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Baku Summit Looks To Bring Caspian Resources To Europe

  • Bruce Pannier

The Caspian Sea is becoming a focus of the world's energy markets.

The Caspian Sea is becoming a focus of the world's energy markets.

Top officials from Eastern Europe, the Caucasus, Turkey, and the United States are in Baku to discuss their options for transiting Caspian energy to Europe.

Those attending the energy summit in Baku are hoping to reach deals that could open the way for the Caspian's wealth of oil and natural gas to feed energy-hungry Europe.

The big problem, and the center of the discussions, is the logistical question of establishing export routes by land or sea.

On November 13, the special envoy for Eurasian energy at the U.S. mission to the European Union, Boyden Gray, summed up the importance of finding a quick solution.

"The price of oil in some respects reflects the economic slowdown, which is hopefully just temporary," Gray said. "In any event, the needs for hydrocarbons in Europe, especially natural gas, these needs are not going to abate. You're going to be very much -- Azerbaijan, Turkmenistan, Kazakhstan -- this region is going to be very much in demand."

Working Around Russia

The Caspian Basin's massive potential as an energy supplier is well-known, but nearly two decades after the collapse of the Soviet Union there are still only a few routes for bringing energy resources from the region to Europe.

One traditional and well-established route goes through Russia, with new but far from sufficient avenues traveling through the Caucasus and Turkey (the Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipeline).

Changing the existing setup is the focus of the Baku conference. Russia was invited to attend the conference, but according to U.S. Deputy Secretary of State Mathew Bryza, Moscow "chose not to show up."

This is perhaps a result of the nature of this discussion, which is expected to center on finding ways of getting Caspian oil and gas to Europe while circumventing Russia.

Officials from Bulgaria, Hungary, Estonia, Lithuania, Poland, and Ukraine, all either former Soviet satellite states or former Soviet republics, are in attendance. Some of these countries received good news when Azerbaijani President Ilham Aliyev addressed the summit touting the possibilities of the proposed Odesa-Brody-Plotsk-Gdansk oil pipeline.

Aliyev said the project has "good potential," noting the working group preparing the "technical-economic basis" for the project is close to completing its work. He appeared optimistic that the group would finish its work before the end of this year.

Lithuanian President Valdas Adamkus called on the European Commission to name a special representative for the Odesa-Brody-Plotsk-Gdansk project as a sign of "support for the alternative transportation route that would supply the energy needs of Europe."

Rival Projects

The Odesa-Gdansk pipeline is viewed as a rival route to the Russian-backed Nord Stream pipeline, which would serve Northern Europe, including Poland and the Baltic states.

Russian Prime Minister Vladimir Putin has championed that project, but on November 13 mentioned that the countries benefiting from it should be prepared to shoulder much of the financial burden for its construction.

Adamkus also lobbied for the EU's embattled Nabucco gas-pipeline project, saying it is "important from the point of view of diversification in the transportation of energy resources" and "important for Europe in order to regulate the price of gas on the market and not fall under the influence of a monopoly."

Kazakhstan was not mentioned in reports about the summit, but the Central Asian state's energy minister and the head of KazMunaiGaz are in Baku.

They reportedly signed an agreement with Azerbaijani officials on financial issues regarding the shipment, via tanker, of Kazakh oil for loading into the Baku-Tbilisi-Ceyhan oil pipeline.

The Baku summit comes as EU officials are meeting to discuss the diversification of energy-import routes. Those discussions have a special focus on the Caspian region, meaning events in Baku will be closely followed in Europe.
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