Press Release

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GLOBAL ENERGY SECURITY and the CASPIAN SEA REGION

STATEMENT

of the Representatives of Azerbaijan, Islamic Republic of Iran,
Kazakhstan, Russian Federation and Turkey

During the UNECE Energy Security Forum High-Level Meeting on the Caspian Sea Region held on 28 June 2005, government representatives discussed emerging energy security risks and risk mitigation of the Caspian Sea Region in a global context. In our statements at the meeting, a number of problems, challenges and opportunities were discussed:

1. The energy import dependence of most UNECE member countries will continue to rise in the foreseeable future, particularly for oil and natural gas, increasing their vulnerability to emerging energy security risks.

2. Western European oil imports could rise from 55 per cent of consumption now to 65 per cent in 2010 and possibly to 80 per cent by 2020. North American oil import dependence could rise from 35 per cent to 45 per cent by 2020. Apart from the Russian Federation, central and eastern European oil imports could rise from 80 per cent today to 90 per cent in 2020¹. The oil import requirements of Asian countries, especially China and India, are also expected to increase significantly.

3. Western European natural gas imports are expected to rise from 35 per cent of consumption now to 45 per cent in 2010. United States liquefied natural gas (LNG) imports are likely to continue rising. Apart from the Russian Federation, central and eastern European gas import dependence is likely to increase from 65 per cent in 2010 to 85 per cent in 2015.

4. The traditional suppliers of natural gas from the region such as Iran and the Russian Federation are likely to have the capacity to meet Europe’s growing demand but significant new investments will be needed for production and transportation infrastructure.

5. While oil production in the Caspian Sea Region of Azerbaijan, Kazakhstan, Russian Federation and Turkmenistan is currently a small proportion of world oil production, there is a large potential for the future. Oil production is likely to increase in the Caspian Sea region and possibly double over the next five to ten years. Natural gas production and gas exports are also expected to rise in the coming years.

6. In order to accommodate increased exports from the Caspian Sea Region, developed and enhanced transport facilities and new planned transport corridors will be further considered together with transit rights, new production and transportation systems. The large investments required to accomplish those projects also demand a suitable investment climate, commercial agreements and political will.

7. Together with existing pipeline systems, the Baku-Tbilisi-Ceyhan Crude Oil Petroleum Pipeline that will be operational in the fourth quarter of this year and the South Caucasus Natural Gas Pipeline Project (Baku-Tbilisi-Erzurum Natural Gas Pipeline Project), which is expected to be realised in 2006, are the two significant elements of the East-West Energy Corridor as the new transport corridors will enhance energy security. Likewise, alternative transport corridors from the Caspian Sea region via Iran to international markets will also contribute to the diversity of energy transport routes and energy security.

After our dialogue, as representatives of the countries concerned, we acknowledge that:

1. The diversification of energy trading partners, international cooperation and producer-consumer dialogue are key policy options that UNECE member States can pursue together to mitigate emerging energy security risks.

2. The doubling of energy production in the Caspian Sea Region during the next five to ten years and therefore greater exports could provide UNECE energy importing member States with additional energy supply options, thus contributing to mitigation of energy security risks across the UNECE regional energy market.

3. In order for UNECE member States to benefit from the increased oil and natural gas exports from the Caspian Sea Region, multi-billion dollar investments will be needed to expand energy production capacities and provide for new energy transport infrastructure. Countries of the Caspian Sea Region will need to establish and maintain a suitable investment environment, regulatory framework, facilitating the transfer of technology, as well as provide unrestricted access of their energy products to the European market.

4. In order to accommodate the potential increase in energy exports from the Caspian Sea Region, the countries concerned will work together and with our partners on enhanced transport facilities, new transport corridors, transit agreements, new energy production and transportation systems while enhancing the environmental quality of the region in accordance with the principles of sovereignty of States over their natural resources and economic activity and freedom to choose a suitable framework for their foreign economic relations.

5. The benefits associated with increased oil and gas exports from the Caspian Sea region would contribute to our efforts to achieve sustainable development and fulfil the Millennium Development Goals.

Representatives of the countries concerned welcomed the proposal of the Energy Security Forum to work together with national experts appointed by the government of each participating country as well as individual experts to:

1. Prepare a study on emerging energy security risks and risk mitigation in a global context, including the potential contribution of increased energy exports of the Caspian Sea Region to provide greater diversity of energy supply sources to UNECE member States;

2. Convene a seminar to examine energy transport corridors, new infrastructure, transmission systems and investment requirements for increased energy exports from the Caspian Sea Region including conclusions and recommendations on enhanced energy trade and international cooperation;

3. Submit the conclusions and recommendations of the study and seminar to a subsequent session of the Committee on Sustainable Energy for a decision on further transmission to the relevant bodies of the United Nations system and to recommend follow-up activities for international cooperation on energy security.

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¹ Source: International Energy Agency World Energy Outlook, 2004.

Ref: ECE/IREEDD/05/P07