Energy Security of the Balkan States: Is there any alternative to Russian gas?

April 5, 2016 - 

Dušan Proroković, Katehon - 

Energy security is an expression used every day but one which we cannot precisely define. In political theory and security studies, is there no clear answer to what energy security means? In the famous classification of Barry Buzen, there are five security sectors: Societal security, Political security, Environmental security, Military security and Economic security. The question is: where does energy security belong? Or, if we want to put energy security in a separate sector, the question is whether in the same way can we also classify water security, security of arable land and so on? Security means the absence of threats, and, consequently, energy security meant the availability of energy sources. In this lecture I will speak in this context.

Because the Balkan countries have modest energy resources, the level of analysis cannot be national or only narrow regional. We must refer to the wider regional level. The problem with the wider regional level is: how widely to define the region? The Balkans is a part of Europe, part of the Mediterranean basin, part of the Greater Near East. Because of its geographic position and geopolitical factors the best framework is to look at the Balkans as a part of Western Eurasia.
 
The Balkans is located in an area important for the transport of oil and natural gas from the Middle East and Central Asia to western markets. This is the reason why since 1993 there were plans for eight energetic corridors to be built over the Balkans: "South stream" pipeline, then its successor the “Turkish stream”, “NABUCCO”, the “Trans-Adriatic pipeline”, “AGRI” and “East ring”, as well as the oil pipelines  “AMBO” and “CPOT”. None of these projects were ever realized.  The South Stream would connect Russia with Western Europe through Bulgaria, Serbia, Hungary and Slovenia.  Without any doubt, it is the most important project. It is the only sustainable project. Under the current circumstances it is difficult to expect the realization of the Turkish Stream. NABUCCO was ambitious but unrealistic, and all other gas pipelines-TAP, AGRI and East Ring had a dual function. First, they were to influence the decline of consumption of Russian gas by the EU market. And secondly, to demonstrate to the leaderships of the Balkan states that the issue of energy security could be solved by relying on other projects, in which there is no participation of Russia. Both of these tasks are debatable.
 
The biggest western energy project in the last two decades that concerned the Balkans was the Nabucco pipeline. Although the construction of this pipeline was a political priority for the United States, it turned out that it cannot be be competitive to the “South Stream” pipeline. First, the capacity of Nabucco is supposed to be between 31 billion cubic meters of gas per year, which is only half of the capacity of the “South” or the “Turkish” stream. In addition it remained unclear from where Nabucco would be withdrawing the said amount of gas, as the source from Azerbaijan's Shah Deniz can only fill the pipeline with a maximum of 16 billion cubic meters per year. Another open question is the price of the distributed gas, because of the length of the pipeline, and the associated costs of providing for the pipeline that would go through unstable areas. Therefore, even if it came to realization, it would not be possible to provide a significant alternative to Russian energy through Nabucco, nor can it reduce the energy dependence of Europe from Russia. The same goes for “Trans Adriatic”, AGRI and East Ring. The "Trans-Anatolian" pipeline as a Turkish project should be completed by 2018 and is supposed to initially bring about 16 billion cubic meters of gas per year to the "Trans Adriatic" pipeline.
 
The same question arises in the case of the “Trans Adriatic” pipeline as in the case of “Nabucco” pipeline – there is an ongoing concern if the gas from Azerbaijan can be an alternative to the basic reserves of gas from Russia. It is not certain that the reserves in Azerbaijan are large enough. First of all, the ownership of Shah Deniz, the biggest and the most important gas field in Azerbaijan is very complex. BP has 28,8 percents of shares, Turkish TPAO 19, Azerbaijan SOCAR 16,7, Malesian  Petronas 15,5, Russian Lukoil 10 and Iranian National Oil Company 10 percent. The gas field "Shah Deniz" is located in Azerbaijan, but it is not in Azerbaijan ownership. The second thing is that Uzbekistan has two times bigger and Turkmenistan has 20 times bigger proven reserves than Azerbaijan. On the list of the countries by natural proven gas reserves Azerbaijan is in the 28th position. Proven gas reserves in Azerbaijan are not enough to be any realistic alternative to Russian gas. This question is even more important when it is known that gas reserves in Azerbaijan are supposed to be used also in two new alternative routes. One of them is the “East Ring” that should connect Turkey, Bulgaria, Romania and Hungary and the second one was the announced as the AGRI project – a pipeline for LPG that would connect Azerbaijan, Georgia, Romania and Italy. LPG would be transported by tankers from Georgia to Romania, and from Romania to Italy; the pipeline would stretch through Serbian and Croatian territories. Both of these projects, however, have only been announced so it is still not known who would finance the entire job, how profitable it would be, and what selling price would be at the end destination. One thing about prices: today, natural gas price is around 230, and LPG  is at 470 USD, and if we compare prices in 2014 natural gas was around 350 and LPG 1000 USD. So, LPG is two to three times more expensive than natural gas.
 
It is appropriate that the EU wants to reduce its energy dependence on Russia and other producers. Therefore, the EU initiated a number of programs with an aim to increase the share of energy from renewable sources. However, this process is slow and at least in the first half of the 21st century, fossil fuels will remain a key energy source. More than 70 percent of energy in Europe comes from fossil fuels.
 
When it comes to fossil fuels, it is necessary to underline that coal reserves are being exhausted rapidly, and there are numerous ecological problems with excessive use of oil. This is why gas is becoming the more popular and more acceptable energy source. As in the case of the EU, the Balkan countries are basing their energy strategy on the availability of energy sources.  It is appropriate that in the countries of South East Europe, except Albania and Moldova, energy security is currently based on coal. However, coal reserves are quickly exhausting, and it is necessary to look for a sustainable alternative. According to the latest research of "Elektroprivreda Srbije", lignite in the Kolubara basin can be exploited until 2060. Excluding hydro potential, other renewable resources are used in a negligible percentage. In 2015, the South East European countries signed an agreement with the EU on the so-called Third Energy Package, which defines the rights and obligations of countries on the common energy market. However, as in the case of thet Migrant crisis, when it turned out that the Schengen and Dublin agreements are not a sufficient legal framework for problem solving, the same has happened with the common energy market in 2016, when  the European Commission recently informed Serbia that they are thrown out from the plan for emergency gas supply for that year. Of course, without any acceptable explanation. The question of energy supplies largely remains a part of the national question.
 
According to numerous analyses that were done, the simplest, most cost-effective and environmentally the most acceptable way is connecting with big sources of natural gas in the wider region. The nearest big natural gas sources are in Russia, Iran and Turkmenistan. When it comes to natural gas and Turkmenistan, this country is in a strategic partnership with China. We're too late. When it comes to natural gas and Iran, a large investment and a lot of knowledge is necessary for exploitation, as the country has long been under sanctions. Who can offer it? The answer is simple: Gazprom or BP. So, Russians again! There is no sustainable energy concept for Balkan states without a Russian role. Everything else is questionable in terms of the economic interests of Balkan states.

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European-Eurasian Integration Can Not Be Stopped, It Can Only Be Slowed Down

Expansion of the Customs Union of EurAsEC: Green - Customs Union; Red - canditates for CS; Yellow - potential candidates for CS

Rostislav Ishchenko for RIA Novosti

23 years after the liquidation of USSR and the establishment of CIS on December 8, 1991, we can conclude that the Commonwealth of Independent States - is now, in fact, a defunct project, says Rostislav Ishchenko.

Of course, politicians and diplomats will continue to talk about the huge potential of the Commonwealth, listing achievements, documents, agreements, treaties, summits and long-term plans. These are the rules. Rarely do the circumstances arrange in such a way that a much discussed, approved and adopted for implementation international project ends with the words: "This is it, the project is closed".

Usually, it happens quietly. This is how the Nabucco gas pipeline quietly perished. Quietly died the GUAM organization. It seems that the same fate awaits the CIS. It was not necessary to announce the decision, but to simply stop gathering at the summits. But then you have to maintain and finance the staff of the Commonwealth, but for what?

The technique worked. Immediately after the announcement of the creation of Eurasian Economic Union (EEU), the elimination of useless Eurasian Economic Community (EurAsEC) was announced. A political Eurasian Union (EAU) will be created, and suddenly a Union state of Russia and Belarus becomes unnecessary (in any case, Alexander Lukashenko did not rule out such a possibility).

In fact, today the CIS looks like a memorial to post-Soviet integration, which most of the time was more like disintegration. If this structure was effective, it would not be necessary to develop the concept of multirate integration and a creation of the EurAsEC, Customs Union, EEU and even the CSTO (Collective Security Treaty Organization) on its basis.

The CIS at its creation was considered by optimists as a confederate state formation designed to consolidate the majority of former USSR republics under the new circumstances. Until August 1993 the United Armed Forces of the CIS still existed.

Theoretically, events could go in that direction, but only in theory. As practice and experience showed, disintegration capacity was not exhausted in 1991, and one cannot force his way against historical trends. Russia struggled with centrifugal tendencies for a decade. Only at the beginning of 2000's the situation at the core state of CIS has stabilized.

From 2004-2005 centripetal tendencies in Russian politics began to accumulate, and since 2010 they absolutely dominate not only in domestic politics but also in foreign.

Its own separatist movement threatened Kazakhstan. In Central Asia interrepublic territorial disputes overlapping with domestic standoff of certain ethnic groups and regional economic interests, has created a zone of permanent instability which produced several civil conflicts and carried a threat of inter-state armed conflicts, which were miraculously avoided.

In the Caucasus military coups were followed by civil wars, and civil wars - by conflicts between countries. There were two full-scale wars with participation (on opposite sides) of CIS member states: the Nagorno-Karabakh conflict and the war of 08.08.08.

Moldova broke apart after a civil war, practically losing Transnistria. In Ukraine the civil war is raging as we speak, Crimea has gone to Russia, Donbass is almost lost. Which other regions will be lost, and what will be left of Ukraine - no one knows.

This amorphous formation, members of which have various status (Ukraine is the co-founder of the CIS, but has not signed the Charter; the Charter hasn't been signed by Turkmenistan, and Ukraine and Russia have not ratified the Protocol to the Agreement on creation of the CIS from December 21st, 1991) and have no consensus about each other's boundaries - is the Commonwealth of Independent States.

After the war of 08.08.08. Georgia formally withdrew from the CIS, but have maintained its participation in almost all the agreements reached in its framework. It's as if Belgium withdrew from the EU, but would remain a member of Schengen, the Euro zone, etc. In turn, Ukraine, Turkmenistan, and occasionally other countries partially ratified various CIS documents, considering some of their rules acceptable, and others - not.

It is clear that an international organization cannot exist under such conditions. And it does not. For example, Ukraine is in no hurry to leave the CIS, although, it shouts at every turn that it has been invaded by Russia, precisely because the formal fact of exit, besides short-term PR aimed at the domestic audience, will provide nothing, at the time when there may be problems with many agreements formally bound to CIS, favorable for Ukraine. And a lack of single procedure does not guarantee Kiev, that it will be able to pull off the trick that worked for Georgia - to withdraw from the CIS.

In general, the situation has changed so much that the integration projects of Russia ceased to focus on the post-Soviet space and are focused on the entire Eurasia (EEU and EAU) and even on the whole world (BRICS). It is clear that the Eurasian integration projects are much more clearly defined, although the obstructionist position of the EU against its own interests (including not even development, but survival), not willing to leave the custody of the US, calls for adjustments, forcing to shift priorities to Asia and the Middle East.

However, in 2014 BRICS have demonstrated the ability for unified political (refusal to participate in the American pressure on Russia and indirect support of Moscow) and financial-economical (the decision on the establishment of the BRICS Bank and the beginning of the transition to national currencies in international settlements) actions.

In fact, the task of reintegration of the post-Soviet space, not fulfilled by the CIS is now solved at a different level. This space is just a part of a much larger Eurasian integration project. The hand stretched out by Russia over the heads of ambitious post-Soviet formations to China, Iran, Turkey, India is moving these countries beyond the established brackets, turning from limitrophes playing between civilizational projects on their frontier positions into an inner Eurasian formation which cannot exist without the participation outside of the Eurasian integration project.

Meanwhile Russia (because of the mentioned EU position) only failed in overcoming the frontier position of Ukraine, which is one of the main causes of the ongoing civil war. If Europe agreed to the compromise proposed in March by Russia, when the continuation of the political and economic merger between the EU and the CU (EEU) would be exchanged for the preservation of a unified federalized neutral Ukraine, -  and the problem of Kiev would be solved as well as the problem of Central Asia as a result of the Russian-Chinese military-political and financial-economic integration. Inside a dynamically integrating European-Eurasian Union, Ukraine would simply lose the space for maneuver, and its elites would loose the ability to speculate with geopolitical choices. There would be only one choice.

However, despite the increase in confrontational rhetoric the point of no return has not been passed in Russia's and EU relationship, even though it is already very close. The most important thing is that regardless of the position of the European Union, the Eurasian integration cannot be stopped, it is only possible to slow down its Western direction.

However, neither the US can further support the financial and economic basis of the European Union nor the European economy is able to provide sufficient resource base to maintain unity.

Thus, the only question is whether the EU will join the Eurasian project at once and entirely, or gradually and in parts. The first would be preferable.

As for the CIS, since the moment when the face off between Moscow and Brussels for Ukraine has transformed into a face off between Washington and Moscow for the EU, the CIS as a political mechanism finally outlived its usefulness. Now it's only a sinecure for the apparatus providing periodic summits of presidents and prime ministers to discuss a priori impossible, or already resolved in the framework of other integration projects, questions.

Today CIS - is only an image for the media, a manger for a small number of bureaucrats and a cause for "expert opinions".

Translated by Kristina Rus for FortRuss.blogspot.com