Between Europe and Asia

 

TURKMENISTAN JOINING MULTIVERSION ENERGY SECURITY SYSTEM

 

In mid summer the International Energy Agency (IEA) published the report with notifications about the risk of "resource nationalism" or measures targeting a tough control by governments and state-owned corporations over the energy sector and worsening work conditions for foreign investors.

Investors that envisage such dictation of crude hydrocarbons owners reduce their presence in these countries, while consuming countries are working hard on supplies diversification and are in a strong search of alternative energy sources. Under the pressure of the government ConocoPhillips was forced to cease its activity in Venezuela, while in Russia Shell and BP handed a major part of their successful and perspective projects to Gazprom.

Soon the Russian government is going to fix juristically the already established practice of discrimination of foreign companies willing to obtain access to development of large crude hydrocarbons fields. In Iran such a "patriotic" approach has been carried to extreme. Here foreigners are completely deprived of any rights to subsoil use.

Such attitude towards foreign investors in Iran originated in 1952, when on the surge of peoples' claims the oil branch was nationalised and the Constitution was supplemented by one more paragraph prohibiting any foreign concessions. In 1979 this paragraph was included in the Constitution of the Islamic Republic of Iran without changes.

 

According to Heydar Aliyev (September 20, 1994) "Azerbaijan lies between Europe and Asia and, thus, has to establish good relations with the countries of Europe and Asia and all countries across the globe".  

These words spoken by Azerbaijan's national leader Heydar Aliyev at the ceremony of signing the Contract of the Century in Baku were taken as a cornerstone for follow-up implementation of the strategy of a multiversion hydrocarbons export from the Caspian region to global markets. Azerbaijan was the first country in the world that pondered upon its vital security and independence inseparably linked to the energy constituent, and demonstrated the reality of alternative thinking in this utterly traditional and stereotype area of the global economy to the entire world.    

Having arranged Azerbaijani oil deliveries to global markets through three oil export routes, Azerbaijan and its Shah Deniz project partners are now successfully negotiating export opportunities of both Azerbaijani and Middle Asian gas towards the European market.

"Nowadays a gas factor is crucial for ensuring energy security and energy independence in the countries worldwide", says President of Azerbaijan Ilham Aliyev. Putting aside such notion as "resource nationalism", which finally brings only losses, Azerbaijan that commissioned the Heydar Aliyev Baku-Tbilisi-Ceyhan oil pipeline has all chances for one more strategic success to become the most stable and beneficial gas transit hub from such energy rich countries like Turkmenistan and Kazakhstan, and probably Uzbekistan that might join the project in the future.

 

Transcaspian project

Many people believe that construction of the Transcaspian export system from Turkmenistan to Baku will settle the Caspian Sea status problem. However, this concern has already shifted to the realm of bilateral relations between neighbouring states and is not a number one obstacle on the way of the project's implementation. Thus, Russia and Kazakhstan, Azerbaijan and Russia have agreed about the demarcation line and division of fields.

Under the provisions of the Joint Declaration, division of the Caspian Sea "shall be implemented on the basis of the principle of a demarcation line drawn with consideration equidistant spots and modified on the basis of decisions of the parties, generally acknowledged principles of the international law and the established practice in the Caspian Sea". Declaration's Paragraph 5 runs as following: "Other elements of the legal status of the Caspian Sea shall be discussed through follow-up stages".

Following these decisions, 3 out of 5 countries, which are Azerbaijan, Russia and Kazakhstan, have already reached a first consensus to divide the sea and its resources on the basis of the modified demarcation line principle taking into consideration generally acknowledged principles of the international law and the established practice in the Caspian Sea.

The representative of the Kazakhstan's Foreign Ministry said the Agreement on the Caspian Sea division did not cover biological resources and utilization of the Caspian Sea for shipping. The parties also called upon the Caspian states to conclude a convention on the Caspian Sea legal status, as soon as possible, on the basis of a common consent.

The major problem of the future Transcaspian gas pipeline is its provision of resources as the current gas production in Turkmenistan has been contracted by Russia's Gazprom for a forthcoming decade (read the previous issues of Caspian Energy), while the rest onshore fields have been handed to the Chinese investors. The Turkmenistan's representatives have already reported that no new contracts on onshore E&P activities would be concluded.  

The government's number one task is a large-scale development of hydrocarbon resources in the Turkmen sector of the Caspian Sea and its coastal area. Here the matter concerns 6.5 trillion m3 of reserves. Heads of such transnational oil-and-gas holdings as Chevron, Total, Shell and others have already paid visits to Turkmenistan. Russian, Kazakh and Uzbek companies have also received invitations to work on the shelf. The negotiation process with Azerbaijan got intensified. In turn, Azerbaijan vigorously commenced on settling the old problem of the border-line Serdar-Kapaz field on the diplomatic level. At the press-briefing Azerbaijan's Industry & Energy Minister Natig Aliyev did not exclude the possibility of concluding an agreement on this border-line deposit. Reaching a consensus between the two countries is logical not only from the viewpoint of law, as the precedent in the person of Russia and Kazakhstan already exists (in 2006 the companies of the two countries agreed about development of Kurmangazy (Kazakhstan) and Tsentralnaya (Russia) fields following the 50/50 principle. However, from the business point of view, the Azerbaijan gas infrastructure is located at the distance on only 50 km from the Turkmen sector. In this regard, the concern of the field's jurisdiction also seems to be not so principal as the price for final sales markets (read Caspian Energy ¹4(45).

At the same time, the President of Turkmenistan is strongly motivated to "come down to history as a leader who opened the sea for the Turkmen", said the source from the government that wished to remain unknown.

That is why one may assume that G. Berdymuhammedov will prefer to intensify the investment attractiveness of the oil-and-gas sector of the country by promoting alternative export routes like Azerbaijan did 13 years ago. And already in the near future one may expect a breakthrough in the development of the Transcaspian Gas Pipeline Project like Russia's in May and Chinese's in September. Anyhow, all necessary preconditions for that are already available now. 

 

In early September President of Turkmenistan Gurbanguly Berdymuhammedov invited China's corporation CNPC to develop the right shore of the Amu Darya River. The investor obtained the license on E&P activities at Bagtiyarlyk field in the eastern area of Turkmenistan located at the territory of over 500 km2. 

The expected reserves of Samandepe, Yalguya and Bot fields handed to the Chinese investors are evaluated as much as 1.3 trillion m3 of gas. These resources will be a base to feed to the future Turkmenistan-China gas pipeline with the capacity of 30 billion m3 by 2015.