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EU: Brussels Targeting Central Asia's Energy

Andris Piebalgs (right) and president of the Energy Council, Martin Bartenstein, after a news conference of the EU Gas Coordination Group in January (epa) Central Asian gas, oil, and uranium are high on the European Union's shopping list in its quest to secure its energy needs. EU Energy Commissioner Andris Piebalgs, who was in Kazakhstan last month, tells RFE/RL in an interview that the EU is currently seeking long-term supply contracts with Kazakhstan and Turkmenistan, as well as promoting a string of pipelines to take Central Asian gas and oil to Europe circumventing Russia.

BRUSSELS, June 7, 2006 (RFE/RL) -- In early May, Andris Piebalgs became the first EU energy commissioner to visit Central Asia. His visit reflected growing concerns within the EU to find new energy suppliers.

Earlier in the year, the EU's biggest provider, Russia, caused jitters by cutting gas deliveries to Ukraine -- and affecting some EU countries as a result. Global competition for gas and oil has also markedly intensified.

Piebalgs says the EU sees considerable potential in the region. He says that Central Asia could easily provide more than 10 percent of the EU's gas -- increasingly the most important source of energy for the union.

Piebalgs says the EU is in the first instance targeting Kazakhstan, and possibly later also Turkmenistan.

"At this stage we're talking about Kazakhstan and [prospectively] about Turkmenistan, because Uzbekistan is bound [by] very long-term contracts with Gazprom, the quality of the gas is not particularly high, so I would say at this stage our target is Kazakhstan first, and definitely at some stage also Turkmenistan," Piebalgs says.

Piebalgs says Turkmenistan's reported long-term contracts with Russian gas monopoly Gazprom might not be as binding as often reported. He says the EU is trying to make "closer contact" with Turkmenistan.

Piebalgs says Kazakhstan -- and Central Asia more broadly -- have ample supplies of key EU desirables -- gas, oil, and uranium: "Actually, [Central Asia] can offer most of the energy resources that we need. First of all, it's a region where [there] is [a] very dynamic development in energy production. And definitely, [there is more] oil than the Baku-Tbilisi-Ceyhan pipeline could deliver. Then [there] is the gas. [There] is not too much gas in the region, but still substantial [reserves] to bring in 20 billion cubic meters a year. So, quite a substantial amount that could be used in the EU. [Kazakhstan is] also one of the potentially big producers of uranium. On top of it, it's a country that's friendly to foreign investment."

Caspian Projects

Piebalgs says gas and oil from Central Asia already reaches Europe, albeit mostly via intermediaries such as Russia. But the commissioner emphasizes the EU is seeking more reliable access routes. This is why it actively promotes pipeline projects across the Caspian Sea to take Central Asian gas and oil to Azerbaijan and from there to Turkey and into Europe.

Piebalgs admits the EU is a relative latecomer to the Caspian region: "But it's true that we have neglected the potential of [this] region for quite a substantial time. We haven't been active and actually, [the Transcaucasus] Baku-Tbilisi-Ceyhan pipeline was built [with] strong support from the United States. To be fair, we should say it's the United States [that] already in the early stages already supported [the] use of the resources from Central Asia and bringing [them] closer to the European markets."

Piebalgs says it is too early to say when pipelines crossing the Caspian Sea would come onstream. He says the EU is currently financing feasibility studies, but notes private companies must eventually foot the bill for building the pipelines.

Piebalgs says trans-Caspian pipelines will give Central Asian countries greater choice in selling their energy carriers.

"It's [also] good for Central Asia, because in that respect they could always find the best customer, and then they [could] also use different supply routes. If the transport via Russia would be cheaper, they could supply us via Russia -- or they will sell it via the trans-Caspian pipelines," Piebalgs says.

The commissioner notes that recent EU interest has already forced Gazprom to offer Kazakhstan better terms for its gas.

Chinese Rivals

Piebalgs says China, rather than Russia, is the EU's biggest competitor for Central Asian energy: "I think the competing pressure [comes] less [from] Russia, I would say it's China [that is] competing, because Russia is not [an] end consumer. [It mostly offers] transit [although] it also uses part of the gas in the chemical industry. But still, for Kazakhstan it's important to have two good customers -- China on one side and Europe on the other side. Russia is important [for Kazakhstan], but we know that politically, Kazakhstan will always try to keep good relations with Russia, and it's nothing wrong."

When it comes to Central Asia, Russia predominantly presents a transit problem for the EU. Moscow refuses to sign a transit protocol allowing outsiders access to its pipeline network. But Piebalgs says that even full access to Russian transit facilities would not prevent the need for the trans-Caspian and Transcaucasian routes.

"The answer is 'No' because even with the [transit protocol] in place we need additional supplies. The pipeline system is fully used in Russia. Definitely, you can increase the pipeline capacity or system capacity also in Russia, but for diversification of supplies, it's more than necessary to have more than one supplier," Piebalgs says. "Because if you have just one supplier, even the most [secure], you can't be protected against everything that could happen -- there could be natural disasters, there could be earthquakes, there could be damage to the pipes, you also need to repair the pipes, so even then you need to move towards it, but definitely it is less urgent. I do believe we need [a] pipeline from this region."

Piebalgs rejects suggestions that the EU's concern with energy leads it to treat the autocratic regimes in Central Asia relatively leniently. He says the EU never "negotiates" concerns over democracy or human rights. In the end, he says, the EU is interested in fair trade: "Because at the end of the day we are not begging for the resources, we are just giving the possibility to sell resources to the European customer and they are paying for it. It's not charity, it's a business project and clearly there are possibilities to replace any supplier in the world."

This last observation, Piebalgs says, also applies to Russia.

Caspian Energy Special

Caspian Energy Special

For a complete archive of RFE/RL's coverage of energy issues in the Caspian Sea region and Russia, click here.

HOW MUCH OIL? The U.S. Energy Information Administration has estimated that the Caspian could hold between 17 billion and 33 billion barrels of proven oil. ("Proven reserves" are defined by energy experts to be 90 percent probable.) Other experts estimate the Caspian could hold "possible reserves" of up to 233 billion barrels of oil. ("Possible reserves" are considered to be 50 percent probable.) By comparison, Saudi Arabia has 261 billion barrels of oil and the United States 23 billion...(more)

See also:

Economic Forecast For 2006 Sees Growth, But Danger In Continued High Oil Prices

How Vast Are The Riches In The Caspian?

Experts Envision A Future Beyond Oil