Energy transit in Eurasia: challenges and perspectives

The Energy Charter's Transit Protocol is an important 'missing link' in the legal framework necessary to support an open and integrated Eurasian energy market. This was the conclusion of a Conference on 'Energy Transit in Eurasia: Challenges and Perspectives' held in Brussels on 19-20 October 2004.

The Conference brought together over 150 participants from governments, energy companies, financial institutions and international organisations, with the aim of discussing the role of transit in promoting energy security. The question of energy transit is growing in importance with the increased interdependency and integration of energy markets, and senior representatives of major producing countries (the Russian Federation, Kazakhstan, Iran, Qatar), and from key existing and potential energy transit countries (Ukraine, Turkey) provided their perspectives on this issue, alongside those of speakers from the energy industry, international financial institutions and the International Energy Agency.

Among the key issues addressed by the Conference was the need for a stable and predictable framework governing cross-border energy flows across Eurasia, based on a consensus among the countries and interests concerned. This is the objective of the Energy Charter's draft Transit Protocol, on which a large degree of consensus has been reached among the fifty-one member states of the Energy Charter. In its present form, the Protocol would address critical issues for energy transportation networks, in particular the conditions for access to networks and the stipulation that tariffs charged for energy transit must be objective, non-discriminatory and cost-reflective.

Speaking after the conclusion of the Conference, the Secretary General of the Energy Charter Secretariat, Dr Ria Kemper, noted that huge investments are needed in order for Eurasia to meet its projected energy needs, and emphasised that a reliable framework for energy transit is essential if these investments are to be realised.

"The aim of the Energy Charter process is to provide a foundation of common rules, facilitating investment in those projects offering the most advantageous combination of high economic efficiency and low environmental impact. A completed Transit Protocol would provide a strong additional impetus to these investments by clarifying - on a multilateral basis - how energy resources can be brought across different national borders and jurisdictions to consumer markets. I strongly hope that the three remaining issues in the text of the Protocol - all of which are the subject of continuing consultations between the European Union and the Russian Federation - can be resolved as soon as possible."

Programme and Presentations

Welcome address - Ria Kemper, Secretary General, Energy Charter Secretariat

Session 1: Energy Transit - Problems and Risks: Industry Views

The aim of the session was to evaluate existing barriers and risks for energy transit in different parts of the Energy Charter Treaty community, in particular, from the perspectives of the energy industry and financial community.

Chair: J.-M. Devos, Secretary General, Eurogas

The Role of Gas Transit and its Demand for Investment - W.C. Ramsay, Deputy Executive Director, IEA

Gas Transit Risks and their Impacts on Transit Infrastructure Development - P. Shapiro, Senior Banker, EBRD

Transit Issues: Importer Perspective - C. Berthelot, Head of European Affairs, Gaz de France

Transit Issues: Transiter Perspective: The Nabucco Project as a Gas Bridge between Asia and Europe -R. Mitschek, Managing Director Nabucco Pipeline Study Company, OMV Gas

Transit Issues: Exporter Perspective - S.A. Emeliyanov, Deputy Director General, Gazexport

LNG: Alternative Way to Markets - Escaping Transit Risks? - H.V. Rogers, Head of Fundamental Analysis, BP Gas, Power & Renewables

Session 2: Energy Transit - Problems and Risks: Country Views

The aim of the session was to evaluate the existing barriers and risks for energy transit from different perspectives: producer, consumer and transit countries

Chair: Prof. J. Stern, Director Gas Research, Oxford Institute for Energy Studies

Turkish perspective - S. Cimen, Deputy Undersecretary, Ministry of Energy and Natural Resources

Iranian perspective - M.H. Nejad-Hosseinian, Deputy Minister on International Relations, Ministry of Petroleum (speech in English)

Qatari perspective - A. Alkwari, Senior Manager, Qatar Petroleum

Ukrainian perspective - B. Kliuk, Deputy Minister, Ministry of Fuel and Energy (speech in Russian)

Kazakh perspective - K.G. Rakhmetova, Director Pipeline Transport Development, KazMunaiGaz

Session 3: Energy Transit: The Role of the Energy Charter Process

The aim of the session was to introduce the Energy Charter instruments with a view to establishing a stable multilateral framework for ensuring secure energy flows in the Eurasian area.

Chair: Prof. T. Waelde, CEPMLP

Transit provisions of the Energy Charter Treaty and draft Transit Protocol - A. Konoplyanik, Deputy Secretary General, Energy Charter Secretariat

Model Agreements: Investment Security in Trans-Boundary Energy Transportation Projects - P. Griffin, Partner, Herbert Smith