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U.S. Senior Advisor on Caspian Energy Speaks at Jamestown Forum

On March 10, 2005, the Jamestown Foundation, the America-Georgia Business Development Council and the U.S.-Azerbaijan Chamber of Commerce, held a public discussion entitled "Caspian Gas and European Energy Security."

Jamestown hosted on its discussion panel the foremost U.S. official on Caspian basin energy affairs, Ambassador Steven Mann, as well as regional expert and Jamestown senior fellow, Vladimir Socor.

Ambassador Mann addressed the dynamics of U.S. policy toward the Caspian region and its potential as a supplier and transit corridor for hydrocarbons. Mann reiterated a consistent U.S. policy line of promoting a "secure and a stably developing Eurasian region…not plagued by regional conflicts, an area which offers no home to terrorism, religious extremism, narco-trafficking, and organized crime." In the sphere of energy policy, Ambassador Mann stated that the "core of America's Caspian energy policy" is "anti-monopoly," in reference particularly to Gazprom and Transneft's domination of the Eurasian energy supply market.

In the case of Georgia, Ambassador Mann heralded the achievements of the Baku-Tbilisi-Ceyhan (BTC) pipeline project as a "new benchmark for energy projects worldwide." Mann continued, "BTC's main benefit to Georgia is that it makes a gas pipeline economically feasible." "Shah-Deniz gives Georgia the possibility of an alternative supply of gas, in other words an end to the total dependence on Gazprom…energy independence." Regarding the Georgian government's plans to sell its trunk pipelines to Gazprom, Mann "urged great caution…because we believe that it is important for Georgia to diversify its energy supplies," although "the fate of Shah-Deniz does not rest on the sale or non-sale of Georgia's pipelines."

Ambassador Mann shifted focus to Turkmenistan as a gas supplier for trans-Caspian energy corridor to the West, a project which collapsed in 2000. "From the U.S. policy standpoint, we continue to support a trans-Caspian pipeline," however "it will be up to Turkmenistan to reestablish commercial confidence" among Western energy investors. "If liberated from the gas monopoly, Caspian gas can be a powerful force for competition in Eurasia, an outcome that the United States remain committed to support," said Mann.

Ambassador Mann added that, in the case of Kazakhstan, the U.S. stands fully behind the concept of a "Kazakhstan-BTC link." He proposed that "in the next few months, all of us should work together to get an effective set of legal and political agreements for cross-Caspian transport, that will enable Kazakh oil to more efficiently flow to BTC." Mann also called for an improvement in press freedom in the Caspian countries so that "the economic decision makers in that country know how to allocate resources (and) assess the effectiveness of policies."

Jamestown Senior Fellow Vladimir Socor addressed the effects of Russia's Caspian gas policies on European markets and their overdependence on Russian gas deliveries. In light of Russia's ability to obtain commercial guarantees on Turkmen, Uzbek and Kazakh gas deliveries, Socor cautioned that "under such arrangements, the European Union would end up buying Central Asian gas as Russian gas sold at Russian-dictated commercial mark-ups, also enabling Moscow to accumulate currency reserves with which to manipulate international currency markets." Socor defined the Russian energy strategy toward Europe as one that "seeks control of Caspian and Central Asia gas." He warned, "If successful, this policy would double the volume of natural gas reaching Europe from Russia and would maximize the European Union's dependence on Russian-supplied gas."

Socor concluded that Russia's energy policy will have adverse consequences for intra-European, EU-Russia, and trans-Atlantic relations. "New member countries of the EU will rely on Russian-supplied gas between 75% and 100% of their consumption" in addition to Gazprom's ownership of transport infrastructure in these countries. In the old member countries, "Russian suppliers are set to gain a growing market share but are not the owners of market infrastructure," said Socor. As a result, "two zones are emerging with different levels of security of supply" which ultimately will "affect the political cohesion of the European Union" and the development of a common energy and security posture toward Russia.

Regarding the effect of Russia's current strategy on trans-Atlantic relations, Vladimir Socor opined that "the growing overdependence of the EU on Russian-supplied energy will inevitable effect NATO decision making." As a common answer to these threats, he proposed that Washington and Brussels develop a common strategy for developing a trans-Caspian gas route that bypasses Russia to Turkey. "Caspian gas transit can provide that common sense of purpose and long-range vision in order, not only to ensure Europe's economic and political independence, but also trans-Atlantic solidarity in the years ahead."

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