1. 3d Asia Energy Security Summit 2013
Fostering energy security partnership and cooperation within Asia.
Anantara
Riverside Resort, Bankgok, Thailand
February 28- March 1st 2013

2. World Oil and Gas Reserves.
GAS
Middle East 38%
CIS 36%
Arica 7%
Oil
Middle East 48%
CIS 8%
Africa 8%
0% 10% 20% 30% 40% 50% 60%

3. Oil Consumption Projections.
 OECD states - oil for transport demand will be reduced by
30% between 2009-2035.
 Non-OECD states – demand will increase from 7.5 mbd. to
13.5 mbd. at the same period.

4. Gas demand growth.
81% of growth will come from non-
OECD states.
In China only it will grow 5 times.
(2009-2035)

5. World energy consumption by region: India and China
account for half a growth in world energy use.

6. C A G as res erves (trillion cubic meters )
9
8
7
6
5
K az akhs tan
4
TUrkmenis tan
3
2 Uz bekis tan
1
0
K az akhs tan TUrkmenis tan Uz bekis tan
BP s tatis tical review (2011)

8. Two shores of Caspian – East and
West
Different gravitation trends.
West - ( Azerbaijan and South
Caucasus ) towards EU
East ( Kazakhstan, Turkmenistan–
China, Asia).
Quickly integrating Central Asia
independently of Europe.

9. Caspian Sea Basin – dividing factor.
 1. Unresolved legal status
 2. Various historical identities on the Western and Eastern
shores.
 3. Conflicts, political regimes. ( Iran-Azerbaijan, Azerbaijan-
Turkmenistan, international sanctions towards Iran).
 4. Lack of maritime activities, including civilian, and trade
transportation infra structure.
 5.Competition between producers and producer/transit states.
 6. Russia’s and Iran’s policies preventing trans-Caspian
pipelines.
 7. Militarization of the Caspian.

10. Oil and Gas Reserves Azerbaijan
(national sources)
GAS OIL
 Proven 2,5 tcm Proven 2bln
 Projected 6 tcm Projected 2bln

11. EU - Southern Gas Corridor
 1. Nabucco
 2. ITGI ( Turkey-Greece-Italy Inter connector ) Poseidon
project.
 3. IGI ( Inter connector Greece Italy) IBG ( Bulgaria-
Greece)
 4. TAP ( Trans Adriatic Pipeline)
 5. AGRI ( Azerbaijan- Georgia – Romania Inter connector)
 6. White Stream ( Georgia-Ukraine).

13. Gas Pipelines to Europe.

14. Trans Caspian Pipeline

15. Shift in Caspian producers’ energy
policies
 From “politicization of energy” to “commercialization of
state”.
 Azerbaijan – from the “oil diplomacy” in 1990s
 to promotion of national state oil and gas company in
2000s.

16. Turkmenistan’ gas exports– East or
West?
 Turkmenistan currently ranks in the top six countries for natural gas
reserves and the top 20 in terms of gas production. According to
OGJ, Turkmenistan has proven natural gas reserves of approximately
265 Trillion cubic feet (Tcf) in 2012, a significant increase from 94 Tcf
estimated in 2009. Turkmenistan has several of the world's largest
gas fields, including 10 with over 3.5 Tcf of reserves located primarily
in the Amu Darya basin in the southeast, the Murgab Basin, and the
South Caspian basin in the west. Recent major discoveries at South
Yolotan in the prolific eastern part of the country are expected to
offset most declines in other large, mature gas fields and will likely
add to the current proven

17. SOCAR investments abroad
 Georgia – up to US$ 1 bln. ( Kulevi Terminal, near 100 gas stations, gas
transmission system…)
 Turkey – will reach US$ 17 bln by 2018. TANAP – projected cost raised from
US$ 5 bln to US$10 bln., privatization of PETKIM refinery ( production
volume will reach 5 bln in 2015), refinery in Izmir,, BTE branch to
Nakhichevan, goal- gas distribution in Ankara
 Switzerland – gas stations and refinery of Exxon.
 Ukraine – near 15 gas stations, goal -refinery and share in Sarmatia (1,5%)-
Odessa Brody Plotzk pipeline.
 Romania -13 gas stations ( goal -refinery)
 Kirgizistan – refinery ( negotiations)
 SOCAR Trading Company - terminal in Jumeyra, South East Asia.

18. EU energy Security - Competing projects
South Stream and Nabucco

19. TANAP – Game Changer of the
Southern Gas Corridor.
 1. EU independence from Russia’s gas export monopoly.
 2.Replaced original Nabucco East on Turkish soil.
 3. Jointly owned (80%-20%) with Turkey gas pipeline.
 4.Azerbaijan relies on its own gas resources (independence
from Turkmenistan)
 5. Azerbaijan gets almost full control over the Shah Deniz 2
gas transportation to Europe (independence from EU).
 6. Enables Azerbaijan for the first time to sell its gas to EU
customers through its own pipeline.

21. Russia as an actor in Central Asia
and Caspian.
 1. Flaws of “energy superpower” concept ( investment crisis, increasing state
encroachment undermines growth).
 2. Lack of technology and capital to acquire assets abroad ( some in
Turkmenistan and Kazakhstan).
 3. Monopoly on major gas export route to Europe and transport of oil and gas
in Central Asia. (Torpedoed transportation projects such as CPC, which led to
Kazakh-Azerbaijan agreement in 2006 on BTC, “explosion” crisis with
Turkmenistan etc.)
 4.Improved Russia-Turkish relations ( Turkey allowed Russia Blue Stream
through its territorial waters).
 5.Waning power of state owned Gasprom ( clashing with third EU energy
package , aspiring ownership of Ukrainian gas pipeline)– Russia’s policy
responses becoming rougher.
 6. Caspian status: trans-Caspian gas pipeline unacceptable ( military threats)
 7. Russia’s political and economic influence in CA states stagnated.

22. China and Central Asia.
 1. In decade increased its presence in CA – dominant in onshore
Kazakh oil fields, replaced Russia in Turkmen gas sector.
 2. China – Kazakh crude oil pipeline in 2005, branch Kenkyak to
Kumkol in 2009, 10 bcm line from Western Kazakhstan to Southern
Kazakhstan.
 3. Modernization of Atyrau refinery in 2009-2013.
 4. Member of Shanghai Cooperation Organization
 5. Refuses global security role in favor of Russia prioritizing bilateral
commercial and political interests. Energy geopolitics for China is
energy politics ( Denison, 2012).
 6. CA states’s main advantage shifted with the globalization of the
gas market from resources as geopolitical bargaining tool towards
the bordering with China- main market for global energy
consumption growth.

23. Pipeline Kazakhstan-China (PKC)

24. Challenges in CA markets
integration.
 Power derives not from fixed control over natural resources
within borders, but through regimes of market access that
maximize control over the flows of good, capital and
innovations. ( John Agnews).
 CA reserves are insignificant compared to those of Russia,
they are landlocked and depend on transit states they border.
 The transport is expensive.
 Growing resource nationalism leads to tough negotiation
behaviour and less openness.
 Increase in LNG decrease attractiveness of high priced gas via
pipeline.

26. India: challenges in access to CA
energy.
 Like the EU, and unlike Russia and China, India depends
on transit states to get an access to CA resources.
 - is the democratic actor.
 - relative passivity of energy companies.
 - security considerations.
 - Russia and Iran blocks trans-Caspian pipeline.
 - Iran is under international sanctions.
 - can Turkmenistan fulfill its export commitments?

27. More pipelines secure greater
peace.
 “Win – win” mentality should prevail.
 Geopolitical domination approach should diminish.
 Objective factors ( nature of a gas “era’)
 Subjective factors
-CA and Caspian states – artificial stability, based on oil
revenues – when replaced by the political process.
-Big regional powers - when liberalized and reduced
geopolitical ambitions.

28. New Geopolitics of Central Asia – from the “great
game” to “ local politics of energy” (Michael
Dennison, 2012).
 -New technologies lead to unconventional reserves shifting
geography of production and reconfigure import dependencies.
 -energy mix of major consumers was subject to external shocks like
Fukushima disaster in 2011
 -policy on climate change and renewable energy
 -ownership of resources ( resource nationalism and assertiveness of
National Oil companies) factor in investment decisions.
 -the CA leaders use the investments and export diversification of the
oil and gas as the best way to political and economic sovereignty
and elite enrichment.
 -“compression” of geography - China’s railway expansion.( Parag
Khanna, 2012) happens faster than political institutions can afford.

29. Increasing insufficiency of the current
Energy Security conceptual framework
International Energy Agency defines energy security as
 ‘ an uninterrupted energy supply at a reasonable price
and with environmental considerations”
 from abundant, reliable and diverse sources
 connected with economic growth and social
development.
As most of the producers are authoritarian or semi -
authoritarian regimes political factors and domestic
impact of the energy security - or ownership -is
becoming more salient ( EU agenda in Azerbaijan).

30. Duality of integration.
1. Commercialization ( internationally) of state actors
and regionalization of energy policies.
2. Globalization of ideas.
Increasingly affecting the issue of ….
Ownership and domestic impact of energy security in
states- producers.

31. Conclusions.
Success of access to the Central Asia resources for the Asian consumers
depends on variety of factors:
 Global market trends/economy/resources availability
 Geography
 Political factors (conflicts, resource nationalism, rising ambitions, need of
revenues to support patronage etc).
affecting both bilateral relations, energy policies of the CA leaders and
export routes stability and security).
 Increasing role of small states as a game changers ( Azerbaijan and CA
states ) and regionalism/commercialization trends.
Most importantly,
 Understanding the changing nature of the “ great game” and “compressing
geography” of the CA, which work in favor of the most dynamic and
adjusted to these changes actors in the region. (Russia versus China).