Yayin Tarihi: 6 Nisan /April 1998
EURASIAN ENERGY PROSPECTS:
Need For a Long-Term Western Strategy
MEHMET ÖGÜTÇÜ
Mehmet Ögütçü Kimdir?
(Mesleksel Özgeçmisi)
Now that nearly three years have elapsed since the break-up of the Soviet Union, the
previously little known vast territory of Eurasia is forcefully entering the global scene
on many fronts in which the energy diplomacy figures prominently. Access to the region was
heavily restricted under the communists and only recently has Eurasian scholarship become
fashionable in the West. This region, the boundaries of which are difficult to draw
precisely, encompasses more than twice the territory of the Middle East and compels the
world to rethink the traditional views of its security, political and economic
significance, its power structures and the consequences that current changes portend for
world energy prospects.
Energy has today become the driving force of the global economy and, in the next century,
it will remain the pillar of economic and social development. The demand for energy is set
to increase apace with economic growth in the medium term and population growth in the
longer term. The substantial oil price increases of 1973/74 and 1979/80 had a major impact
on fuel substitution, energy conservation and energy policy, and compelled Western
countries to expand their strategic reserves and invest billions of dollars in opening up
new reserves, developing alternative energies and improving end-use efficiency and
conservation. However, with the lack of further growth in oil/gas prices, interest has
gradually waned and now future energy markets are facing uncertainties arising from energy
policies in general and environmental requirements in particular.These uncertainties call
for a rethinking of global/regional energy policies and the development of a unified
approach.
1. During the Cold War years, free world access to oil supplies, especially those of the
Middle East, was one of the premier foreign policy interests of the Western world. All of
the recent Middle Eastern confrontations, from the initial Arab-Israeli conflict of 1947
and the first Iranian crisis of 1951-52 to the Suez crisis of 1956 and the Arab-Israeli
wars of 1967 and 1973, have elicited concern about the strategic consequences of losing
control over Middle Eastern oil supplies. And the end of the Cold War has done little to
diminish the Western interest in the security of the oil supplies from the Middle East.
The oil reserves in the region make it inevitable that practical change around the Persian
Gulf will attract world attention. This has been a factor in the region's internal
politics since the break-up of the Ottoman Empire after the First World War. The Western
oil stakes are simply too high so that the Middle Eastern countries will not be allowed,
in the words of Krapels, even "to sort out their own rivalries without substantial
Western attention and intervention."
It is, on the other hand, ironic that the Western community of nations, while not
hesitating to wage a costly war in order to keep the Kuwaiti oil fields from changing
hands, have virtually pushed aside the possibility of what may happen in the event of the
rich oil and gas fields of West Siberia (Russia), Kazakhstan, Turkmenistan and Azerbaijan
falling into unfriendly hands. This region has been the world's leading oil producer since
1976. The sheer extent of the territory and the apparent size of the potentially
recoverable petroleum and gas resource base make the Eurasian space one of tomorrow's oil
& gas exporting superpowers. The outcome of the current developments in the Eurasia,
sounding as though the 20th century version of the Great Game is being replayed among new
major powers, may therefore determine the stability of a vast geography covering the
Middle East, the Balkans, the Trans-Caucasus and the Central Asia and, by this token, the
very security of the world's major supply areas of oil and natural gas. It is for this
reason that the EU, alongside other major Western countries, should speedily undertake a
comprehen- sive review of its presently ambigious Eurasian strategy and think over its
longer-term interests in the region. There is a pressing need for the formulation of a new
EU strategy encompassing all aspects of its relationship with the Eurasian countries and
the energy co-operation, we think, offers an excellent opportunity in this respect.
2. For the sake of this paper, whenever a mention is made of energy commodities, it should be taken as referring mainly to oil and gas -- the two precious assets abundantly found in the Eurasia and most sought after in the global energy markets. Put it another way, we shall not be dealing here with other sources of energy i.e. electricity, coal, solar, nuclear and other renewables as oil and gas are, and will be, of primary importance to the West. It is beyond doubt that the Eurasian region would be among the most strategic in the world for energy resources. It has also become evident that oil and gas are set to be the engines for the ongoing economic and political transfor- mation in this vast landmass. The former Soviet Union had a unique wealth of natural energy resources and was one of the few countries capable of satisfying all its power requirements on a self-sufficient basis. Now, most of the oil and gas reserves of the former Soviet Union are located in Russia; recent estimates of 162 bn barrels of proven, probable and possible oil reserves in the former Soviet geography assign 137 bn to Russia, 15 bn to Kazakhstan, 4 bn to Azerbaijan, 3.2 bn to Turkmenistan and 2.8 bn to other countries of the CIS.
The Caspian Sea, at the centre of some of the world's most obscure states, is growing into
an oil and natural gas producing region that experts say could rival some Persian Gulf
nations. A lot of regions in the Caspian either have never been identified or never
tapped. Expected economic growth, boosted by oil and gas export earnings, could spill over
and fuel expansion in two of the former Soviet Union's most backward regions, the Central
Asia and the Caucasus. The Caspian Sea, actually the world's largest lake, covers 600.000
square km, but the geological region extends much further.
The Caspian Depression reaches across the northern Caspian Sea into Western Kazakhstan and
includes the long producing Russian oil and natural gas fields of Astrakhan, Orenburg and
Volvograd. Another formation crosses the Sea's mid-section, called the Northern Caucasian
Mangeshlak plate, encompassing the fields of Azerbaijan and Turkmenistan and stretching to
the Aral Sea. There are numerous untested structures out in the Caspian Sea; also, deeper
horizons offer good prospects. It is one of the world's most promising areas for new oil
development. Held back during the Soviet times by lack of capital and technology, the
fields of the newly independent Kazakhstan, Azerbaijan and Turkmenistan may well hold
billions of barrels. Now that the countries around the Caspian Sea are independent, they
can better control their destinies: They are small enough for the Western explorationist
to find his place without having to deal with the overpowering bureaucracy of Russia. They
are also receptive to Western participation in their own local industries. As Western
companies move toward the arrangement that will permit the joint development of these
reserves, one question mark looms ever larger - how to get the Caspian oil to the world
market? The chief problem is shipping the Eurasian oil and gas exports to the market over
huge distances from a region landlocked by often unfriendly, rival or unstable states. For
now, there are two pipeline projects on the table. We shall deal with this issue at great
length later. The fate of both resource development and the entire industrial base depends
on the development of a secure and efficiently-run network of pipelines that can transport
oil and gas to deep water ports for sale in the world currencies. Without such pipelines
in place, says the Chevron President, "we will only have a pipedream in that
region".
3. We believe that the end of the Cold War has created new opportunities for regional economic co-operation and integration between Europe and the Eurasia, where energy is poised to play a pivotal role. As a matter of fact, the former Soviet Union used to cover about 25 percent of West European energy imports. In 1988 Soviet energy deliveries to the OECD area amounted to about 93 mn tonnes of crude oil and products, 38 bcm of natural gas, and to 21 mn tonnes of hard coal - a total of about 140 mn tonnes of energy (TOE). Currently, the NIS area ranks 7th in the world in proven reserves - Saudi Arabia, Iraq, Kuwait, Iran, Abu Dhabi, Venezuela and the former USSR, followed by Mexico and the US. It is estimated that the region contains more than one third of the world's gas resources. All of the countries that have greater proven reserves than the ex- USSR such as Mexico are currently closed to Western companies -- a basic reality, which has driven companies like Chevron, BP and Shell to look elsewhere.
The European Union has become ever more vulnerable in its energy supplies, especially oil
and gas supplies, since 1986: It now has to meet nearly half of its energy requirements
with imports and this degree of dependence is likely to increase in the longer term as
highlighted in the International Energy Agency (IEA) projections. There is therefore a
danger that the Union might become excessively reliant on a small number of countries, or
even a single production region, where political stability is not guaran- teed. The
natural gas demand of the EU countries could reach 300 bcm by the year 2010, compared to
the present 220 bcm. This growth of about 35 percent will mean that the share of natural
gas in Europe's primary energy consumption will rise from 18 percent to 23 percent by
then. Local production of gas, now some 135 bcm, is estimated not to rise significantly
over the next 20 years, increasing to 140 bcm by 2000, but then falling off to 120 bcm by
2010. The resulting supply and demand picture for the whole region is therefore likely to
entail net import requirements estimated at 140 bcm by 2000 and 180 bcm by 2010. Where
would the new supplies come from? The answer is simple: inevitably mainly from outside the
Western Europe. Currently, just over 20 percent of continental Europe's gas is supplied by
the NIS, principally Russia and Turk- menistan. (Algeria is also an important gas
supplier. Norway's accession to the EU will obviously further improve its gas supply
situation). Virtually all this gas is piped across former Czechoslovakia and Ukraine.
However, recent disputes over payment and transit tariffs have led to temporary reductions
in exports to both Western and Eastern Europe.
With Germany and Italy reliant on NIS gas for more than a third of their supply, these
disruptions clearly cause major concern in Western Europe. Against this background, where
might Turkey's role be found in the complex energy picture of the Eurasian world?
Turkey, standing as it does precisely at the geo-center of the Eurasian world, is destined
to play a critically important role in energy trade between the Eurasian suppliers and the
European consumers -- a role, which require great wisdom, creativeness and strategic
thinking on the part of the Turkish leadership given the complex political equations and
economic problems in the region. The pressure on Turkey from the oil and gas exporting
states of the Caspian region are expected to grow stronger as these countries would want
to pump as much oil and gas as possible to the world markets. And the performance of the
Turkish energy diplomacy in formulating a viable response to this unprecedented challenge
is believed to affect profoundly the future course of Turkey's relations with the European
Union and the Eurasian countries beyond the 21st century.
II- CURRENT ENERGY SITUATION IN THE EUROPEAN UNION:
ULUSLARARASI iLiSKiLER-STRATEJiK ÇALISMALAR'a dön
