GERMANY BACKS UP NABUCCO AND TRANS-CASPIAN PIPELINE PROJECTS - GERMANY'S DIPLOMAT

 

Caspian Energy (CE): Dr. Stanchina, what kind of opportunities Germany expects due to its chairmanship in the EU this year? What energy policy it will be adhered to?

Dr. Peer C. Stanchina, the Ambassador Extraordinary and Plenipotentiary of Germany to Azerbaijan: Germany is presiding in the European Union (EU), but this is not related to the country's economic development or welfare. It is very pleasing that Germany is presiding in the very time when all European countries are getting well in economic respect. Unfortunately, we did not have any economic growth for a long time, and it started only in 2005-06. Germany is one of Europe's most economically developed countries and now it is presiding in the EU: it is excellent when a powerful country is a prime mover.

Concerning energy policy, I would like to say that lately we are facing new opportunities and new approach to this issue. This situation was created due to the fact that over the last 5-6 years Germany's energy consumption decreased instead of growing up, so it was not necessary to get deeply involved in energy issues that time.

However, three events have unexpectedly took place in our economic development. Firstly, German economy started growing up again, calling for more energy. Second, the RF places energy as a tool for political use. As you remember, two years away in mid-winter the gas pipeline was shut down in Ukraine. And last mid-winter, gas deliveries were cut for Georgia, Belarus and gas prices sky rocketed for other countries. An open market should exist for energy resource delivery in Europe, but, unfortunately, there is no such market in the RF. The third influencing factor was in change of government in Germany. Due to these reasons, this kind of modified energy policy was drawn up.

All these factors, i.e. economic growth, the RF's new energy politics, and our new policy, have resulted in intensifying of our energy policy. I think it is not very difficult to understand our new energy policy. We want energy resource delivery guarantees, save energy and achieve the objectives set out in Kyoto Protocol.

It is really hard to achieve all three objectives simultaneously, so we are diversifying our energy policy. And it is very good that Azerbaijan is playing a big part in this respect.

 

CE: Could you provide detail on Germany's position about EU-Azerbaijan and EU-Kazakhstan Energy Memorandums and process of development of EU's new strategy on Caspian and Central Asian countries?

Dr. Peer C. Stanchina: The problems, I have just mentioned, concerning Germany and entire Europe alike. And we are doing our best, as the EU's presiding country, to lay the foundation for new European Energy Policy. New energy policy shall be based upon the ‘mutual benefits' principle. We shall benefit through diversifying our energy deliveries and our partners will benefit from our good and broad sales market. We can not connive at chaotic oscillations of oil prices. Moreover, each person resided in Baku for the last ten years has experienced the same. Last year the oil price reached $70/bbl, while several years away it was $8/bbl. So, we shall be ready and respond to these changes. Thus, when a contract basis exists the delivering countries may always be sure their consumer-countries, in this case we, Europe, will be purchasing these energy resources and providing them a broad sales market.

From January the EU got the closest to the Central Asia. Europe today is a part of the Black Sea region and it is one of Germany's tasks to draw up our new strategic policy for implementation in the Central Asian countries. Prior to the expiry of our presidency in the EU, we schedule to submit a complete strategic plan of relations with the Central Asia. This is not an easy target as the EU today consists of 27 countries and it becomes difficult to observe each country's interests and bring them together. On the other hand, it is a super-interesting objective and we have a pleasure to say Germany's initiatives are positively regarded in the countries of the Central Asia.

 

CE: Will the EU and Turkmenistan sign a similar memorandum?

Dr. Peer C. Stanchina: It is a bit early to sign such a memorandum between the EU and Turkmenistan. Turkmenistan experienced significant alterations after Turkmenbashi passed away. And now Turkmenistan under its new leader shall decide where to head and what to change. New authorities realize that the time has come for big changes and they can take place at support of European countries. There are the first signs of these changes and we keep tracking and welcoming them.

However, finally Western entrepreneurs' readiness to invest in Turkmenistan's private sector is being discussed. The Turkmen businessmen are willing to work in the right way and intensively. Unfortunately, neither the government nor Western investors are ready to this. All we need in this issue is time.

 

CE: What are the countries of preference in energy resources delivery to Germany? Do you consider the so-called ‘gas factor' a paramount point of economic relations between Germany and Russia?

Dr. Peer C. Stanchina: We are intended to diversify our energy delivery system. Our primary suppliers of energy resources are Norway, Russia, and Algeria and, certainly we will be utilizing gas delivered by other supplying countries.

Concerning Russia, the ‘gas factor' is not a paramount point in economic relations. Economic relations between Germany and Russia are based upon a huge and broad foundation. Energy sector is one of the most important fields of cooperation, but there is no factor or sector that can solely serve as a basis for all fields of economic relations between Germany and Russia.

 

CE: You have mentioned Russia, Norway, Algeria... How is this gas distributed in pro rata terms?

Dr. Peer C. Stanchina: Germany consumes much energy. We are striving to diversify these deliveries and attract as many suppliers as possible. There are 26 countries on this suppliers list.

I think when Azerbaijani gas is delivered to Europe, it will appear in Germany's houses as well.

 

CE: How is the pan-European energy policy progressing?

Dr. Peer C. Stanchina: Through our presidency in the EU, we are trying to lay a new foundation for new energy policy in terms of Europe, but not for pan-Europe. And now we are perform provisional works to implement this program, though no final decisions have been made to date. The consultations are taking place at the level of ministries. I hope a new European energy policy will have been created in the EU by the end of our presidency.

 

CE: What are basic principles of possible energy alliance with France concerning energy resource suppliers?

Dr. Peer C. Stanchina: There is no alliance at all between Germany and France today. Neither Germany nor France will benefit from separating from the other countries and creating an alliance in such an important sector as energy and exclude the others from it.

Furthermore, the matter is that Germany and France have opposite opinions on, for instance, use of nuclear energy.

The former government decided that there will be no nuclear energy policy in Germany, and those currently operated nuclear plants will be just shutdown after some time. Our new government, half of which consists of old government's members, also stated that there will be no change in the policy concerning nuclear energy. However, we do not know what is expecting us in the future.

 

CE: Many countries with the EU are committed to nuclear energy sector development...

Dr. Peer C. Stanchina: Yes, they are many... But Germany opposes the nuclear energy. I recall the accident at Chernobyl nuclear power plant. Germany was the closest of all Western countries to the accident area. I think following April 26, 1986, when the Chernobyl accident took place, the environment issue in Western countries became the top priority matter as the wind-transported radioactivity affected northern countries like Finland, Norway as well as Germany. Therefore, these events are fresh in our people's memory.

 

CE: Is Germany planning to rely on Russian gas delivery monopolies in the outlook?

Dr. Peer C. Stanchina: This is a disputable, in political terms, issue, so it is very important to know figures. We do not rely on Russia. Russia's deliveries make up less than 30% of entire natural gas import. Certainly, 30% is also a good number. Even if one treats this issue in a most pessimistic manner, he could hardly imagine Russia shutting down gas delivery to Germany. So far, the RF used ‘gas off' politics just on less developed countries. Politically Ukraine is a very weak country and Russia's debtor, Belarus is politically and economically weak, and Georgia is in a large debt to the RF. Whereas Germany is a different case.

In case Russia shuts off gas deliveries to us, then European market will be closed for it. One should understand such political action would have definitely influenced other fields and this can happen only incase of the mutual relations are stopped completely. But our relations with Russia, both economical and political, are excellent. Nobody has ever blamed Russia for counteracting its own interests. As you know, both Germany and the RF share mutual interests in this case. I can hardly imagine such political scenario with Russia shutting off gas delivery to Germany.

 

CE: However, Russia is likely to redirect its export directions. Do you think rapidly growing Asian-Pacific countries could become Europe's competitors in consumption of Russian and Middle Asian gas?

Dr. Peer C. Stanchina: For example, the goods turnover between Russia and China today is even not a tiny fraction of that between Russia and Europe. Mr. Miller, head of Gazprom, may threaten, but he will never take these measures. Economic relations between Russia and Europe are so interdependent that one could barely imagine Russia deciding to stop gas deliveries to Europe and redirect them, for example, to China. Russia has no gas pipelines to these countries either.

It is quite funny to draw such political scenarios, but we should be realistic all the same.

 

CE: Is Germany planning to take part in Azerbaijani energy resource distribution within NABUCCO Project extension to Germany?

Dr. Peer C. Stanchina: NABUCCO Project does not exist as yet, it is just a dream. No document has been signed as yet, and it is still just being spoken of. It is very difficult to implement such a project. You just should remember this on the example of Baku-Tbilisi-Ceyhan (BTC) pipeline, which was constructed only in three countries. NABUCCO is a huge project with various additional branches.

We all expect heads of states and investors to sit at the negotiating table and create something we all will benefit from. However, one of NABUCCO's parts is Turkmenistan, we were speaking of above. Kazakhstan's gas issue is still in the air as the gas pipeline is not installed along the Caspian Sea bed. It is not easy to install a gas pipeline from Turkmenistan through Turkey, via the Bosporus Strait and further to Bulgaria. I suggest some more time should pass until we will launch NABUCCO Project. Nonetheless, we are backing up this project on the whole.

 

CE: Is Germany interested and supporting Trans-Caspian Pipeline project in this respect?

Dr. Peer C. Stanchina: Surely we are interested; surely we want to diversify our energy sector. The more we have independent suppliers running energy resources bypassing Russia and directly to Europe, the better it is for us.

But we are speaking of big money. For example, investments in NABUCCO Project with its relevant branches amount to $50-$100 bln. All depends on how NABUCCO Project is designed and how many lines will be laid from the trunk pipeline. Some more time is needed until each participating country displays its political will, with subsequent arrival of investors. But we hope this will serve as a basis for development in the following five or six years.

But as you know, the Caspian Sea status has not been defined yet. Unless the countries do not reach common agreement regarding this issue, it will be very difficult to finance such project as construction of the Trans-Caspian gas pipeline. Therefore, the key to the solution of the Trans-Caspian Gas Pipeline Construction Project is in Iran. We pinned great hopes on the last negotiations regarding the Caspian Sea status held in Teheran. But unfortunately, these talks were not successful and resulted in no new positive results.

I believe it is necessary to call for Iran and Turkmenistan to come to a final solution of the problem. The gas pipeline cannot be laid across the Caspian Sea unless the Caspian Sea legal status is undetermined. The construction of such a gas pipeline requires multibillion investments; however, it is not as easy task to find an investor that will want to invest big money into the Trans-Caspian gas pipeline project without the legislative document for this problem's solution.

 

CE: Is Germany's Chancellor Angela Merkel planning to pay a return visit to Baku?

Dr. Peer C. Stanchina: At present the visit has not been scheduled, but after three official visits Azerbaijan's President Ilham Aliyev made to Germany the two countries' relations progressed more intensively. Upon his return from Germany on February 19 Mr. Aliyev said approximately the following: "This was an excellent visit. This visit shall boost mutual relations, especially in economic areas". The same was stated by the federal government's officials about the results of this visit. And I, as an ambassador, will be doing my best to put this in practice.

 

CE: Does Germany intend to join development of the Caspian fields? Does Wintershall plan to purchase assets in the Caspian Sea (Azerbaijan, Turkmenistan and Kazakhstan)?

Dr. Peer C. Stanchina: German energy firms used to work in Azerbaijan but unfortunately without success. Afterwards all German firms left for home after the sudden landslide of oil prices. At the moment German companies are returning to Azerbaijan waiting for their turn. Over the last several months I personally submitted three letters from the largest German energy companies to President of Azerbaijan Ilham Aliyev. These companies are carrying out very intensive talks with Azerbaijan. Thus, recently the representatives of Germany's Wintershall visited Baku. I am sure German companies will keep on visiting Azerbaijan in future.

 

CE: How would you evaluate the cooperation between Azerbaijan and Germany? How will Germany build up further relations with Azerbaijan and does the country have a strategic plan? What areas are good to promote cooperation between Germany and Azerbaijan? What steps are being taken?

Dr. Peer C. Stanchina: Traditionally the relations between Azerbaijan and Germany are developing well. We were one of the first countries that recognized independent Azerbaijan and the first country where Azerbaijan sent its ambassador. I think our relations are progressing well because Germany has no strategic interests in Azerbaijan. We are a medium-level trading country and do not enter the membership of the Security Council. The countries with strategic interest in Azerbaijan behave differently here. This is one of the main reasons for excellent relations between our countries. The Azerbaijanis like some character traits of the Germans. Every morning almost each head of various ranks in Azerbaijan gets in a German car and admires the German quality, accuracy, neatness and luxury of a car. Our prices are expensive but we are good to rely upon. I think it justified itself beforehand. It is better to buy once at an expensive price than to purchase something new every year.

 

CE: What is the trade turnover between the two countries? What economic fields do prevail in it? What fields are good to expand mutually beneficial] cooperation between Azerbaijan and Germany?

Dr. Peer C. Stanchina: Over the recent years the goods turnover almost doubled. For the first time it exceeded €1 bln. We welcome continuation of economic cooperation between Azerbaijan and Germany in this direction.

Political, economic, cultural, humanitarian, consular relations along with the educational ties are regarded as bilateral relations. It is planned to proceed with the intensive development of all these fields to be implemented by both Germany and Azerbaijan. One of the bright examples is that the Azerbaijan Government has decided to arrange the Year of Culture of Azerbaijan in Germany in 2008. I will do my best to make the Embassy of Germany carry out active work in the field of culture and draw up a broad cultural programme.

As to the economic field, we plan to arrange various conferences. The economic delegation will pay visits. Michael Gloss, the Minister of Economy of Germany is going to visit Azerbaijan in October 2007.

BakuBuild Exhibition will be held in October 2007 in Baku. The German Government and the association of German companies have decided to represent themselves in Baku sharing a stand. German companies will take part in the Caspian Oil&Gas Exhibition and Conference to be held in June 2007 with a common stand.

Soon after the visit of Ilham Aliyev to Germany I received the inquiry from the chancellery of Baden-Wurttemberg where it was asked what kind of business they could deal with. In Berlin the President met with Gunter Hettinger, the Prime Minister of this federal state and currently we are working on this issue.

Regarding other fields of cooperation, for example such areas as press or science witness the trends of growing development. However, such fields of bilateral relations as politics, economy, culture and the German language show the best indicators. The Germans have been present in Azerbaijan since 1820.