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Iskandarov, K., & Gawliczek, P. (2020).The South Caucasus and energy security: Challenges and prospects in Miroslaw Banasik, Piotr Gawliczek and Agnieszka Rogozinska (eds) The Russian federation and international security, Poland: Difin publishing house, 2020, pp. 169-180.

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Abstract

The abundance of the energy resources in the South Caucasus, as well as its geographical location, which is suitable for oil and infrastructure are the main factors drawing ample attention from the outside. The paper seeks to highlight the importance of the South Caucasus as a historical energy provider and transit conduit and a promising energy hub for the foreseeable future. The authors touched upon the historical evolution of energy security concept and tried to envision the future prospects for the broader region, including the potential of the Caspian basin. The energy projects related with the region have been delineated and construed. The authors tried to conclude the paper with the recommendations for further enhancement of energy security concept with regards to the South Caucasus.
1
Citation:
Iskandarov, K., & Gawliczek, P. (2020).The South Caucasus and energy security: Challenges
and prospects in Miroslaw Banasik, Piotr Gawliczek and Agnieszka Rogozinska (eds) The
Russian federation and international security, Poland: Difin publishing house, 2020, pp. 169-180.
THE SOUTH CAUCASUS AND ENERGY SECURITY: CHALLENGES AND PROSPECTS
Khayal Iskandarov1
PhD, assoc. prof. Piotr Gawliczek2
1War College of the Armed Forces, Republic of Azerbaijan
2University of Warmia and Mazury, Poland
E-mail: xayal1333@gmail.com
pgawliczek@gmail.com
Abstract. The abundance of the energy resources in the South Caucasus, as well as its
geographical location, which is suitable for oil and infrastructure are the main factors drawing ample
attention from the outside. The paper seeks to highlight the importance of the South Caucasus as a
historical energy provider and transit conduit and a promising energy hub for the foreseeable future.
The authors touched upon the historical evolution of energy security concept and tried to envision the
future prospects for the broader region, including the potential of the Caspian basin. The energy
projects related with the region have been delineated and construed. The authors tried to conclude the
paper with the recommendations for further enhancement of energy security concept with regards to
the South Caucasus.
Keywords: energy security, South Caucasus, infrastructure, pipeline, route.
Introduction
One of the most challenging issues in the South Caucasus region is the energy security, which
attracts regional (Russia, Turkey, Iran), as well as global actors (the US). Highly influential
organizations like EU and NATO also seek additional sources of energy, which in turn necessitates an
energy trade as a major dimension of the cooperation between Europe and the South Caucasus. This
issue must be addressed with due attention from the viewpoint of both classical and hybrid threats.
Thus, the threats can be directed against a specific target or might be unintentional. In the latter, the
attacker does not anticipate the effects of his actions, which are not limited to the original target and
might have a “ripple effect” with dire consequences.
1
Various authors addressed an issue of energy security, however few highlighted the importance
of the South Caucasus region in the global energy network. Ali Hasanov touched upon the geostrategic
interests of leading countries in the Caspian basin and South Caucasus region with regard to the energy
resources.
2
CASCADE Project “Energy security in the South Caucasus: views from the region”
seeks to shed light on energy security notions from South Caucasus governments and energy
companies, as well as of citizens and consumers. It finds that there are significant differences in the
perceptions of the different actors in the energy sector within each South Caucasus country that could
lead to political conflicts over energy security strategies.
3
Meliha B. Altunışık and Oktay F. Tanrisever
assess the key importance of energy, argue that the prospects for regional integration are weak, and
1
Ionuţ Alin Cîrdei, Lucian Ispas, “A possible answer of the European Union to hybrid threats”, Scientific Bulletin Vol.
XXII No 2(44) (2017): 71-78.
2
Əli Həsənov, Xəzər Qara dəniz hövzəsi və Cənubi Qafqazın geoiqtisadiyyatı: Azərbaycanın enerji siyasəti, Bakı:
Zərdabi LTD, 2016.
3
Energy security in the South Caucasus: views from the region, Leila Alieva and Natalia Shapovalova eds., CASCADE
Project, funded by the European Union's Seventh Framework Programme (FP7/2007-2013) under grant agreement
613354, Paris, November 2015.
2
state that while the approach of Europe and the United States has been confused and weak, Russia’s
interest and involvement in the region is strong, and growing.
4
Tamar Pataraia has discussed the
challenges to the security of transit infrastructure in South Caucasus and the European Union’s role in
reacting to the existing challenges and political aspects of transit infrastructure.
5
Stefan Meister
underscores the importance of energy projects stretching from the Caspian Sea to Europe and brings
Azerbaijan’s role as an energy exporting country and envisions its prospects as a transit country.
6
The analysis of literature review shows that, the topic has not been fully covered and the
importance of the region as a whole has been overlooked. The questions raised in the paper are as the
following: 1) How the energy security of the South Caucasus region is maintained? 2) To what extent
the South Caucasus region may contribute to the global (particularly European) energy security? The
objective of the paper is to highlight the importance of the South Caucasus region in the European
energy security. The research methods primarily used in the book are comparative analysis and
synthesis.
The evolution of the energy security concept
The International Energy Agency (IEA) defines energy security as “uninterrupted availability of
energy sources at an affordable price”.
7
The United Nations defines energy security as “the continuous
availability of energy in varied forms, in sufficient quantities, and at affordable prices”. A key issue is
the availability of energy resources. The reliable continuity of energy supply is another aspect of
energy security.
8
Energy insecurity, therefore, is a lack of the ability to provide or ensure the constant
accessibility of energy sources at a fair price. The absence of energy security and the existence of
energy insecurity lead to negative economic and social effects for national economies.
9
Energy
security is not perceived in the same by energy exporting and importing countries, since they have
different interests. While energy importers focus on security of supply, i.e. sustainable energy
production and uninterrupted oil and gas deliveries from energy exporters, producers are concerned
with security of demand, implying stable revenues and guarantees of demand security from energy
consuming nations.
10
The concept of energy security is attributed to Winston Churchill and Georges Clemenceau, who
perceived oil supply security as a primary factor in the World War I.
11
However, it came to the fore in
the wake of Suez Crisis in 1956, which precipitated energy instability in Europe for the first time.
12
Post-war reconstruction was supported by the technological developments of the 1950s and 1960s,
increasing demand for fossil resources. A growing world population also underscored the value of
energy. ArabIsraeli War in 1973 underscored the importance of energy security once again.
Therefore, the 1973 oil crisis is considered the turning point, as states agreed that energy security was
not simply a commercial issue.
13
Because, unexpected fluctuation in oil prices had significant impacts
on their economies. William Flynn Martin and et al. observe that, energy security referred to the stable
4
Meliha B. Altunışık, Oktay F. Tanrisever, The South Caucasus - Security, Energy and Europeanization, Routledge, 2019.
5
Tamar Pataraia, “Energy transit and security imbalance in South Caucasus: The road between Russia and the European
Union”, June 1, 2015, https://bit.ly/2uRDK4P.
6
Stefan Meister, “Energy Security in the South Caucasus the Southern Gas Corridor in its geopolitical environment”,
DGAPkompakt Nº2, January 2014, https://bit.ly/39paqSo.
7
Ulviyye Aydin, Energy Insecurity and Renewable Energy Sources: Prospects and Challenges for Azerbaijan, ADBI
Working Paper 992, Tokyo: Asian Development Bank Institute, 2019, https://bit.ly/38vLk34.
8
Bruce G. Miller, “Coal and Energy Security”, December 2011, https://bit.ly/2PQ5cYd.
9
Ulviyye Aydin, Ibid.
10
Ulviyye Aydin and Dina Azhgaliyeva, “Assessing Energy Security in the Caspian Region: The Geopolitical Implications
for European Energy Strategy”, ADBI Working Paper 1011, Tokyo: Asian Development Bank Institute, 2019,
https://bit.ly/2VQ3ael.
11
Ibid.
12
Kazutomo Irie, “The Evolution of the Energy Security Concept and APEX Energy Cooperation”, IAEE Energy Forum
(Singapore Issue 2017): 38-40.
13
Ulviyye Aydin and Dina Azhgaliyeva, Ibid.
3
supply of energy (mainly oil) resources after the revolution in Iran (1979).
14
Thus, since the 1970s,
energy security has become one of the main targets of states’ national strategies. Geopolitical
developments in the world following the collapse of the Soviet Union has added a new dimension to
energy security.
15
As early as in the 19th century, oil has been the driving force behind the growth of production
and trade in the South Caucasus region. Nobel brothers were first individuals who realized the
potential and importance of the region. Jordanka Galeva observes that, in 1897, the oil production in
this region accounted for 45% of world’s entire oil production and thanks to this region Russia was the
leader in oil sector during the 1898-1902 period. In comparison, at the time of dissolution of the
USSR, the oil produced in this region accounted for only 3% of the total world production, with the
largest quantities originating from Azerbaijan. However, today oil and gas reserves are respectively
estimated at around 75 billion barrels and 6.9 trillion cubic meters in the Caspian basin.
16
The South
Caucasus, observed as the “Balkans of Eurasia” by Brzezinski has been a playground of regional and
world powers since the late 20th century. The region is of great importance in terms of not only energy
sources, at the same time as a nexus of energy and transport routes.
17
In the mid-1990s, the South Caucasus states began rebuilding their impaired energy
infrastructure while at the same time deciding which energy spaces they saw themselves as inhabiting.
European market began to fill the void created by the collapse of the Soviet energy system.
18
Since the
2000s, the South Caucasus energy transit corridor has occupied a significant place within the
formation of the European Union’s energy security system. It starts with Azerbaijan supplying the EU
member states with Caspian Sea oil, using both offshore and onshore infrastructures through the
pipelines depicted in Figure 1.
19
Figure 1. Pipelines of Azerbaijan
20
14
Kazutomo Irie, Ibid.
15
Ulviyye Aydin and Dina Azhgaliyeva, “Ibid.
16
Jordanka Galeva, “Energy Resources as Factors of Geopolitical Importance of the Caspian Body of Water”,
Mediterranean Journal of Social Sciences, Vol 7 No 5 (September 2016): 151-157.
17
Hatəm Cabbarlı, “Cənubi Qafqazın geosiyasi vqeyi təhlükəsizlik problemləri”, August 08, 2012,
https://bit.ly/2IdxJTh.
18
Karena Avedissian, “Understanding the Region: Energy in the South Caucasus”, Jan 31 2020, https://bit.ly/2uOKd0n.
19
Tamar Pataraia, Ibid.
20
Baku-Tbilisi-Ceyhan Pipeline”, https://bit.ly/39K6Oue.
4
The South Caucasus and energy security
Energy cooperation between Turkey, Azerbaijan and Georgia has opened up new vistas for
greater integration within the European market. This arrangement, however, has marginalized
Armenia’s position due to its tense relations with Turkey and Azerbaijan, and lack of natural resources
forcing it into greater reliance on Russia for energy resources. Azerbaijan has become more self-
sufficient due to its oil reserves, beginning to export its energy through Georgia as an important transit
country.
21
Thus, Armenia has been excluded as a transit of Caspian energy sources. This imbalance
between the states of the South Caucasus in terms of energy dependence makes it difficult to ensure
the stability of energy transit regarding the polities shaped by European and Russian influence.
22
The
problem is that, there is not a unity among the nations to maintain the energy security of the region.
Azerbaijan is an energy producing and Georgia is a transit country, while these two nations are
struggling to achieve guarantee, Armenia is a real menace to regional security, which in its turn
undercuts the global security. Thus, any decision made in favor of Armenia will definitely be against
Azerbaijan and at least will detract from Georgian security. Therefore, in order to ensure the energy
security of the South Caucasus a global approach should be applied ranging from simple forums
among all three nations to developing new partnerships with Western countries and organizations,
which desperately need the natural resources of the region and seek an access to Central Asian
resources. Azerbaijan and Georgia have become a part of the European corridor. Europe supports these
countries in enhancing the production and transportation of oil and gas to the West, and at the same
time, to implement EU standards and regulations within their national legislations. However,
according to Tamar Pataraia, Europeanization does not imply an immediate and complete overhaul of
the existing national regulations to bring them in line with European policies and norms. It provides
specific member states of the corridor with the opportunity to choose European norms, which they
would be able to fulfil in the foreseeable future. In this regard, it will be up to Georgia and Azerbaijan
themselves to decide to what extent they wish to become members of the European Energy
Community.
23
Armenia provides the shortest route for the transportation of the Caspian energy resources.
However, not any pipeline to Europe through Armenia has been realized to the detriment of the latter’s
economic well-being. The diversification of Armenia’s primary energy resources and supply routes is
set as a priority in different official documents in order to strengthen its energy security.
24
The second
country (after Russia) in the region, which may contribute to its energy security is Iran. Erevan is eager
to cooperate with Tehran in order to mitigate its political isolation and decrease its dependence on
Russia.
According to Karena Avedissian, Azerbaijan is one of the key energy producing and transporting
countries of the wider Caspian region and has communicated its readiness to be a part of the EU’s
energy security framework.
25
She states that, “energy independence has been a political goal for
Azerbaijan since gaining independence”.
26
Having successfully met its domestic oil (since 1998) and
gas (since 2007) demand, Azerbaijan has stood out as an energy exporter in the last two decades due to
its long-term energy strategy. European countries highly value the stability of oil and gas imports and,
as a result, the Strategic Energy Partnership was initiated between the EU and Azerbaijan in 2005.
27
Following the realization of the BTC, main export pipeline, Azerbaijan’s new Southern Gas
Corridor (SGC) project was generated. New pipelines have been projected and realized. The Trans-
Anatolian Pipeline (TANAP) and its follow-up Trans-Adriatic Pipeline (TAP) are one of the main
parts of the SGC, transporting the natural gas from the Shah Deniz-2 to the West (Figure 2). These
pipelines enable the export of natural gas from the Middle East to Europe, along with the Caspian
21
Karena Avedissian, Ibid.
22
Ibid.
23
Tamar Pataraia, Ibid.
24
Karena Avedissian, Ibid.
25
Karena Avedissian, Ibid.
26
Ibid.
27
Ibid.
5
basin. The President of the Republic of Azerbaijan Ilham Aliyev touted SGC as an energy security
project during his speech in the first opening ceremony of TANAP in 2018.
28
Figure 2. The Southern Gas Corridor
29
Azerbaijan’s gas reserves enable it to become a key player in the Southern Gas Corridor. Apart
from it, Baku is willing to diversify its energy routes bypassing Russia. Azerbaijan is at the moment
the only country able to supply the EU with a significant amount of gas through the corridor, but there
is huge potential in the region considering its connections to Turkmenistan.
30
Shahrouz Abolhosseini
and et al. observe that, Iran has the highest natural gas reserves in the world (34 trillion cubic meters).
This amount is sufficient to satisfy current EU natural gas demand for 90 years. Despite this rich
natural endowment, the country has not yet translated this potential into reality.
31
Iran is eager to use
its natural gas resources to improve its economy, however sanctions inhibit Tehran’s ambitions.
Nevertheless, these sanctions cannot be perpetual. Therefore, the incorporation of Iran together with
northern Iraq into SGC is pretty much viable in the future in case the sanctions are lifted.
Azerbaijan holds roughly 7 billion barrels of proven oil reserves and produces 841,000 barrels on
a daily basis.
32
Its natural gas potential is estimated to be 1.3 trillion cubic meters.
33
The SGC is one of
the priority projects for the EU and 10 billion cubic meters of Azerbaijani gas is estimated to be
transported from the Caspian region to the West through Georgia and Turkey. The first gas through the
Southern Gas Corridor was delivered to Turkey on June 12, 2018 and to Greece on June 15, 2019.
Turkey and Azerbaijan formally marked the completion of TANAP on November 30, a milestone in a
major project to help reduce Europe’s dependence on Russian gas. TANAP can transport up to 16
billion cubic meters (bcm) of Azerbaijani gas a year, 10 bcm for Europe and 6 bcm for Turkey, with a
potential to be increased up to 31 bcm.
34
Turkmenistan’s proven natural gas reserves (50 trillion cubic
meters) account for about 10 percent of the world’s gas reserves. However, the current level of gas
production in the country accounts for only 2 percent of the world gas production.
35
The Trans-
Caspian Gas Pipeline (TCGP) project, which passes through the Azerbaijani and Turkmen sectors of
28
“Cənub Qaz Dəhlizi enerji təhlükəsizliyi layihəsidir”, İ. Əliyev, 12.06.2018, https://bit.ly/38EvWRN.
29
Socar and BP kick off Trans Anatolian Natural Gas Pipeline construction”, 28 May, 2014, https://bit.ly/3cC548a.
30
Stefan Meister, Ibid.
31
Shahrouz Abolhosseini and et al., Energy security and competition over energy resources in Iran and Caucasus region,
AIMS Energy, 5(2) (2017): 224-238.
32
Marika Karayianni, Ibid.
33
Ibid.
34
“Turkey and Azerbaijan mark completion of TANAP pipeline to take gas to Europe”, November 30, 2019,
https://reut.rs/361NIOf.
35
“Turkmenistan says its gas reserves total 50 trillion cubic meters”, 28 May, 2017, https://bit.ly/3ay5n21.
6
the Caspian Sea, will contribute substantially to the increase of this percentage (Figure 3). This project
underscores once again the importance of the South Caucasus as a conduit for energy transport.
Figure 3. Proposed Trans-Caspian Pipeline Route from Turkmenistan to Azerbaijan
36
Georgia is the second transit country for the energy resources of Azerbaijan. Apart from it, the
pipelines transporting energy from Russia to Armenia pass through its territory.
37
Georgia itself does
not have energy resources and it is dependent on Azerbaijan. According to Tamar Pataraia a
comprehensive policy plan on reducing Georgia’s external energy dependence, which would increase
its energy security, does not exist.
38
International cooperation would attract investment, which could
help develop its national energy resources and potential while further regional integration of electricity
grids could help mitigate supply constraints.
39
The routes through which Caspian’s oil and gas reserves are exported have emerged as a political
issue since the collapse of the Soviet Union. The determination of the direction of the strategic,
geopolitical export routes has become an important part of the struggle for dominance between Russia
and the West. Russia owns the northwestern shore of the Caspian Sea and only a negligible part of its
abundant energy reserves are located in the Caspian basin.
40
Therefore, the Russian Federation has
adopted a strategy of involvement in the energy business of the other, by means of joint resource
development (production revenues) and granting access to the Russian oil and gas pipeline system
(transport revenues).
41
Russia, one of the main players of this struggle, tries to ensure the export of the
oil and gas reserves of the Caspian Sea to the world markets only through its northern route. Russia’s
main goal is to maintain its leading position in the global energy market and the traditional
mechanisms of influence on the Caspian energy resources. The geostrategic interests of Russia in the
Caspian region chime with Iran’s ambitions. Iran threatens Azerbaijan as the key geo-economic
partner of the West in the region to undermine their transnational geo-economic and energy interests in
the Caspian Basin and the South Caucasus.
42
While Iran positions itself to circumvent sanctions and
Caspian Sea boundary disputes, Russia’s strategy and influence is well established. Russia has
36
Richard Stokes, Why upcoming convention will not solve Trans-Caspian Pipeline problem”, May 22, 2018,
https://bit.ly/2D4NkC2.
37
Tamar Pataraia, Ibid.
38
Ibid.
39
Karena Avedissian, Ibid.
40
Aigerim Ibrayeva, Dmitriy V. Sannikov, Marsel A. Kadyrov, Vladimir N. Zapevalov, Elnur L. Hasanov, Vladimir N.
Zuev, Importance of the Caspian Countries for the European Union Energy Security, International Journal of Energy
Economics and Policy, 8(3), (2018): 150-159.
41
Ibid.
42
Əli Həsənov, Azərbaycan Respublikasının Milli İnkişaf Təhlükəsizlik Siyasətinin Əsasları, Bakı: Zərdabi LTD, 2016,
394.
7
significant inroads to the Caspian with its common history to the former Soviet countries and existing
infrastructure.
43
Nevertheless, taking the existing regional context into account, the transit potential of South
Caucasus can play an important role in bringing the Caspian energy resources to the global market.
44
Any issue, which poses a threat to the sustainable transport of energy resources should be addressed
seriously. The frozen conflicts in the region are primary threats to the energy security of the region and
beyond. This can be solved through active cooperation with the EU, which is the main consumer of the
Caspian energy resources.
45
Conclusions
The changing nature of the security environment prompts the European countries to contemplate
searching for alternative energy sources and diversifying energy routes. The South Caucasus for both
reasons plays a crucial role in the energy security of Europe and has proved to be reliable as far as the
security of supply is concerned. The most recently introduced energy projects in the region and
beyond, including the initiation of SGC and launch of TANAP and TAP have brought the South
Caucasus into the focus of attention again. The South Caucasus is one of the rare regions in the
European neighborhood, which lacks the unity amongst the regional countries (since Armenia is
excluded from all projects). However, its contribution to the energy security of Europe is of utmost
importance. Europe needs the South Caucasus to diversify its energy sources, as much as the latter
needs Europe to ensure the security of demand. Therefore, the initiated projects augur pretty well for
the prospects of future cooperation with the West on energy security.
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ResearchGate has not been able to resolve any citations for this publication.
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The purpose of this paper is to present a short introduction to the geopolitical importance and impact of energy resources on the definition of the legal status of Caspian body of water. The legal status of the water is regulated in accordance with international conventions or international law, and depends of the definition of water, as a sea or as a lake. The kind of water actually has a direct impact on the method of sharing of its natural resources. In the Caspian case, precisely because of its resources, (gas and oil), the issue of legal status is still open. In relation to this issue, research has shown that the position of five Caspian countries depends of their interest and benefits of the natural resources. The conclusion is that the energy resources are the primary factor for regulation of the legal status of Caspian body of water, whilst the pipeline network balances the world energetic stability. DOI: 10.5901/mjss.2016.v7n5p151
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