Center For Energy Researches

On May 23, in Kiev, the 3rd Summit on Energy Security, where Ukraine, Azerbaijan, Georgia, Estonia, Latvia, Lithuania and Poland has attended at the presidential level, has ended. The main topic at the meeting was the creation of alternative ways of energy supply, from countries of the Caspian Sea basin, mainly from Azerbaijan and Kazakhstan. At the conclusion of the Summit Kiev declaration was signed on the concept of a Baltic-Black Sea-Caspian energy space.

The idea of establishing such a concept is not new and has spoken for several years in the various levels meetings by representatives of interested countries. Several years ago, the current format was established, and at the moment, the energy security is discussed by participants.

As immediately clear from the context, Central and Eastern European countries are seeking alternative supplies to its large neighbor Russia. The countries of the former Eastern Bloc and the Soviet Union, are trying to reduce dependency on Russia's delivery of oil and gas. In this case the most viable alternative to Russia is energy form the Caspian basin. Azerbaijan in the last two years was represented at the presidential level, Kazakhstan represented only by the vice-minister of Energy and Mineral Resources.

However, cautious approach of Kazakhstan and more decisive attitudes to the event by Azerbaijan, relates primarily limited access to world markets of Kazakhstan and the availability of alternative routes for Azerbaijan. In fact, almost the entire export of Kazakh oil to the west passes through Russian territory, while Azerbaijan has an alternative transport infrastructure. This circumstance has forced Kazakhstan more cautious about initiatives of Eastern European countries. In turn, Azerbaijan has the opportunity to pursue more independent foreign policy in the sphere of energy. Curiously, the lack of participation of Kazakhstan president at this summit like last year has also another reason. If the last time it was Putin, this year in Kazakhstan, arrived new president Medvedev. Interestingly, in both cases the central themes of conversation were of energy projects.

In this case, more active participation of Kazakhstan in creating the Baltic-Black Sea-Caspian energy space projects; it would be possible only after when this country accedes to the oil pipeline Baku-Tbilisi-Ceyhan pipeline, with which the possibility of alternative routes for own oil to the European markets will be obtained. In turn, without the participation of Kazakhstan this initiative will not be able to develop fully and Azerbaijani oil may not be sufficient for full development projects.

During the Kiev Summit, the ability to export Caspian oil to the existing Odessa-Brody pipeline, originally built for this purpose, was considered. Currently, the pipeline is used by Russia, which transports its oil, but in the opposite direction, to the Black Sea. It is envisaged that this pipeline will be extended to the Polish city of Gdansk, where refineries are located in Poland. It is noteworthy that during the visit of President of Azerbaijan to Poland, he visited Gdansk and learned about industrial capacity of the city. In addition, both parties have agreed on possible directing of Azerbaijani oil to these refineries.

Azerbaijan is interested in exporting its oil through this pipeline. This is consistent with the policy of diversification of pipelines. Azerbaijan will receive another alternative pipeline to Western markets. In this case, it would be an alternative to Baku-Tbilisi-Ceyhan pipeline, which also is sending some kind of monopoly, this time in the hands of Turkey. Despite the fact that Azerbaijan and Turkey have excellent relations in all spheres, there is some difference view over the prices of natural gas exported to Turkey. Nevertheless, it’s unlikely that Turkey will use own monopoly condition over the pipeline as a means of pressure on Azerbaijan.

Another reason is the desire of Azerbaijan to export to the countries of the Black Sea finished petroleum products. To do this already built oil terminal in Kulevi in Georgia, also planned construction of oil refinery in Ceyhan, Turkey. At the summit in Ukraine, the possibility of construction or acquisition of the refinery in this country was discussed. Provided that, no doubt that Azerbaijan is serious about the projects under this initiative and will actively support them.

Regarding Ukraine and Georgia, after the arrival of new pro-western government to power, these two countries are particularly in need of alternative sources of energy. Both countries have long been in varying degrees, have strained relations with Russia. Both countries have already felt the energy pressure from Russia and therefore could have a keen interest in the supply of energy from the Caspian basin. Thanks to the gas supplies from Azerbaijan, Georgia was able to buy cheap gas for their needs than that proposed by Russia and get rid of its monopoly.

The same applies to the Baltic countries, who are seeking alternative energy resources imported from Russia. Remarkably, that at this summit was attended by Estonia and Latvia, although earlier this region was represented only by Lithuania, is an active member of the initiative. Lithuania opened an embassy in Azerbaijan; officials of both countries periodically visit the capitals of both nations. With regard to Estonia and Latvia, their participation only underscores how much credibility to this project. These days the President of Azerbaijan is the first official visit to Finland, and possibly as this country will also accedes to the concept.

With regard to Poland, the country recently joined to the EU, and in addition to its own energy security also has the goal of strengthening its positions in the union. Poland is skeptical about the initiatives of its neighbor Germany, which together with Russia implements the construction of the Northern gas pipeline. This way Germany will be the main distributor of gas in Europe, and Poland would lose its role in transit of Russian gas. All this can not but concern one of the largest countries in Eastern Europe and that’s why Poland is so actively participates in the concept.

In general, its can be expected strengthening of realization of this project and support will be also provided by the United States and Western Europe states. Even Russia opposed this initiative; nevertheless she could not stop the process, as has been unable to resist the regional organization GUAM, which in principle is the basis for the development of this initiative. Established in 1996 by Georgia, Ukraine, Azerbaijan and Moldova, GUAM, albeit slowly, but successfully develops. And this is despite the fact that Russia has demonstrated openly hostile positions towards that organization. With regard to the concept of establishing a Baltic-Black Sea-Caspian energy space, the project is directly linked to the national security of member countries. In this case participants did not simply retreat from their intentions. Moreover, in the long run is to expect the active participation of Kazakhstan, and possibly other countries, both producers and consumers.