Caspian Sea energy and big powers
Institute of the Islamic Consultative Assembly
The newly independent
states of Azerbaijan, Turkmenistan, and Kazakhstan are located in Central Asia and
Caucasus and enjoy rich oil and gas reserves.
After implosion of the
former Soviet Union, efforts made by the said countries to promote their
international standing, has paved the way for extraction of oil and gas
resources of the Caspian Sea. Although the
legal regime of the Caspian Sea has not been
defined yet and negotiations among concerned states are going on, existence of
remarkable energy sources in the region has turned it into a major field of
rivalry among major regional and international powers during the past years.
Construction of oil and gas transit routes is the most important
challenge faced by the said countries in promoting their status in the region as
well as in global energy markets. Regional and international players are trying
to find a more suitable position in the future by determining the most suitable
energy transit route.
Between May 12 and May 15, Gurbanguly
Berdimuhammedov, Vladimir Putin, and Nursultan Nazarbayev, presidents of
Kazakhstan have signed early
agreements on construction of new pipeline to transfer Turkmenistan’s gas to Russia and Uzbekistan. They
stressed the roles played by their respective countries in the world’s energy
market during a press interview in Turkmenbashi port city in Turkmenistan.
Total gas transfer through the joint pipeline will amount to 10 billion cu. m.
per year and it is projected that the final contract for construction of the
pipeline will be signed before July. Putin noted that construction of the
pipeline will boost cooperation between Russia and the Commonwealth of
Independent States. He added that according to the existing timetable,
construction of a border pipeline for transfer of gas will start in the first
half of 2008 and after completion in 2012; its capacity for gas transfer can be
increased up to 12 billion cu. m. per year.
The pipeline, which is
currently taking Turkmenistan’s gas to Europe through
Kazakhstan, is capable of
transferring 5 billion cu. m. gas per day. The question is what would be the
impact of the new pipeline on the region and international relations among
countries and which country’s standing in international energy markets will be
bolstered by it. To answer this question, first we must have an overall look at
regional resources and its status in supplying world energy. Major routes for
transferring regional energy to global markets constitute the second issue. The
consequences of choosing any of the said routes, especially, signing of a new
contract for construction of a new gas pipeline by Russia, Turkmenistan, and Kazakhstan is
another major topic to be discussed here. In conclusion, proposals will be
offered on suitable policies to be adopted by the Islamic Republic of Iran.
There are various assessments about the exact amount of oil and gas
reserves of the Caspian Sea. Some experts draw
an analogy with the North Sea while others exaggerate and liken it to the
Persian Gulf. The latter claim, however, cannot
be held up by authentic figures.
Total proven oil reserves of the
Caspian Sea stand between 203 billion and 235 billion barrels of which 132
billion barrels belongs to Kazakhstan, which accounts for the
highest amount of oil reserves. Kazakhstan is followed by Turkmenistan, the Republic of Azerbaijan, Iran, Russia and Uzbekistan,
which respectively account for 7.39 billion, 39 billion, 15 billion, 3.7
billion, and 59.2 billion barrels of the Caspian oil reserves.
produced on gas reserves of the Caspian Sea are
also different. Total proven gas reserves of the sea have been estimated at
about 232 trillion cu. ft. while probable gas reserves have been estimated at
328 trillion ft. This figure is less than 10 percent of total world gas
reserves. Iran’s gas reserves
along are bigger than total gas reserves existing under the Caspian Sea. At the same time, the cost of exploration,
production as well as export of oil and gas in the Caspian Sea is much higher
than corresponding figures for the Persian Gulf
and energy production in the sea requires a lot of time and effort. However, the
situation of the Caspian Sea is such that it
has been in focus of attention by big regional and international powers as well
as transnational companies. Firstly, the Persian
Gulf, which is the most important oil and gas hub of the world, is
considered by major consumers of energy as being unstable. A recent research
carried out by an international and strategic research center in Washington showed that
countries which are facing major threats to their domestic stability would be
producing 50 percent of total needed crude oil of the world by 2020. The same
study has stipulated that 65.3 percent of total world oil reserves (6.683
billion barrels) are located in unstable and anti-American states of the
Middle East. The U.S. policy, as
one of the most important oil consumers is to diversify oil production and
supply sources. From this viewpoint, the Caspian Sea region is of high
importance to the Americans and can reduce their dependence on the Persian Gulf.
Secondly, apart from
Iran and Russia, other littoral countries of the
Caspian Sea are newly independent states which
are good grounds for influence through political and economic investment. They
are located in a region which is surrounded by second-rating big powers such as
Russia, China, and the Europe, which are trying to boost their own influence in
that region. Russia considers
the region as a traditional field of its influence while European Union is a
growing power which is seeking to boost its influence and improve its standing
in Caspian Sea region both to assure
sustainable supply of energy from the region and to prop up its international
position. China, on the other hand, needs
energy resources of the region. Its growing need to oil and gas, on the one
side, and position of Central Asia as the sole region, which can supply energy
to China via land, has
greatly increased importance of the said countries for China.
Thirdly, oil and gas transfer from the Caspian
Sea is basically possible through pipeline and via a number of
countries, because the region has no access to free waters. Construction of new
oil and gas pipelines will lead to structural developments in the region and
will improve situation of countries where the pipelines would pass. Therefore,
apart from having control over oil and gas resources, control over the route of
relevant pipelines is of utmost importance because, from one angle, it would
make both energy producing and consuming countries dependent on the country
through whose soil, the pipelines pass. Therefore, the main rivalry is over oil
and gas routes. The system chosen to transfer regional energy will be determined
according to geographical, economic and geopolitical factors and is also a
function of the power and interests of producing and consuming countries.
Routes taken to transfer
Caspian Sea energy to international markets
of the most important routes for transfer of Caspian Sea oil is through
Baku–Tbilisi–Ceyhan (BTC) pipeline, which is greatly supported by the
United States, Europe and
The 1,776km pipeline
starts on the western coast of the Caspian Sea and crosses the Republic of Azerbaijan, Georgia and Turkey before
reaching the Mediterranean coast en route to international markets.
main contractor for this pipeline was British Petroleum (BP) and it was
scheduled to be inaugurated in May 2006 as the world’s second longest pipeline.
When fully launched, it will decrease dependence of the European countries on
the Middle East oil as well as on oil pipelines crossing Russia.
Trans-Caspian pipeline connects Aktau port of Kazakhstan to Baku port
city in Azerbaijan. The proposed pipeline
will be 700km long and after reaching Baku, it will be connected to
The pipeline is also supported by the west
and while connecting the Caspian Sea to Europe, it will downplay the importance
of Iran and
construction of the pipeline is bugged with a lot of environmental and legal
problems and has been opposed by rival countries.
The French Total has
practically taken preliminary steps to build the pipeline and the government of
Kazakhstan has promised to feed the
pipeline by supplying 150,000 barrels per day crude oil, which will be increased
to 400,000 barrels per day.
The cost of the project has been estimated
at 4 billion dollars and it is predicted to become operational by 2010.
While Russia is playing a game of monopolies in global energy market,
especially with regard to gas exports to Europe and the United States is trying
to deprive Iran of benefits of its superb regional and strategic position by
building Baku–Tbilisi–Ceyhan pipeline, Turkmenistan is playing a balanced game
and is trying not to confront any regional or global player such as Iran,
Uzbekistan, Russia, China and the United States. Bilateral and multilateral
cooperation with all involved countries is one of the main pillars of that
country’s foreign policy.
It is according to that policy that
Turkmenistan has tried to establish a
regional and transregional system for exporting its energy resources and is
trying through construction of various oil and gas pipelines via different
routes to turn the existing limitations into opportunities.
In this way,
the country’s policies will not be faced with serious opposition from other
regional players and it will have their support and help in case of need.
According to current estimates, Turkmenistan has more than 102
trillion cu. ft. in gas reserves and is currently producing about 5.2 trillion
cu. ft. of natural gas. As put by Turkmens, their country is exporting more than
3 trillion cu. ft. of gas per year.
The traditional route used for
exporting Turkmenistan’s gas via Russia, exporting gas through pipeline from
Turkmenistan to Iran’s Kord Kuy, exporting gas through Afghanistan
(trans-Afghan), exporting gas through the Caspian Sea (trans-Caspian) as well as
exporting gas through Turkmenistan – China pipeline are major routes that have
been proposed for the export of Turkmen gas to global markets.
the above modalities, at present, only the traditional route through
Russia as well as the gas
pipeline running from Turkmenistan to Iran are active
and are used for exporting Turkmen gas.
At present, most gas exports
from Turkmenistan are carried
out through its traditional pipeline (which crossed the former Soviet Union) and
Moscow has complete control over gas sent by
Apart from the traditional route, Turkmenistan is also exporting some oil through
Iran route. The line, which is 200 km
long, was opened by presidents of both countries on December 29, 1997 and
Turkmens are using it to export 5-8 billion cu. m. of gas per year to
Iran. The plan to export
Turkmenistan gas to
whose negotiations are still underway is another proposed route for export of
Turkmenistan’s gas. The plan was
first proposed 12 years ago, but it has not been implemented yet.
most important hurdle on the way of its implementation is the security in
Afghanistan, doubts on the
part of Pakistan about gas
reserves of Turkmenistan as well as economic
problems. The route taking Turkmenistan’s gas to China is the
newest and, at the same time, the most important gas export plan considered by
Turkmenistan and China signed a cooperation contract on natural
gas during Niyazov’s visit to Beijing in April 2006. According to that
contract, Turkmenistan is
expected to export 30 billion cu. m. natural gas per year to China.
Exports will begin in 2009 and will continue for 30 years. The two
countries’ officials have also reached an agreement on construction of a gas
pipeline from Turkmenistan to
construction operations of the new gas pipeline, which will cover Turkmenistan,
Russia and Kazakhstan; the president of Turkmenistan stated that in view of the
existence of huge oil and gas reserve in Turkmenistan, the country is
considering plans to build Turkmenistan–Iran, Turkmenistan–China, as well as
Turkmenistan-Afghanistan–Pakistan–India gas pipelines and is also planning to
implement trans-Caspian gas pipeline plan.
China signed a cooperation
contract on natural gas during Niyazov’s visit to Beijing in April 2006. According to that
contract, Turkmenistan is
expected to export 30 billion cu. m. of natural gas per year to
China. Exports will begin in 2009 and
will continue for 30 years. The two countries’ officials have also reached an
agreement on construction of a gas pipeline from Turkmenistan to China.
Inaugurating construction operations of the new gas pipeline, which will
cover Turkmenistan, Russia, and Kazakhstan, the president of Turkmenistan stated
that in view of the existence of huge oil and gas reserves in Turkmenistan, the
country is considering plans to build Turkmenistan–Iran, Turkmenistan–China, as
well as Turkmenistan-Afghanistan–Pakistan–India gas pipelines and is also
planning to implement trans-Caspian gas pipeline plan.
Outcome of building
Russia-Turkmenistan-Kazakhstan gas line
about construction of Turkmenistan-Russia-Kazakhstan gas pipeline has many
outcomes, which can be enumerated as follows.
Perhaps the first and the
most important outcome of the plan is to bolster energy routes via
Russia and improve its standing in
the face of other rivaling countries.
Despite the fact that the plan is
still rudimentary, news sources have called it “Russia’s gas victory over the United States.”
The United States had
already launched a vast effort to take the pipeline to Europe without crossing
Russia. Even the U.S. Vice President
Dick Cheney visited the Central Asia in 2006
for this purpose.
Speaking on the sidelines of signing the contract, the
Russian President Vladimir Putin warned the European Union and the
United States against
interfering in the internal affairs of Caspian
Sea littoral countries.
Construction of the pipeline would
be a great triumph for Moscow. By restricting all energy transfer
routes to their soil, the Russians are willing to regain their traditional
control over Central Asia countries.
The United States, as
the most serious rival for Russia in the region, is advocating oil and gas
export lines that would serve its long-term interests and is trying to prevent
oil and gas pipelines from going through either Russia or Iran.
The United States had
come up with a plan according to which Turkmenistan’s gas would have been taken to
Europe in the absence of Russia. The U.S. plan sought to minimize role of
Russia in supplying gas to
Europe. Russia, however, has been able to thwart part of
the U.S. plan for building a pipeline to
transfer Central Asian gas by signing the new contract.
construction of the new pipeline can make construction of other gas lines which
cross the Caspian Sea from east to west,
especially a trans-Caspian gas pipeline, practically economically infeasible. At
the same time, the deal may lead to intensification of the existing rivalry in
Thirdly, such agreements will harm the Islamic Republic of
Iran in two ways: first, oil and gas pipelines built according to such plans
bypass Iran and this means a
loss of bargaining chips in the Caspian Sea.
Second, such agreements have legal aspects. Trilateral agreements of this type
are practically turned into procedures in which the legal regime of the Caspian
Sea is drawn up against Iran’s interests. In fact,
Iran is seeking a comprehensive
solution based on agreement among all neighboring countries through bilateral or
Caspian Sea littoral states should consider
Iran as a country that
connects the Caspian Sea to the Persian Gulf.
Iran plays a determining role in both
regions. Therefore, Iran is able to play an effective
role to promote cooperation in both regions.
However, construction of a
gas line along the eastern coast of the Caspian Sea can be used as a good ground
for creating a balance of power between Russia and Western countries and this
can serve the interests of the Islamic Republic of Iran. On the whole, care
should be taken to prevent such balance from ignoring Iran’s natural
position and causing its national interests to be
Iran and Central Asia and
Caucasus in oil and gas projects is the most logical and the most economic way
for exporting Caspian Sea oil and gas. Using
the existing network of pipelines and constructing new pipelines will facilitate
oil swap deals among Iran,
Kazakhstan up to 700,000 barrels per
Studies carried out on global supply and demand of gas in the
future show that the Middle East and Central Asia will be playing an important
role in future natural gas deals that would take place in the Indian
Subcontinent, China, Turkey, Armenia, Georgia, as well as parts of Europe and
In the long run, cooperation among major gas producing countries
will assure the use of the most economic methods for developing gas resources
and creating gas export networks. Iran, Turkmenistan, and Kazakhstan can
cooperate on developing pipeline networks that would be able to carry gas from
the said countries to international and regional markets.
has always played a determining role in many regional issues, this reality
should not be ignored that under the existing circumstances, economic factors
are playing an equally important role in rivalry among regional countries. In
reality, Iran is the most
logical and the most economic route for exporting oil and gas from the
In fact, political
hostility shown by the United States toward the Islamic Republic of Iran, has
blocked the most economic route for exporting oil and gas from such Caspian Sea
states as the Republic of Azerbaijan, Kazakhstan, and Turkmenistan. This will
deprive the said countries of making the most of their oil and gas revenues and
is also against the most basic principles of liberal markets, which is also
supported by the United
Also, U.S. hostility against Iran has increased dependence of global energy
markets on Russia and has
dealt irreparable economic blows to Europe and even the United States.
At the same time, such behavior and its consequences have lowered the
United States’ standing in
the eyes of the Iranian people in comparison to Russia.
The Islamic Republic of Iran should embark on a multilateral and
balanced economic game in the Caspian Sea.
Iran’s natural position will provide
the country with a good opportunity to claim a leadership role in the region.
Cooperation, providing infrastructures, and suitable economic ground for
secure and sustainable transfer of energy to major consuming countries can
thwart or at least reduce the impact of U.S. measures. Any carelessness about
defending Iran’s position and construction of
pipelines along other routes will inflict historical and irreparable damages to
neighboring countries. Naturally, judgment of next generations of Iranians about
this issue would be tough.
At the same time, construction of pipelines
through Iran will provide
Iran with a structural and long-term
opportunity and can boost its bargaining power in other fields and in the face
of other regional and global players.
Iran should move in a direction that would make
other regional countries in Caspian Sea area recognize its role as a link
between the Caspian Sea and the Persian Gulf.
Iran plays a decisive role in both
regions and can continue its effective and positive role in promoting
cooperation between the two regions.
Littoral countries of the Caspian
Sea should cooperate with Tehran on the
construction of a pipeline which would transfer the Caspian oil to Persian Gulf
via Iran. At the same time, Persian Gulf
countries can be actively present in developing infrastructures in Caspian Sea states by increasing their investments there.
By connecting two important energy hubs, the Islamic Republic of Iran
can increase its own bargaining power in international energy, economic and
political fields. No effort should be spared to provide suitable ground for the
realization of this goal.
... Payvand News - 9/20/07 ... --