Poland, the Baltic States, Hungary, Slovakia, and other countries are among those expected to receive fuel from the Caspian in the coming years. From 2015-to 2020, at least 20 billion cubic meters of gas will be piped to Europe. Other prospective fields, such as Bahar, Inam, Alov, and Umid, have deposits of more than 2-3 trillion cubic meters. Assuming that the country will produce 15-20 billion cubic meters of gas annually, these resources should be sufficient for 100, or even 200 years. This raises the possibility of exporting gas via other routes, in addition to the Southern Corridor. In line with its multi-directional energy policy, the government has included the transportation of fuel via Nabucco, Turkey-Greece-Italy, Trans-Adriatic, and other pipelines in its long-term plans.[4]

In the contests  of energy security we need to mention the main pipelines of the region (oil):

·         Baku–Batumi pipeline (Azerbaijan-Georgia)

·         Baku–Novorossiysk pipeline (Azerbaijan - Russia)

·         Baku–Supsa Pipeline (Azerbaijan-Georgia)

·         Baku–Tbilisi–Ceyhan pipeline (Azerbaijan-Georgia-Turkey)

·         South Caucasus Pipeline (Baku–Tbilisi–Erzurum Pipeline) - it runs parallel to the Baku–Tbilisi–Ceyhan pipeline (oil)

And gas:

·       South Caucasus Pipeline (Baku–Tbilisi–Erzurum Pipeline) - it runs parallel to the Baku–Tbilisi–Ceyhan pipeline (oil)

·       Azerbaijan–Georgia–Romania Interconnector (project to transport Azerbaijani natural gas to Romania and further to Central Europe)

·       Dzuarikau–Tskhinvali pipeline

·       Trans-Anatolian gas pipeline (TANAP project - 2018)

·       White Stream (project - Georgia, Romania, Ukraine)

The success achieved at the Shah Deniz, Umid, and Absheron gas fields has strengthened Azerbaijan’s position in the project to ensure energy security for Europe. There are great expectations of the Caspian region from Europe in light of its desire to reduce energy dependence on Russia. At the same time, Azerbaijan has its own expectations of the West. At a time when negotiations on the Nagorno-Karabakh conflict are at a decisive stage, the success of the Umid and Absheron gas fields is of great importance for our state. Huge political dividends may be reaped from successes in the economic sphere; in particular, hopes rise for the negotiations to resolve the Nagorno- Karabakh situation.

Literature:

1.     Andrei V. Belyi. Energy security in International Relations (IR) theories

2.     Dennis Sammut and Amanda Paul. Addressing the security challenges in the South Caucasus The case for a comprehensive, multilateral and inclusive approach POLICY BRIEF March 2011

3.     Emmanuel Karagiannis. Energy and Security in the Caucasus

4.     Eldar Ismailov and Vladimer Papava “Rethinking Central Eurasia”, Central Asia-Caucasus Institute Silk Road Studies Program, Washington DC, 2010

5.     Vakhtang Maisaia “The Caucasus-Caspian Regional and Energy Security Agendas – Past, Contemporary, and Future Geopolitics: View from Georgia”, Second Edition, IREX, Brussels, 2007

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[1] Hisham Khatib (Jordan) LEAD AUTHORS: Alexander Barnes (France), Isam Chalabi (Iraq), H. Steeg (Germany), K. Yokobori (Japan, on behalf of Asia-Pacific Economic Cooperation) Energy Security. http://www.undp.org/content/dam/undp/library/Environment%20and%20Energy/Sustainable%20Energy/wea%202000/chapter4.pdf

[2] LÁSZLÓ SEBŐ, KLÁRA SIPOS-KECSKEMÉTHY Energy security and the Caucasus region

[3] Dennis Sammut and Amanda Paul. Addressing the security challenges in the South Caucasus The case for a comprehensive, multilateral and inclusive approach POLICY BRIEF March 2011

[4] Murad Mehdiyev. ENERGY SECURITY FOR EUROPE AND REGIONAL SECURITY FOR THE CAUCASUS? http://www.visions.az/en/news/319/dcb50cb5/