Although the importance of the region for geopolitics and security has long been recognized, its critical role, especially when its boundaries are viewed in the wider sense of Eurasian and Euro-Atlantic energy security, has not received deserved attention up until the clash of Russia and Georgia in August 2008.
All countries in the region have different dynamics, but there is only one common denominator for both fostering cooperation and catalyzing conflict in the Black Sea basin—energy. However, energy has become more of a controversial issue rather than a uniting one. Whether they like it or not, all countries in the region are involved in energy politics. And the controversy over the transport of Caspian oil and gas, involving all the major actors across the region, will continue into the future due to competing interests.
Why is the Black Sea region important for EU energy security?
The Black Sea region is faced with multiple challenges, most importantly the thawing of frozen conflicts and politicized ethnicity on both a state and regional basis, that contain risks for the escalation of conflict. These risks, combined with regional fragmentation on several fronts, have the serious potential to destabilize the flow of energy supplies, especially from the Caspian region to Western markets.
As is well known, an important issue concerning European energy security is diversification of supply sources and transportation routes so as to lessen dependence on one particular country: Russia. Developing prospective new transport routes from the hydrocarbon rich Caspian basin to Europe through southern Black Sea region plays a key role in resolving this security issue. This is the key reason why the Black Sea region is at the core of European energy security.
The struggle over oil and gas transport routes in the Black Sea basin
How could Caspian oil and gas be headed to the Western markets, preferably bypassing Russian territories? Baku-Supsa and Baku-Tbilisi-Ceyhan (BTC) oil pipelines as well as Baku-Tbilisi-Erzurum (BTE) natural gas pipeline were the answers and fruits of the Western efforts to answer this question.
Oil transport routes
Traditionally Caspian oil was delivered to Western markets from Russia’s Black Sea terminals. After the dissolution of the Soviet Union, new projects were planned. Early projects were concentrated on transporting Azeri oil. An existing pipeline from Baku to Russia’s Black Sea oil terminal in Novorossiysk was activated in 1997, and another one running from Baku to the Georgian Black Sea port of Supsa was upgraded and became operational in 1999. Kazakh oil fields were connected only to the Russian pipeline system. With the construction of the Caspian Pipeline Consortium (CPA), Kazakh crude oil has been transported to Novorossiysk in the Russian Federation since 2001. Several bottlenecks prevented this system from expanding until Russia asserted its influence, doubling its capacity to 1.3 million barrels per day (m/bd) by 2008.
Growing quantities of oil necessitate more infrastructures. Moreover, moving oil along Black Sea shipping lanes has led to increasing the number of Winter delays and intensifying safety, congestion and environmental concerns in the Bosporus and Dardanelles Straits. All these paved the way for several Bosporus bypass projects.
The Baku-Tbilisi-Ceyhan (BTC) oil pipeline was the first direct transportation link between the Caspian and the Mediterranean seas bypassing the Turkish Straits as well as Russian territory. The US backed this 1 m/bd capacity pipeline aimed at carrying Azeri and eventually Kazakh oil, and it came on-stream in June 2006. The pipeline route was not the most economical option, but it had the geopolitical advantage of not traversing Russia, Armenia nor Iran. Thus it has provided a compromise between the West and Azerbaijan/Turkey.
The region needs more capacity to export oil, particularly from the giant Kashagan field, which will start producing oil sometime before 2015. One of the initial options was to reverse the flow in the Odessa-Brody pipeline in Ukraine, which was built in 2001 with the strong encouragement of the EU and US, in order to reduce dependency on Russia by bringing Caspian oil to this south-north pipeline. This plan was backed by Azerbaijan, Georgia, Lithuania, Poland and Ukraine. But political support did not materialize, and the pipeline stood idle until 2004. At this point the Ukraine felt obliged to run the pipe with Russian oil. The pipeline has been carrying Russian crude southward into the Black Sea since 2005. The former government in the Ukraine had planned to return to the pipeline’s original design and begin shipping Caspian oil northward from Odessa to Brody, then extend it to Plock in Poland. The new government thus far has been silent on a directional change in the pipeline’s flow.
Other Black Sea pipeline options include the following projects:
• AMBO pipeline: from Burgas in Bulgaria via Macedonia to the Adriatic port of Vlore in Albania, hence connecting the Black Sea with the Adriatic. This project is currently stalled due to several obstacles, including fierce opposition for the site in Vlore, Albania’s main coastal resort.
• Trans-Anatolian oil pipeline (TAP): from the Black Sea port of Samsun to Ceyhan in Turkey, which was initially supposed to be completed in 2012. Progress in this ENI-Calik (Italian-Turkish) consortium has thus far been unsatisfactory.
• Burgas-Alexandroupolis pipeline (or Trans Balkan Pipeline): from Burgas in Bulgaria to the Greek Aegean port of Alexandroupolis. The pipeline agreement was signed in 2007 by Greece, Bulgaria and Russia, but no concrete progress has been registered since then. The Bulgarian government has not yet completed the environmental impact and financial assessments on the pipeline.
Except for the Burgas-Alexandroupolis pipeline, all of these projects are promoted and supported by the US and EU. Russia is the promoter and the largest shareholder in the Burgas-Alexandroupolis pipeline project. It is yet to be seen how many of them will materialize, but time is running out. While people in the West were talking-the-talk about these pipelines, China quietly constructed an oil pipeline from Kazakhstan all the way to China.
Natural gas transport routes
There are several pipeline projects to bring Caspian gas to Western markets. Among them are:
• The Interconnector Turkey-Greece-Italy (ITGI): intended to carry Caspian gas to Greece and Italy via Georgia and Turkey.
• Nabucco project: aimed at bringing Azeri and Turkmen gas, among other sources, to Austria via Georgia, Turkey, Bulgaria, Romania, Hungary and possibly to other Central European countries. It is strongly backed by the EU and the US.
• The EU-backed White Stream gas pipeline project: intended to bring Azeri and Turkmen gas to Europe via Georgia-Black Sea-Ukraine/Romania. It would branch off from Baku-Tbilisi-Erzurum gas pipeline in Georgia, run to Supsa, and then cross the Black Sea to reach Crimea in Ukraine or to Romania.
• South Stream: a pipeline backed by Russia aimed at bringing partly Russian partly Caspian gas to Europe via the Black Sea.
It is highly probable that not all these projects will be realized. More importantly, the longer these pipeline projects are postponed, the less likely they will find feed gas in the future. While the pipeline diplomacy of the West has not succeeded in the past few years despite an abundance of projects, China has slowly but persistently been working towards becoming an important player in the Caspian region.
We have been witnessing one by one the results of China’s determined pipeline policy over the past few years. For instance, Turkmenistan-China pipeline was launched in December 2009 (only three and half years after the start of talks), and a Kazakhstan-China oil pipeline has already started to pump Kazakh oil to China.
Russia and Iran have also benefited from Western inaction. Turkmenistan has constructed a new gas pipeline and increased its gas exports capacity to Iran. More or less at the same time, Azerbaijan started to sell gas both to Russia and Iran.
These new export agreements, further plans and geopolitical developments over the past two years have begun to change the geopolitical balance of power in the Black Sea and Caspian regions.
The Russia-Georgia conflict and pipeline politics in the Black Sea region
Georgia hosts three pipelines: the Baku-Supsa oil pipeline, Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipelines. During the 2008 hostilities, Georgia accused Russia of attempting to bomb the energy pipelines (especially the BTC pipeline). However, these claims were denied by Putin and other Russian officials. Georgia, once seen a reliable alternative energy corridor to the routes dominated by Russia, has become a choke point in pipeline politics of the Caspian-Black Sea region.
On 13 August 2008, the Baku-Supsa oil pipeline and the Baku-Erzurum gas pipeline were shut down as a precautionary measure. A week before the outbreak of fighting, the BTC pipeline was shut down due to a fire at a compressor station in Turkey. Georgia’s Batumi oil terminal also reduced shipments as a result of a temporary halt in railway transportation because of an explosion. The shutting down of transport lines forced oil and gas production in Azerbaijan to be reduced significantly.
When Dmitri O. Rogozin, Russia’s representative to NATO, stated that “there are two dates that have changed the world in recent years: September 11, 2001, and August 8, 2008,” he sounded alarmist. In terms of energy politics, however, he might be right. The brief armed conflict in Georgia may have long-lasting implications for Eurasian and Euro-Atlantic energy politics.
After the war in Georgia, the EU launched the Southern Gas Corridor initiative to supply gas from the Caspian and Middle Eastern regions to Europe. The EU has identified a number of partner countries for this initiative, including Azerbaijan, Turkey, Georgia, Turkmenistan, Kazakhstan, Iraq and Egypt. So far, four projects of strategic importance for the EU have been identified as Southern Corridor projects: ITGI, Nabucco, White Stream and the Trans Adriatic Pipeline (the interconnector that will link the Greek gas system with the Italian grid via Albania and the Adriatic Sea). Together, the Southern Corridor projects would provide the necessary transportation capacity to deliver 60 to 120 bcm of Caspian and Central Asian gas to Europe annually.
Russia-Ukraine gas crisis and pipeline politics in the Black Sea region
Ukraine is an important energy transit country. The country accounts around 80% of Russian gas exports to Europe. Russian gas exports to 18 countries were drastically reduced in January 2009 due to the dispute between Russia and Ukraine for several reasons including debt, pricing, transit tariffs, intermediary companies etc. Central and Southern Europe were seriously affected.
The 2009 gas crisis was a wake-up call for the EU. It not only highlighted the missing links in the mitigation capabilities of the EU in the case of supply disruptions but also demonstrated that Southeastern European countries are Europe’s weakest link in terms of security of gas supply. This is why the development of a Southern gas corridor, which gained importance after the August 2008 war in Georgia, is considered once again as a key priority for the EU to bring Caspian and Middle Eastern gas to Europe.
The Southern Corridor concept consists of several projects: the Nabucco gas pipeline, White Stream and the interconnector between Turkey, Greece and Italy being the first among them. All of these projects involve at least one Black Sea country. So far no final investment decisions have been taken on any of these projects.
Following the Ukraine elections and President Yanukovych’s accession to power, Ukraine has begun to lean towards Russia in energy and security issues. Russia and Ukraine signed an agreement on 21 April 2010 providing a significant discount in the price of Russian gas to Ukraine in exchange for extending the lease for the Russian Black Sea Fleet in Sevastopol until 2042. A month later, on 28 May 2010 Gazprom and Ukraine’s Naftogaz agreed to consider a potential joint venture on a 50:50 parity-basis as a first step in a possible merger between the two companies.
Russia has been gaining ground in Ukraine but losing in Bulgaria. The new Bulgarian government, led by Prime Minister Boyko Borisov, suspended Bulgaria’s implementation of three projects (the South Stream gas pipeline, Burgas-Alexandropolis oil pipeline, and Belene nuclear power plant) on its territory immediately after taking office in July 2009. The future of an oil pipeline is still not certain, but Russia is making progress on South Stream.
Regional initiatives to promote cooperation
A number of regional initiatives with the aim of bringing together countries in the Black Sea region have been established over the last two decades. However, they have been unable to produce tangible results, and most are considered ineffective. For instance, The Black Sea Economic Cooperation, established in 1992, covering all the countries of the Black Sea, failed to move beyond an exchange between heterogeneous interests of its members. Similarly, this can be said for nearly all of the EU initiatives as well.
The EC Green Paper in 1995 (European Union Energy Policy) emphasized the importance of the Black Sea region for European energy security and underlined that cooperation with the countries of the region is essential for the security of transit into the Community. The Interstate Oil and Gas Transport to Europe initiative was launched to promote the security of energy supplies through the revitalization of the existing transmission network and new oil and gas pipelines to Europe across the Caspian-Black Sea region.
An EC Communication in November 1997 contained an assessment of the Black Sea region’s potential and the emergence of synergies in the region. The EU Council Conclusions on 13 December 1997 highlighted the region’s strategic importance for the EU. The EU Council of Ministers stated in 1998 that promoting the exploitation and export routes of Caspian oil and gas resources will be crucial to the future prosperity of the region.
The EC and the European Parliament have been calling for the development of a strategy for the Black Sea region. But, the EU has been repeating its failure to establish a true format for regional cooperation that includes all relevant actors.
The Baku Initiative, launched in 2004 as a regional policy dialogue to enhance cooperation between the EU and the Black Sea-Caspian basin in the energy and transport fields is regarded as unsuccessful. No different is the European Neighborhood Policy (ENP), launched in 2004 to engage with the countries on the southern and eastern peripheries of the EU, which play a vital role in the EU’s energy security either as supplier or transit countries.
The Black Sea Synergy (BSS) initiative, formally launched in 2008, is regarded as complementary to ENP. Energy is probably the core driver of this initiative, even though it is only one of the 13 key areas in which cooperation is aimed to be intensified. The initiative is to invest in a new trans-Caspian trans-Black Sea corridor and a possible common energy policy legal framework.
In 2009, the EU adopted the Eastern Partnership (EaP) to foster closer economic and political ties with the six bordering countries, including Georgia and Ukraine. The EU wants to bring reality to this initiative by establishing sector partnerships in three crucial sectors: environment, transport and energy.
The initial goal of the three EU initiatives (ENP, BSS and EaP) is to bring the countries covered by them closer to the EU. While the EaP promotes partner countries’ rapprochement to the EU, the BSS aims at developing regional cooperation around the Black Sea. The EaP put an end to the unsuccessful ENP, while the BSS still has had limited success. Both lack economic and political power. None of the three initiatives have become a success due to overlapping policy issues and contradictions, a lack of visible success stories and flagship projects, insufficient resources, limited engagement and coordination.
These initiatives should go beyond rhetoric and should be turned into tangible actions. For that the EU needs to develop a comprehensive strategy that views the Black Sea basin as a region of opportunity rather than as a fragmented region of instability. This means increased and sustained dialogue in all areas of common interest to both the EU and all the countries of the region, particularly with Russia.
The Black Sea region is increasingly becoming a critical strategic crossroads in 21st century geopolitics. It links Europe with the energy rich countries in the Caspian region, and as a result it is a nexus of multiple oil and gas pipelines and pipeline projects. If the EU is serious about the diversification of its energy supplies and improving its long term (beyond 2025) energy security, the region must become a priority for the EU, because its oil and especially gas options will heavily depend on it.
The Black Sea energy landscape is going to change dramatically over the next 5-10 years, not because the region's nations are becoming crucial transport corridors for oil and natural gas supplies moving into Europe, but because they are increasingly becoming an attractive place for exploration and production.
Interdependency is at the heart of energy security. It is a two-way street. There must be an intensification of effort to address common future challenges and to improve energy security for EU members and its neighbors in the Black Sea. Establishing reliable mechanisms of ensuring energy security in the spirit of mutually beneficial and non-discriminatory international cooperation and frank dialog among all actors in the Black Sea-Caspian region is of paramount importance. Confrontation is and will never be a solution.
Dr Sohbet Karbuz is the Director of Hydrocarbons, OME, France. The opinions expressed in this article are solely the responsibility of the author.