EU Security of Supply Project

EU Security of Supply Project The Nabucco and Trans-Sahara Gas Pipelines The European Commission has identified the EU s core energy objectives as sustainability, competitiveness and security of supply. The latter objective is singled out in the recent Strategic Energy Review as a particular concern. The Review states that the EU must intensify its efforts in identifying infrastructure of major importance to its energy security and then ensuring its construction, and acting coherently to deepen its partnerships with key energy suppliers, transit countries and consumers. The Review asserts the EU s intention to protect its essential energy interests i. The EU is also committed to mainstreaming human rights and democratisation into all aspects of EU policy, decision-making and implementation ii. In its Central Asia Strategy document, the Council asserts that the development and consolidation of stable, just and open societies, adhering to international norms, is essential to bring the partnership between the European Union and Central Asian states to full fruition. iii The Commission states that the EU is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms iv. Policy coherence too is a foundational principle and a legal commitment for the EU. The Commission states that non-development policies should respect development policy objectives v. However, there are no references to human rights, democratisation or policy coherence in the Strategic Energy Review. This project will explore whether the EU s approach to energy security is consistent with its approach to human rights, development and conflict prevention. I will focus on two of the major infrastructural projects proposed in the Review. The first project, the Nabucco gas pipeline, is well developed; the second, the Trans-Sahara gas pipeline, is in an early stage of development, at least in terms of EU involvement. Both will require substantial amounts of public money if they are to be realised, and both raise important questions about their potential contribution to entrenching economic and political mal-development, conflict dynamics and human rights abuses in supplier countries. These projects also sit uncomfortably with the Commission/Council strategy on climate change and security, which indicates that the regions of the world most affected by climate change will be the energy rich regions of West Africa, Central Asia and the Middle East. Nabucco and Trans-Sahara tie Europe into an energy relationship with these regions for decades to come, even though the climate change and security strategy forecasts radically diminished energy security in these regions in the coming years. Nabucco The EU consumes 482 billion cubic metres (bcm) of gas a year. Around 40% of this is currently supplied from within EU borders. However, EU gas production is expected to decline rapidly over the coming years leaving it increasingly reliant on imports. 85% of the EU s imported gas

comes from just three countries Norway, Algeria and Russia. Russia is by far the biggest exporter of gas to the EU, supplying 24% of gas imported into the EU-27. The EU is committed to diversifying its gas suppliers and reducing its dependence on Russia. The Nabucco gas pipeline is the flagship project of the EU s supply security strategy. The pipeline will traverse 3,300km, crossing four countries Turkey, Bulgaria, Romania, and Hungary before terminating in Austria. The pipeline is intended to carry gas from Central Asia and the Middle East to the European market and will have an annual capacity of 31bcm. First proposed in 2002, the Commission pinpointed Nabucco as a priority project in 2004, and in 2005 contributed 5m in seed funding to aid the project s development. A feasibility study in the same year estimated the final cost of Nabucco would be around 5bn. Volatility in oil and steel prices has seen this estimate oscillate between that level and as much as 8bn. Up to a third of the pipeline s final construction cost is expected to be covered by loans from the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD). The Nabucco Gas Pipeline route The Commission identifies as key Nabucco supplier countries Azerbaijan, Turkmenistan, Uzbekistan, Egypt, Iraq and Iran. Construction is due to begin in 2010. Thus far only Azerbaijan has committed to supplying Nabucco, though its reserves are only sufficient to get Nabucco started they will not be able to fulfil the pipeline s capacity. Andris Piebalgs, EU Energy Commissioner, has been engaged in an ongoing diplomatic tour of supplier countries over the last few months, and the incoming Czech Council Presidency has announced that firming up supplier countries for Nabucco will be one of its priorities. Nabucco was first conceived of as a way of bringing Iranian gas to Europe. This objective has been toned down, in large part to please the USA who offer political support for Nabucco on

the basis that it sources gas from the Caspian States, but explicitly not from Iran. While the EU plays down Iran s potential role in Nabucco, it is likely that Iran will eventually be the main supplier once/if the US-Iran relationship improves. The US also takes an interest in bettering European relations with Nabucco target countries in the Caspian region, many of which have been strategically important to the war on terror effort and the furtherance of the goal of increased US influence in the Caspian, laid out in the 2001 US National Energy Policy report vi. There are American military bases in Uzbekistan and Kyrgyzstan, and NATO is also developing a cooperative military relationship with Turkmenistan. The US, like the EU, sees Nabucco as a tool for weakening Russia s grip on gas supply to Europe. Russia is working on its own pipeline South Stream which is designed to compete with Nabucco by traversing a broadly similar route and locking various EU countries into bilateral deals which threaten Nabucco s progress. The EU and Russia state publicly that Nabucco and South Stream can coexist, but in reality Russia and the EU are competing in what is increasingly becoming a zero-sum game for the dwindling gas resources of Central Asia and the Middle East. In this arena of geopolitical competition, the immediate focus for Piebalgs and the Council is securing the gas of Turkmenistan, a major potential source for Nabucco but also for South Stream. EU dealings with Turkmenistan highlight the moral problem which the EU faces with all of its Nabucco supplier target countries should energy security concerns trump human rights, development and conflict concerns? Turkmenistan currently produces 67bcm of gas a year, but this is set to double following the discovery of the South Iolatan field which has been independently verified as the fifth largest gas field ever discovered. To that end, this small Caspian state of 5 million people has become a crucial factor in the development of Nabucco. It is inconvenient however for the EU that Turkmenistan is also a brutal one-party state with a terrible human rights record. Amnesty International document harassment, detention and imprisonment of dissidents, independent journalists, civil society activists and members of religious minorities. Prisoners are denied access to outside contact and torture of inmates appears to be widespread. Human Rights Watch (HRW) calls Turkmenistan one of the most repressive and authoritarian countries in the world. HRW report that Turkmen citizens do not have adequate access to basic education and are severely restricted in their freedom of movement. The vast majority of Turkmens are not allowed to leave the country. It is against this backdrop that the EU is pursuing closer ties with the Turkmen regime in order to access its gas. In November 2007 Piebalgs paid an official visit to Ashgabat, capital of Turkmenistan, to discuss energy cooperation. In April 2008, Turkmen President Berdymukhammedov pledged 10bcm a year of gas supply for the EU. In May, a Memorandum of Understanding in the field of Energy was signed by the EU and Turkmenistan solidifying the energy relationship, but failing to mention human rights and democratisation, and making only a very loose mention of development. The EU has not always sidelined human rights in its dealings with Turkmenistan. A replacement for the Soviet era trade agreement between Ashgebat and the EU has been on

ice since 1998 because of human rights concerns. In February 2008 MEPs maintained that the proposed Interim Trade Agreement (ITA) would remain stalled until Turkmenistan could demonstrate improvements in human rights conditions. However, the Parliament s largest party the EPP does support furthering trade with Turkmenistan, in line with many member states, including Germany and Austria who, in the interest of energy and trade links, recently rolled out the red carpet for an official visit from the Turkmen President. EU Special Representative to Central Asia, Pierre Morel visited Ashgabat in early December in a bid to encourage Turkmenistan to commit to the Nabucco pipeline. The incoming Czech Presidency of the Council has made securing Nabucco gas deals with supplier countries including Turkmenistan its first priority. Is the EU prepared to put to one side concern for human rights and development in Turkmenistan in order to secure gas for Nabucco? Trans-Sahara In development since 2002, the Trans-Sahara gas pipeline project was initially a joint initiative of the Nigerian and Algerian state oil companies. It is only recently that the EU has made its interest in the pipeline clear. Following August s conflict between Russia and Georgia, Andris Piebalgs expressed concern that the Nabucco route might not be as safe as originally thought, and that additional supply routes had to be considered. This prompted new interest in Trans-Sahara and the project was described as an important additional opportunity for the EU to diversify routes and energy sources in the Strategic Energy Review. The pipeline will source gas from the Niger Delta region of Nigeria and transport it from there through Niger and Algeria to the Mediterranean coast then on to the European gas network. This 4,300km route is substantially longer than Nabucco, but expected capacity is roughly the same at 30bcm a year. Construction cost estimates have been as high as 15bn with work scheduled to begin sometime in 2009. The pipeline is intended to be operational from 2015. Nigerian gas reserves are formidable at 5 trillion cubic meters (equal to around 10 years of current EU consumption). This gas is however not only a prize for the EU but for Russia too. Gazprom, the world s largest gas company which is partowned by the Russian government, has been courting Abuja over Trans-Sahara. Wary of increased Russian control of European gas supply, Brussels has stumped up an 840m grant for the Nigerian government to use on gas infrastructure developments. Russia meanwhile has agreed a Memorandum of Understanding with Nigeria on further exploitation of the country s gas. At the present time it is still unclear who is coming out on top in the competition for control over Trans-Sahara.

The hydrocarbon-rich Niger Delta region has long suffered from the Nigerian state s rentier complex 1. If Trans-Sahara goes ahead, large quantities of European money will accrue directly to the Nigerian state, where if poorly managed, it could serve to entrench conflict in the Niger Delta, human rights abuses by government security forces and the continued impoverishment of much of the Delta population. Similar issues arise for the Trans-Sahara transit countries, which would receive transit royalties from the pipeline. In Niger revenues from uranium mining have failed to substantially benefit the general population and violent resistance movements have sprung up to challenge the government. Likewise the people of Algeria have suffered from that country s rentier state complex 2 and the flourishing of violent anti-government groups. The influx of rents which would occur if Trans-Sahara goes ahead would need to be expertly managed if the mistakes of the past are not to be repeated. This implies dedicated input from the EU on this should they succeed in becoming the Trans- Sahara project partner. Physical security of the pipeline would also be a major issue all along its route, particularly in the Niger Delta where attacks on oil and gas infrastructure are frequent. How such security issues would be dealt with pose serious questions again for EU involvement. Security Implications - Nabucco and Trans-Sahara raise serious issues relating to the development of the EU s Common Foreign and Security Policy (CFSP). The European Security Strategy (ESS) of December 2003 identified energy dependence, competition for natural resources and the multiplication of these problems as a result of global warming as key security problems for the EU. These themes were expanded upon in the joint Commission/Council paper on climate change and international security published in March 2008. The paper emphasised that because much of the world s hydrocarbon reserves are in regions vulnerable to the impacts of climate change and because many oil and gas producing states already face significant social, economic and demographic challenges, instability is likely to increase. This has the potential to feed back into greater energy insecurity and greater competition for resources. vii Environmental, social and political stresses are predicted to become particularly acute in the Middle East, Central Asia and Africa, where Nabucco and Tran-Sahara will operate. How far has the medium to long-term security of these pipeline projects been considered? Does it make sense for the EU to invest in energy infrastructure which will tie us to these regions for decades to come, while simultaneously predicting dire security problems in those areas? What are the implications for CFSP? - The recently launched EU naval mission in the Indian Ocean and Gulf of Aden seems to indicate a first step in the militarisation of energy security at EU level. The mission Operation Atalanta - begins in the wake of the seizure by Somali pirates of the Saudi-owned 1 For a short introduction to rentier states and the resource curse please see my briefing written for the recent QCEA conference: http://www.quaker.org/qcea/conference2008/information.htm 2 As above.

Sirius Star oil tanker which is carrying 80m of crude oil. Atalanta is aimed at protecting such shipments, as well as shipments holding other cargo, from piracy off the Somali coast. A critical oil shipping route from the Middle East to Europe runs directly through the Gulf of Aden and thus is close to the northern coast of Somalia. Where might CFSP go next in the effort to counter security threats to oil and gas supply? Gordon Brown has already promised the Nigerian government British military support in the case of serious disruption to critical oil infrastructure in the Niger Delta viii. Could EU military/energy security thinking begin to follow the US model as dependence on African, Middle Eastern and Central Asian fossil fuels continues to intensify? Could Nabucco and Trans-Sahara could themselves become securitised at an EU level given the stresses building on regional energy security? Might severe oil supply problems, which are possible in the next decade 3, also motivate increased militarisation of energy security in Europe? What form will QCEA s work on this project take? a) Research and Advocacy Paper - Analysis of the human rights and development situation and EU involvement in Nabucco and Trans-Sahara supplier/transit countries. - Assessment of coherence of Nabucco/Trans-Sahara projects with EU human rights & development agendas - Analysis of Nabucco/Trans-Sahara in terms of physical security and implications for Common Foreign and Security Policy, and the Climate Change and Security strategy. - Promotion of an alternative Energy Security Strategy putting forward in brief a new paradigm based on reduced demand and modal shift in energy production & efficiency, transport, agriculture. The approach here will not be to suggest that Nabucco and Trans- Sahara are necessarily incompatible with the alternative model, but that they may make more sense placed within it, especially if they are managed in a way that contributes towards sustainable development. b) Dialogue with Institutions It will be important for QCEA to initiate a dialogue on Nabucco and Trans-Sahara with the European Commission, European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) in order to learn more about how these projects are 3 See my briefing on oil supply prepared for QCEA December conference here: http://www.quaker.org/qcea/conference2008/oil_supply_briefing.doc

developing. c) Mobilising Quakers We would like to encourage Quakers around Europe to initiate dialogue with their representatives at national and European level, working if they wish from a campaign strategy which we will provide them, based on the findings of the research and advocacy paper. References i European Commission, (2008) 2 nd Strategic Energy Review, http://ec.europa.eu/energy/strategies/2008/2008_11_ser2_en.htm ii European Commission, (2006) Programming Guide for Strategy Papers: Democracy and Human Rights, http://ec.europa.eu/development/icenter/repository/f20_human_rights_en.pdf iii Council of the European Union, (2007) European Union and Central Asia: Strategy for a New Partnership, http://consilium.europa.eu/uedocs/cms_data/librairie/pdf/eu_ctrlasia_en-ru.pdf iv European Commission, (2007) European Instrument for Democracy and Human Rights (EIDHR) Strategy Paper 2007-2010, http://ec.europa.eu/europeaid/where/worldwide/eidhr/documents/eidhr-strategy-paper- 2007_en.pdf v European Commission, (2005) Policy Coherence for Development: Accelerating progress towards attaining the Millennium Development Goals, http://ec.europa.eu/development/icenter/repository/2005.04_com(2005)134_en.pdf vi National Energy Policy Development Group, (2001), National Energy Policy, http://www.whitehouse.gov/energy/national-energy-policy.pdf vii European Commission & High Representative, (2008) Climate Change and International Security, http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/reports/99387.pdf viii The Independent, (2008) Brown Blunders in Pledge to Secure Nigeria Oil, http://www.independent.co.uk/news/world/africa/brown-blunders-in-pledge-to-secure-nigeria-oil-865035.html