Publication: Eurasia Daily Monitor Volume: 3 Issue: 43

The European Union is urgently drafting for release within the month a Green Paper on Energy, which may be the first in a series of Energy Papers from Brussels. The move responds to the twin problems that suddenly alarmed the EU and the United States in recent weeks: Three rounds of interruptions in energy deliveries from Russia to Europe, coupled with a continuing slide into European overdependence on Russian supplies.

Officially, Brussels and Washington are only beginning sotto-voce to acknowledge those two sides of that problem. But they have yet to focus on the dangerous nexus now forming between disruptions by Russia or in Russia and growing dependence upon Russia. Of those three interruptions, two were man-made in Russia but occurred in the Black Sea region, highlighting this region’s key role in Western energy security.

Compounding Moscow’s leverage as supplier, its middleman-monopoly on eastern Caspian hydrocarbons is a novel type of leverage, usable on the producer countries as well. Additionally, Moscow seeks footholds in downstream infrastructure of European countries for a third type of leverage.

The winter’s events have highlighted these long-neglected, but now mounting, risks to the energy security of the enlarged West and its partners in Europe’s East. The relevance of EU policy will hinge on identifying these risks and calling for the development of a common energy security strategy. This must be based on diversification of supply sources, with direct access via the Black Sea region to the eastern Caspian as a major objective; and on ensuring national or EU control (as opposed to Russian control) of energy transport systems in Europe.

The EU’s initiative must also stipulate consultation and coordination with the United States toward an overall Western strategic concept and measures for energy security. The Paper ought to clarify that energy security has become a key dimension to overall Euro-Atlantic security, and on that basis propose the establishment of a standing EU-United States consultative mechanism that can evolve into a policy-planning framework.

Were the EU to stop short of proposing a Euro-Atlantic approach, then consideration might be given to asking NATO to initiate such an approach to energy security. A start to discussion of this problem within NATO would seem to be a natural development. The alliance has rapidly evolved into a multidimensional security organization; energy security has become more critical to the enlarged West’s overall security than at any time in modern history; and NATO remains the principal trans-Atlantic consultation and policy-making forum.

The EU is moving piecemeal toward its declared long-term goal of a common foreign and security policy; but it has never proposed to develop a common energy-supply policy or at least an energy-security strategy. Such a step can no longer be delayed after this winter’s experience. The Energy Paper is the right vehicle for announcing that goal and proposing the necessary institutional format.

Any EU strategy must recognize the centrality of Caspian oil and gas to the problem of diversification away from dependency on Russia. However, preliminary indications suggest that the Paper will focus mainly on diversifying the types of energy being used, and less so on diversifying the oil and gas supply sources in general or obtaining direct access to Caspian reserves in particular. While conservation and saving, greater use of renewable sources, and adding storage capacity on EU territory are all necessary measures, it would be unrealistic to expect any significant decline in hydrocarbon requirements for at least the medium term.

A viable strategy for supply diversification should aim to link the EU with the transit and producer countries in the Black Sea and Caspian basins. The EU Paper can clarify Western energy interests in this area as opening direct access to eastern Caspian supplies, not through Russian territory; and ensuring that countries traditionally carrying Russian energy to Europe — mainly Ukraine and Moldova — do not lose control of their transit systems to Gazprom or other Russian interests. At the moment, the first goal has not yet been declared, and the second goal is in jeopardy as Moscow began setting the stage this winter for ultimate transfers of control over those transit systems.

Transit projects indispensable to EU and overall Western energy security (as defined above) and vital to anchoring the countries of Europe’s East include, among other proposals:

1) a Trans-Caspian westbound pipeline for Turkmen gas via the Black Sea region. The 1990s proposal for 16 to 32 billion cubic meters annually looks un-ambitious in retrospect. EU and other requirements (e.g., Ukrainian and Balkan) and the gas export potential of Turkmenistan — meanwhile augmented by that of Kazakhstan, and Uzbekistan — warrant a higher target;

2) a Kazakhstan-Azerbaijan oil transport system to feed into the Baku-Tbilisi-Ceyhan pipeline, with a ramification from Tbilisi to a Georgian Black Sea port. These can become the main non-Russian routes for Kazakhstan’s super giant Kashagan oilfield’s output. Transport to Baku by five medium-capacity tankers, as proposed, can provide a short-term palliative. The necessary solution will be a westbound pipeline on the Caspian seabed;

3) expansion of the Shah Deniz (Azerbaijan)-Tbilisi-Erzurum (Turkey) gas pipeline. Proven reserves at Shah Deniz considerably exceed the earlier estimates. Turkey’s role will change from that of a consumer to that of transit country for Azerbaijani gas;

4) extending the Odessa-Brody oil pipeline into Poland, expanding its projected annual capacity to a commercially more attractive figure than the 9 million tons initially proposed, and ensuring supplies of Kazakhstan oil via the Black Sea to Odessa for this pipeline.