Azerbaijan's Role in European Unions Energy Security - Literature review Example

European Union’s Energy Security and Azerbaijan’s role Abstract Energy security is one of the main challenges facing the development of the EU. Due to this, the EU has had to look for various alternatives to help boost its energy sector. Azerbaijan, one of the world’s top producer of oil is the main alternative that the EU is seeking to help it become energy secure. This paper looks at some of the current articles on the EU and Azerbaijan and the role that Azerbaijan is playing in the energy sector of the EU. TABLE OF CONTENT Abstract …………………………………………..…………………………………1 Outline of the thesis project …………………………………………………………3 Introduction…………………………………………………………………………5 Literature review……………………………………………………………………7 Research problem…………………………………………………………………..11 Research question…………………………………………………………………..12 Methodology……………………………………………………………………….13 Conclusion………………………………………………………………………….16 References………………………………………………………………………….19 Tentative outline of the thesis project 1. Introduction 1.1 European Energy Security 1.2 Issues in European Energy Security 1.3 Azerbaijan’s collaboration with neighboring countries in EU’s Energy security diversification 1.4 Brief overview on the subject 1.4 Statement of the research question 2. Literature Review In this chapter existing literature is being reviewed and explains how the literature conducts with author’s knowledge on the research proposal 3. Hypothesis 4. Research design 5. Main analyses 5.1 Europe’s historic and current use of energy resources. 5.2 Current developments 5.2 Role of the new independent post Soviet South Caucasus countries 5.3 Importance of Azerbaijan as an energy supply country, as well as transport hub country from Central Asian countries to European market. 5.4 Geographical, political and economical importance of the existing projects. 5.5 Proposed projects 5.5.1 Nabucco Gas pipeline 5.5.2 Trans-Caspian Pipeline 5.5.3 Importance, and as well as economical and political will for both of t these projects. 5.6 Successfulness of the implementation of the proposed projects. Diversification of the EU’s Energy Security is very crucial to decrease dependence on Russian energy resources Importance of the existing projects to implement the proposed pipelines Political and Economical issues related to proposed pipeline projects to diversify the EU’s Energy security Benefits that pipelines bring both to Azerbaijan within the South Caucasus region, and to European countries. 6. Conclusion Introduction The European Union’s quest for energy grows each and every day. A recent study indicates that meeting the current energy requirement in Europe, would require, a solar panel covering the whole of the Sahara Desert, So as to sustain the EU through solar energy. It is evident, that currently energy consumption of most countries in the European Union is experiencing growth. Lacking energy resources of their own, most of the European Union nations rely on importing energy resources. In the year 2006, there was a notable increase in worldwide competition over the natural energy resources and this was brought into the limelight by the developments in terms of the geopolitics that incorporates the demographic growth as well as economic factors. Considering all these factors, one begins to be able to appreciate the concern about the over-reliance of the majority of the European countries on such limited sources. In the event that the sources diminish or dry up, the drama that may arise may cause irreparable harm. This is the reason why minimizing European energy vulnerabilities by eliminating overreliance on one source of supply and by promoting energy sector, diversification is very important (Bahgat, 2006). Azerbaijan is one of the world’s top producers of oil. By 2011, its daily produce of oil stands at 800000 barrels of oil per day. This is combined with a gas production of 1 billion cubic meters per year. It is for this that the country poses to become one of the giants of oil production once again. Due to this reason the EU and Russia has fought for a long time over the control of the oil fields with Russia promising to buy all the oil fields that are in the country. After gaining their independence from Russia in 1991, the country has become one of the best trading partners with EU, with the EU providing infrastructure and development in the country. With a total investment of over $92 million the EU has done a lot to ensure that Azerbaijan gets good infrastructure and form a good base for business development in the country. Azerbaijan on the other hand acts as the main security to energy supply to the EU. Azerbaijan’s strategic role in securing European energy security has also changed from simply providing alternatives to Russia to also providing alternatives to Turkey’s expanded role as an energy hub, connecting suppliers and demand. Regardless, the key role that Azerbaijan has played, and will play, in the European energy arena is ensuring that Europe can access the rich energy resources of the Caspian region. The role of Azerbaijan is being proved itself in East-West energy corridor cooperation by giving its fruits to the region’s stability and growth, both politically and economically. The historical dependence of the whole of Europe on Russia for its energy supplies has driven the energy importing countries to look to diversify their energy sources. This quest to improve Europe’s energy security has formed the basis of this paper. By combining the above discussion in more detailed manner, the author generated the following research question: Does the European Union need Azerbaijan for energy sufficiency? Literature Review Background Being one of the largest oil producing countries in the world, Azerbaijan has played an important role in the production of oil that is exported to various parts of Europe both for commercial use and for storage for future use. It is for this reason that a total of 15 articles were selected based on their content with relation to the role played by Azerbaijan in securing the EU energy security and the time that they were written. These articles are reviewed to see if there is any role played by Azerbaijan in securing the EU’s energy. The articles were chosen using their date of publication, for an article to be reviewed here; it had to have been written in 2011 to 2012 the current year. The other criteria for choosing an article are based on its content. All articles chosen here had to relate to the main question of the paper which is to find out if Azerbaijan can succeed in securing the energy of the EU. Existing Infrastructures. For the security of the EU’s energy sector, enough infrastructures to mine the oil as well as transport the oil to the EU countries are necessary. For this reason, this literature review took a look at some of the articles that described the existing infrastructure that can enable the security of energy in the EU. There are numerous studies discussing the importance of the existing pipelines. The EU has financed a lot of projects to mine oil in Azerbaijan. Several pipelines have also been erected to enable the transportation of oil to the EU (). Some of the pipelines are as Baku-Tbilisi-Ceyhan (BTC – crude oil) and Baku-Tbilisi-Erzurum (BTE – natural gas). The construction of these pipelines, as well as the management of their activities, the maintenance and repair activities and the security providing activities, has acted as a source of stability in political, economical and social sector’s of the involved countries and as a result both of these pipelines is truly a major projects that deserves to be applauded by the whole world (British Petroleum, 2009). Youngs (2009) states that the BTC pipeline, which now transports more than a million barrels of crude oil from its source in the Caspian Sea per day, cost more than three billion dollars but after construction this was indeed a worthy investment. The main purpose of this project was to unlock an immense energy store in the Caspian Sea so that markets worldwide could rely on the otherwise landlocked Caspian reserves as an alternative to existing suppliers, and it was accomplished. Youngs (2009) explains that in regards to political benefits, pipeline politics are transforming the world. The project has, and will continue to contribute to the economic stability of the South Caucasus region. The provision of work opportunities as a result of the project is a positive thing to the (local) governments too, as this ensures that the masses of whom they have the responsibility to govern are catered for. Politically, it is also worth noting that the sufficiencies of oil energy sources that will be ensured by this project are likely to foster a political stability of the regions that the pipeline passes through. For Smith (2008), another benefit that this project is likely to continue bringing is the promotion of consumption of a source of energy that is secure, cost effective, reliable and clean. There are several oil fields that have been discovered and geologist maintain the oil fields, contain close to 6 trillion gallons of oil (). The introduction of a reliable source of natural gas as a result of the pipeline to different parts of Europe has facilitated the replacement of some other sources of energy that were more costly, unreliable, bulky, unclean and other undesirable factors. In fact natural gas is considered to be the cleanest of all the fossils the fuels. The above articles provide a good background of the importance of the existing infrastructure and the roles that they play in securing the energy quest for the EU countries. Proposed Infrastructures. For Azerbaijan to play a role in the EU energy field in the future there is need have plans to erect more infrastructures and to discover more oil fields. There are huge amount of literature on proposed pipelines, because the diversification policy became very crucial for European Union. Nabucco Project (natural gas pipeline), Trans Caspian Project (natural gas pipeline) has dominated most of the literature on proposed infrastructure. According to Barysch (2010) Nabucco is expected to connect to the SCP (South Caucasus Pipeline) natural gas pipeline and extend the distribution of Caspian region gas pipeline from Erzurum, Turkey, to Baumgarten an der March, Austria. It will also reduce the threat of the energy supply interruptions due to political disruptions like the Russian-Ukraine gas dispute in recent years (World Bank Group, & Gerner, 2009). Also to European Commission, the gas consumption of the European Union is expected to escalate to 815 billion cubic meters (60% increase) compared to the 2005-year figure of 502 cubic meters of gas. This will most definitely mean that Russian supplies will not be able to meet the need of the gas-importing nations, which therefore calls for concerned efforts to connect their regions with other gas sources, i.e., the Caspian Sea and the Middle East sources (World Bank Group, & Gerner, 2009). Just like the Nabucco pipeline, the Trans-Caspian Pipeline is expected to reduce the dependence of European importers of gas on Russia. Russia has been almost the sole supplier of natural gas to the Central European region (World Bank Group, & Gerner, 2009). Once completed this pipeline would not only carry natural gas from Turkmenistan and Kazakhstan to Central Europe but, perhaps most importantly, reduce European vulnerability to the recurring disruptions in their gas supply arising out of disputed between Gazprom and countries like Ukraine. According to Luft (2009) in recent times the Russian and Iranian offensive opposition against the Trans-Caspian has escalated. Invoking political treaties signed in 1921 and 1940, the two governments argue that any arrangement, for gas or oil, regardless of the route it takes undersea, will require the consent of the five littoral states (Azerbaijan, Kazakhstan, Turkmenistan, Russia and Iran) before it proceeds. Without such consent, they maintain, such a project would be illegal. Other proposals. The Azerbaijan Georgia Romani Interconnection (AGRI) essentially refers to a proposal by the governments of Azerbaijan, Romania, and Georgia to develop new Liquefied Natural Gas (LNG) infrastructure connecting the three countries (Global Insight, 2010). According to Socor (2010) AGRI is intended to be an element of the European Union-planned Southern Corridor for Caspian gas towards Europe. AGRI can be considered as a new entrant in the already crowded race of projects that aim to deliver gas from the Caspian region to South-Eastern Europe. But AGRI is also on a fast track to its realization. A key advantage to liquefying natural gas is that the gas can then be transported outside of a pipeline. AGRI envisions the development of two LNG terminals, one each on the Georgian and Romanian coasts. These terminals are expected to allow Azerbaijani gas to flow to Georgia via a pipeline across Caucasus. In the port city of Kulevi, Georgia this gas will be liquefied, loaded onto tankers and then shipped across the Black sea to the Constanta terminal in Romania (Global Insight, 2010). It is at this point that this LNG will be re-gasified, then pumped into the gas grid of Romania and finally delivered into the European market (Global Insight, 2010). The AGRI proposal to deliver LNG has been considered as the fastest project that has been undertaken towards delivering gas to the European Union. According to Paturia (2010), AGRI has since prioritized the LNG export route since they expect to be able to beat the long delayed Nabucco pipeline to the market and stating that Nabucco (is) ‘’long in promises and short on financing’’. Research problem Basing on the above-mentioned discussion, and contributing existing literature, the main research problem is the role played by the Azerbaijani in energy security in the EU. Research question The main question that is established b the author is does the European Union need Azerbaijan for energy sufficiency? This hypothesis will be proved by the author through the European Union’s Energy Commission policies, policy and economical data, statistics, UN library resources, and also some existing interviews with high official who are responsible for EU’s energy policy, as well as Azerbaijan’s Ministry of Industry and Energy. Key definitions Azerbaijan: Country which is situated on the west shores of the Caspian Sea, bordering Russia, Georgia, Armenia, Turkey and Iran, on the cross road of Europe and Asia. Both politically and geographically Azerbaijan considered Eastern European country with vast amount of energy resource reserves, mainly crude oil and natural gas. Pipelines: For the purpose of this research paper, the term pipelines metaphorically speaking means the crude oil and natural gas veins within the European continent. Author clearly states the important role of the pipelines as blood veins in human body organs, circulating to supply each organ (or state) with needed supplies. Energy Security: Due to fast development of the industrial sector in the 21st century, and need for sustainable energy resources (Natural Gas and Crude Oil) brought the policy for each industrial state for securing the energy supplies. European Union’s well-known Energy Security policy is great example of the mentioned definition. Research Design. The form that research is based explains further aspects of the paper. Study is based on existing and proposed infrastructure intends to describe the current situation and how it should be implemented in the future. The commitment of the research is to drive and to submit to further develop termination through the collected information and data. In this research, researcher will gather and analyze the data about the proposal topic, by using qualitative and quantitative data to investigate the hypothesis. Case Study. Due to this research paper, author decided to pay attention not only on Azerbaijan’s role since the pipelines go through more than minimum four countries. However it was certain not to discuss and inspect more than three countries. In order to prove author’s hypothesis, which is outlined above, author, is planning to analyze European energy security, which requires diversification on multiple levels. One level is that different routes of energy supplies already exist. A second level is that the overall joining of energy imports should come from multiple countries that will provide varying percentages of total energy import. Here, the Azerbaijani role as a transport country linking Europe to the energy resources of Central Asia is very important. Of course the energy products, which produced by Azerbaijan, is also priority for the EU’s energy security. A third level is energy sector diversification, such as shifting consumption from oil to natural gas. Again Azerbaijan plays vital role in the plan. Methodology The author has used a combination of qualitative and quantitative research means. Through the qualitative method is used more in the interpretation of the data collected, it blends perfectly with the data itself found in the quantitative method. Secondary data and limitations. The data used came from published authors, from books and articles, as well as online journals. The biggest limitation of the author is that the time of writing the paper is not perfect. The governments are still discussing the proposed projects and due to this, my research paper is not accurate on timing. Unfortunately the future cannot be predicted to see which proposed pipeline projects would be implemented. This study will be researched throughout the combination of books, online journals, articles and electronic data of many institutions that are dealing with energy security policy. To be daily updated on the energy policy, author is going to read all daily newspapers and Internet television. Also author is planning to attend conferences concerning the EU’s energy security. These mentioned data and sources would be collected throughout his contact with many involved organizations, and as well as with Azerbaijani high officials. Also author will be using Geneva and UN library for available relevant sources. Primary data collection The author will conduct interviews with specialists on the subject, either face-to-face or through other means, such as telephone or email. In order for the interviews to be conducted without any deviation from the subject, the questions that will be asked will be prepared by the author beforehand. Due to the consensus and accuracy of the study, all interviews would be tape-recorded. Also author is planning to schedule with involved persons Skype Internet meetings, and these online meetings would be recorded as well. Expected outcomes After all the data is analyzed, and all the research made, the expected outcomes of the proposal are to better understand Azerbaijan’s influence in European Energy Security as a supplier and also as transit country for the further implications of the pipelines. Replicability. This case study is, in the author’s opinion of a great importance, as Azerbaijan is one of the major actors in this project, and it is as well of a great importance to see its impact and outcomes. Measurement of effects. The author will use and compare the data collected in order to measure the impact of the case study. Through the data that has already been published it should be easier to measure the effects. Author also would link existing pipelines measurement effects to predict the each proposed project’s measurement effect. If there are going to be any new information on the mentioned topic, author will use it to make its research more accurate. Availability of literature. Study spotlights on a subject that is widely discussed in the literature. Author will use accessible data and information to analyze and make the best out of it. Most of the literature sources will be used by author is in English, thus when studying Azerbaijan’s role (also Georgia’s and Turkey’s role), author using its language fluency in Azerbaijani and in Turkish, will be able to analyze publications from those countries in their native language. Limited time frame, access to bilateral governmental meetings and their review. Due to the limited timeframe, author worries on the delays of the bilateral agreements between governments for implementing and putting in reality the proposed pipeline projects. To this situation, Nabucco is a great example, where since 2000 year, implementation of this project has been delayed until this time and it is expected that until the summer of 2012, involved states will make final decision on the implementation of the project. Author doesn’t have any financial problems to go Azerbaijan or to any other European cities to attend the important energy conferences. As well as author doesn’t have any language barriers concerning to carry out the most objective research result for his paper. Also author will not have any problems concerning on language barriers of the planned interview officials, due to the fact that he speaks fluently in Turkish, English, Azerbaijani and Russian. Conclusion. From the above discussions, it is evident to say that Azerbaijan is playing a vital role in the energy security in the EU. Jose Manuel Barroso, the President of European Commission, said that Azerbaijan had been offered a double role in the plan to ensure that the European world has a diversified energy supply (Dimitrova, 2011). The dual roles for Azerbaijani participation are as a transport country and as a producing country. Azerbaijan has been a country whose relations with the European world were very quiet during the time it was part of the Soviet Union. During these times, Azerbaijani relations with the Soviet Europe were also rare. It was only after the fall of the Soviet Union that all this came to change for Azerbaijan. As an independent state, Azerbaijan has been very pro-Europe. As a matter of fact, in its economic and political developments, Azerbaijan aligned itself with the European Union and with EU’s standards. Now Azerbaijan is also playing a crucial role in ensuring that the region grows stronger, both economically and politically. The will for Azerbaijan to help and collaborate with the European Union was formally announced when Azerbaijan joined the European Commission as the forty-third state in the world. In term of the crude oil and natural gas agenda, Azerbaijan proceeded very much in unison with the European nations in building the bridges that could be used to import oil from Azerbaijan into European Union (Niedermaier, 2008). The desire can therefore be said to be very strong in Azerbaijan to help the European Union from a diversified source of oil/gas importers. As has been clearly illustrated in the foregoing section, Azerbaijan has been on the forefront of ensuring that the European region has achieved diversification of oil. Offering the political will by the Azerbaijani government has been a very positive force behind the European Union’s push to actually implement diversification strategies. The Azerbaijani government has by all its capacities rallied its support behind the European Union, using its political will and its physical resources to nurture the plan. Azerbaijan is very committed to ensuring that, in the long run, the goal of the European Union to have its oil and gas supplies come from diversified sources is a success and this commitment must be kept in mind when interpreting events that seem to suggest a picture of Azerbaijan as a stumbling block to the realization of this goal, notably the agreement Azerbaijan made to supply energy resources to Gazprom. It is the smart move of the Azerbaijani government that the decision was motivated by an attempt to create political leverage vis-à-vis the dispute over the oil/gas prices and tariffs with Turkey and with the other players of the energy security policy. While Azerbaijan has allied its political will with European interests, it carries a responsibility to the welfare of the people it governs to capture a fair price for the resources it sells. But Azerbaijan is actively exploring other avenues of delivering of the energy resources that produces. Just as Azerbaijan, Georgia and Turkey were able to build the Baku-Tbilisi-Ceyhan oil pipeline and South Caucasus Gas Pipeline, so will other collaborations and cooperation with other countries and tackling other challenges, so will these proposals come to succeed and achieve another step towards the goal of the European Energy Security. Author would want to finish the research proposal with the final quote from a Tony Hayward, who is the former Chief Executive of oil and energy company BP. In his speech in Davos Energy Outlook panel, he stated clearly where and in which position Azerbaijan stands for BP and for its partners: ‘’I think the key to much of what we talked about today is diverse secure sources of energy supplies, be that, oil, nuclear, gas, bi fuels. In the case of Europe and gas, diverse sources of gas for Europe: Russia, Algeria, Azerbaijan and the Caspian. So what is it you need to create there, I would say couple of things, firstly free open transparent and well-regulated energy markets, and secondly stable, fiscal and regulatory regimes, and Azerbaijan has been a role model. So that allowed BP and its partners to invest 25 billion dollars over the last 10 years and created the energy infrastructure that the president is referred to. We have enjoyed a fantastic partnership with the country of Azerbaijan because they have followed a policy of free open transparent and well-regulated energy markets and stable, fiscal and regulatory regimes which is allowed us to build an infrastructure from Azerbaijan to many places, which is tremendous for the consumers because they got many ways of getting gas and oil thru different pipelines and its been tremendous for Azerbaijan, because its allowed them to have energy independence and for their fiscal and political independence’’ (Davos Annual Meeting, 2009). REFERENCES: Books: Aalto Pami, 2008.The EU-Russian energy dialogue: Europe’s future energy security. Bahgat, Gawdat. 2009. North Africa and Europe: Energy Partnership. Opec Review Journal. 3 December, 30.2: 105-123. Luft, Gal. 2009. Energy Security Challenges for the 21st Century: A Reference Book. Santa Barbara: ABC-CLIO. Najman, Boris. 2008. The economics and politics of oil in the Caspian Basin: the redistribution of oil revenues in Azerbaijan and Central Asia. Boston Publish. Niedermaier, Ana K. 2008.Countdown to war in Georgia: Russia’s foreign policy and media coverage of the conflict in the South Ossetia and Abkhazia. New York: East View Press Perovic, Jeronim. 2009 Russian energy power and foreign relations: implications for conflict and cooperation. Routledge, Taylor & Francis Group, UK. Richard Youngs. 2009. Energy Security: Europe’s new foreign policy challenge. London, Routledge. Smith, C. Keith. 2008. Russian and European energy security: divide and dominate. Ottawa: CSIS Compact Publications and Articles: Ariel Cohen and Lajos F. Szaszdi, “Russia’s Drive for Global Economic Power: A Challenge for the Obama Administration. The heritage foundation, 2009 URL: http://www.heritage.org/Research/Reports/2009/01/Russias-Drive-for-Global-Economic-Power-A-Challenge-for-the-Obama-Administration Barysch, Katinka. Should the Nabucco Pipeline Project Be Shelved? May, 2010 URL: http://www.cer.org.uk/pdf/pb_Nabucco_5may10.pdf British Petroleum, (2009). BP in Azerbaijan Sustainability Report. URL:http://www.bp.com/liveassets/bp_internet/bp_caspian/bp_caspian_en/STAGING/local_assets/downloads_pdfs/s/BP_Sustainability_Report_2009.pdf Dessislava Dimitrova. Barroso is looking for Caspian for Europe. Euinside News. 2011 URL: http://www.euinside.eu/en/news/barroso-is-looking-for-caspian-gas-for-europe Davos Annual Meeting. Energy outlook Panel, 2009 (Video) URL: http://www.youtube.com/watch?v=40eqzUmc9K0 Energy Information Administration. Azerbaijan Energy Data, Statistics and Analysis – Oil, Gas, Electricity, Coal. November 2010 URL: www.eia.doe.gov/cabs/azerbaijan/pdf.pdf Global Insight. Azerbaijan, Georgia, Romania Sing Trilateral LNG Terminal Deal. Global Insight. 14 April 2010 URL: http://www.ihsglobalinsight.com/SDA/SDADetail18549.htm Pasturia, Nino. Georgia Pumped Up About Project with Azerbaijan, Romania. Eurasianet.org. 4 May 2010. URL: http://www.eurasianet.org/node/60980 Papava, Vladimer & Michael Tokmazishvili. Russian Energy Politics and The EU: How to Change the Paradigm. Caucasian Review of International Affairs. Vol. 4(2) – Spring 2010 URL: http://www.cria-online.org/11_2.html Robin Paxton, Vladimir Soldatkin. Gazprom aims to double Azeri Gas purchases in 2011. Reuters, Jan 2010. URL: http://uk.reuters.com/article/2010/01/21/gazprom-azerbaijan-idUKLDE60K19620100121 Richard Youngs. Europe’s External Policy: Between Geopolitics and the Market. No. 278, November 2007 URL: http://aei.pitt.edu/7579/ Socor, Vladimir, 2010. Azerbaijan, Georgia, Romania Launch LNG Project in the Black Sea. Moldova Press, 16 April 2010. URL: URL: http://economie.moldova.org/news/azerbaijan-georgia-romania-launch-lng-project-in-the-black-sea-208221-eng.html World Bank Group, & Gerner, F. 2009. The Future of the Natural Gas Market in Southeast Europe. New York: World Bank Publication. URL: http://issuu.com/world.bank.publications/docs/9780821378649 Read More