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Spotlight Article

Ariel Cohen: Azerbaijan is important player in European energy market

September 15, 2011

U.S. , Washington , Sept.15 / Trend. spec. corr. M.Assenova /

After the collapse of the Soviet Union in 1991, Caspian gas and oil became an attractive option as instability in the Middle East underscored the importance of supply diversification and overall energy security as a key portion of strategic national security, Ariel Cohen, Leading expert of the Heritage Foundation for Russian and Eurasian Studies and International Energy Policy, member of Trend Expert Council, believes.

Cohen made a report on "Energy Future in Caspian Basin: Bright Hopes, Dark Threats" at a conference on "Twenty years of independence in the South Caucasus: achievements and challenges" held at the Center for Strategic and International Studies (CSIS) in Washington today.

"The Caspian Basin has a wealth of proven hydrocarbon recourses, especially when it comes to natural gas. Turkmenistan's proven natural has reserves are just ahead of Saudi Arabia's at 7.5 trillion cubic meters as of January 2010, placing it fourth in the world by volume. This pales in comparison to Russia's 47 trillion cubic meters, by far the world leader, but given their relative size, this is not surprising. Azerbaijan has proven natural gas reserves of 2.2 trillion billion cubic meters, but new discoveries follow yearly," Cohen said.

Azerbaijan, together with Kazakhstan, has been the major energy player in the Caspian region, he said. After the collapse of the Soviet Union, Azerbaijan began to pursue an independent energy policy. Today, Azerbaijan seeks to diversify its gas supplies, including to Europe.

"Another project dedicated to exporting gas from the Caspian is the Nabucco Pipeline. In July Poland, the EU's rotating President until the years end, brokered a deal for the bloc's talk with Azerbaijan on gas supplies for Nabucco. The project promised stable supplies at favorable rates for the long term if the project comes to fruition," he noted.

The European Union adopted a mandate on Monday to negotiate a legally binding treaty between the EU, Azerbaijan and Turkmenistan to build a Trans Caspian Pipeline System.

The agreements, Cohen said, establish an advantageous long-term regulatory transit regime and protect the Nabucco project from disadvantageous changes to that regime.

"The issue of demarcation of the Caspian Sea, which is the largest salt lake on the planet, may have escaped headlines, but is vitally important for the future of hydrocarbon development and energy security in the region. While both Russia and Iran have stalled the demarcation of the Caspian, largely over the rights of each littoral state to veto proposed undersea pipelines, the two countries are at odds with each other as to how exactly the Caspian should be Split," Cohen added.

Cohen underscored that the desire to counter-balance Moscow's growing influence, the global war on terror, and exploitative energy contracts with Russia has led to increased Western interest and presence in the region.

In many ways, the international competition centered around the Caspian Basin has proven harmful to regional growth, development and stability. It is true that the Caspian littoral states share the common threat of radical terrorism with China, Russia and the United States.

"In terms of economic benefits resulting from influence in the Caspian, Washington, Brussels, Moscow and Beijing tend to view the regional situation as a zero-sum game; all four players are seeking to gain the largest piece of the resource pie possible. While this competition has brought investment, economic and institutional development to some countries, others have experienced cool diplomatic relations with regional powers, particularly Russia, thus slowing their development," Cohen said.

Cohen believes a lasting peace and more stable geopolitical climate are necessary to for economic development to happen at the levels countries occupying the Caspian Basin have the potential to achieve.

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