Central Asia is geopolitics and “war” of pipelines.

Central Asia is the region where the interests of almost all main world players intertwine. Geographical feature of an arrangement and considerable stocks of hydrocarbons became the reasons on which the active involvement in the region is carried out by the countries adjoining on it – Russia, China, Iran, Turkey and the remote states – the USA and EU. The Doctor of Economics, head of economy department of Institute of the CIS countries Azganush Migranyan told about the situation development.

One of the main areas of the competition in the region is the use of existing and construction of new pipelines on transportation of hydrocarbon resources. The extent of influence of each of the competing parties considerably depends on where they will be directed. In this regard, whole “ball” of designed and existing pipelines was created in the region, which competes for access possibility to Central Asian resources.

Oil and gas potential in the countries of Central Asia.

Kazakhstan. Today it is one of the largest countries of the world of hydrocarbons stocks and their production in near prospect. It takes the 12th place in the world (without the insufficiently precisely estimated stocks of the Caspian shelf) according to the volume of explored stocks of oil, gas and gas condensate - the 15th place, the oil production - the 23rd place. As a whole up to 2 % (without the Caspian shelf) of the explored and confirmed world stocks of oil is the share of Kazakhstan.

Look-ahead oil resources of the country are estimated in approximately at 13 billion tons of oil. The annual volume of oil production in Kazakhstan makes 79, 4 million tons according to data of 2010 year. Export made about 70, 7 million tons, more than 30 million tons from which (about 43 %) are put to EU countries. The country declared that assumes to extract 120-150 million tons of oil and about 30 billion cubic meters of gas by 2015.

Explored stocks of natural gas in Kazakhstan make about 2-2, 5 trillion cubic meters. Potential resources of natural gas of the Republic of Kazakhstan are estimated at 10 trillion cubic meters. Thus 70, 4 % of all stocks of free gas are concentrated on the Karachaganak field. The opening of a large-scale deposit of oil on a shelf of the Northern Caspian Sea (Kashagan field) became an appreciable event of 2000 year in Kazakhstan. “Kashagan's” stocks originally estimate at 7 billion tons.

Already in 1993 the project on production of hydrocarbons on the Tengiz field with participation of the American companies started and in 1996 – the project on production of hydrocarbons on the Karachaganak field with participation of the European companies. “Tengiz” and “Karachaganak” are the largest active oil and gas fields of Kazakhstan on which about 55 % of the Kazakhstan oil and over 76 % of gas are extracted.

Such stock level is provided with existence of transport pipelines and channels on oil transportation. All volume of oil extracted in Kazakhstan is distributed for today at once at the moment of production according to the signed contracts. That is there are no stocks for realization to the third countries which do not have the contract.

Today the influence of Europe and the USA in this country is defining, but at the same time rather independent, extremely pragmatic policy from calculation of economic efficiency and ratios of expenses and benefits which are received by Kazakhstan is made.

Uzbekistan. This country has absolutely isolated policy and, unlike Kazakhstan, doesn't consider the energy resources as an export material. According to officially approved strategy of economic development till 2030, the export of finished commodity after processing of primary resources is supposed. Therefore the extracted resources are used within the country as much as possible. Only the gas on leftover principle is used for export for the purpose of operation of the pipelines which have remained from the Soviet period. These pipelines provide Kyrgyzstan, Tajikistan and the small part of gas is pumped over to Russia.

The gas branch is considered the most developed. It is much more modernized in comparison with all other Central Asian countries. Uzbekistan invested more than 80 billion dollars in modernization of gas branch for the last 5 years. The same sum is put approximately in petrochemistry. The main Gas pipeline “Bukhara – Ural” 2 lines and the second “Central Asia – Centre”, the new gas pipeline which is strategic “Uzbekistan – China”. It is put into operation and exploited since 2009. Today the volumes of gas pumping in this direction are increased in times. Joint consortia are signed with China on the development of fields. Close cooperation on all questions develops - oil production, petrochemistry.

6 petrochemical plants on processing with the joint capital of China are constructed.
Geological stocks of oil – 5 billion tons, the proved stocks of natural gas – 3, 5 trillion cubic meters. Uzbekistan takes the 11th place in the world on production of natural gas. Annual gas production is 65 billion cubic meters from which 5 billion cubic meters are delivered for export to Kyrgyzstan, Tajikistan and the Southern Kazakhstan.

Kirgizstan. All stocks of hydrocarbons aren't extracted today in view of very difficult bedding and high cost of the development of these fields. Generally the coal is extracted in Kirgizstan. The coal industry is developed from the Soviet period. Central Asia has the volume of stocks second for the importance after Kazakhstan. According to the official statistics, 30 % of needs of Kirgizstan in primary energy resources are supplied at the expense of own production, but actually this figure makes 21-25 %. Gas arrives from Uzbekistan, oil and oil products - from Russia and Kazakhstan. The main energy resource of the republic is the hydroelectric power. On water resources Kyrgyzstan takes the third place among the CIS countries after Russia and Tajikistan. The full hydropower potential of the large and average rivers of the republic makes about 142, 5 billion kilowatt per year. Now about 10 % of water resources are used only. Thus the dependence of the country on external energy resources is estimated at 40 %.

Tajikistan. There are no primary energy resources. There is only a source in the form of the hydroelectric power. Possibilities of development are caused by an environment - concentration of water capacity of all Central Asia. Today Tajikistan owns 85 % of water resources though uses no more than 10-15 % and has big deficiency of energy resources - 5 billion kilowatt per year. The main supplier of the electric power for Tajikistan during the winter period of deficiency is Uzbekistan, with which it has rather difficult relations because of Rogunsk hydroelectric power plant under construction.

Azerbaijan. The oil explored stocks in Azerbaijan are estimated in 4,5 – 4,8 billion tons. The most perspective are the sea fields which are important for economic growth of the country. Oil stocks on a land are exhausted to the present time. The volume of oil production is about 45 million tons a year (the 21st place in the world), gas – 16,3 billion cubic meters (the 45th place in the world). The specific weight of oil and oil products makes 80,6 % in total amount of export. Today there is a rigid competition in the direction of extracted resources in the various parties on consumers. There is a competition between three gas pipelines – “Nabucco", South Stream and TANAP (trans-Antalya gas pipeline). There are also new projects – “White stream” and various European options of transportation. The main field providing the filling of all these pipes is “Shah-Deniz”. This field develops today about 10 billion cubic meters which should fill one of the gas pipelines. The most appropriate on financial expenses and payback periods is TANAP which provides the interests of Turkey.

Turkmenistan. It is one of the leaders of the Caspian region. Gas is generally extracted and exported. Gas stocks in Turkmenistan at present make 44, 25 trillion cubic meters (25, 13 trillion cubic meters established of them), oil - 8, 76 billion tons. Nearly a half of gas stocks in Turkmenistan, 21 trillion cubic meters, is the share of a field “South Iolotan”. Turkmenistan intends to make the oil production to 67 million tons per year and gas to 220 billion cubic meters a year by 2030 year.

Pricing policy and competition of transportation routes.

Today there is a competition not of the countries extracting the primary energy resources, but consumers of these resources. Specifics of these resources is such that it is not enough to own them, it is necessary to provide their physical transfer to the consumer that is rather difficult and technically and financially. In this regard the main routes of oil moving have great value, existing and projected which settle down in this region.

The major factor in this situation is the transportation price – one of the main reasons for a choice of routes by the country supplier. For example, the price on a tanker route “Aktau – Baku” for Kazakhstan makes 10 dollars per ton, “Turkmenbashi – Baku»”- 13 dollars per ton. Thus the cost of oil pumping on the Russian pipelines, for example, for Kazakhstan makes 6-8 dollars. For this reason Kazakhstan prefers the Russian pipelines.

The geopolitical component which substantially is present at this sphere is crossed with questions of a sure profit at a choice of transportation option and more often the economic parameters become the main at decision-making. From this point of view Kazakhstan, despite big share presence of the EU companies and the USA at the power complex, transports the energy resources via the Russian pipelines. And even the owners and developers of fields can't change somehow the direction of these streams in view of their price benefits. When the matter is not about the policy, but profit, the companies of the USA and EU choose those directions which are more favourable.

Therefore the Russian side considers a question of depreciation and compensation of own losses from the point of view of geopolitical interests. For example, the transportation price on a route “Tengiz – Novorossiysk” makes 9-10 dollars. And though the transportation on this new pipeline is more expensive of 10 dollars per ton, but Russia compensates these losses at the expense of volumes of pumping not only on this pipeline, but also on another. In this situation the compromise between geopolitical and economic interests is always looked for. It is impossible to agree with opinion that the price is established only proceeding from political reasons to do much harm to the competitor at a loss to itself. Any price is established first of all with possibility to cover or at least to reduce on self-support of an investment in the oil pipeline.

Besides, the issues of Russia participation in foreign pipelines are considered not far from the point of view of expression of competitors, an exit to the front competition. Policy of the front competition overcame in this branch. It can appear that in mass media, it can be advertised, but thus the true purpose is the achievement of the maximum economic effects.

Trans-Antalya gas pipeline, “Nabucco” and pan-Turkish idea.

Economic criteria became the main in the actions of Turkey, connected with projects of pipelines. Everyone knows the sensational project Nabucco pipeline which was advertised and lobbied by all EU countries, the USA and was considered as the alternative to the Russian South Stream pipeline. Today Turkey being one of interested parties completely refused this project. It is known that at the end of 2011 it was declared about the transfer of the beginning and rise in price of “Nabucco” construction. Initially the cost of this project made 6-8 billion dollars and now by the general estimates it is 24-25 billion dollars.

The refusal cause of Turkey is simple – today this country is interested in other pipeline. It is trans-Antalya oil and the gas pipeline TANAP which is planned to build together with Azerbaijan. It is important for Turkey because allows to get the access for transportation to gas and oil fields of all near-Caspian region. It will allow to provide the dependence of the European consumers on the Turkic countries led by Turkey. It is new, so-called, pan-Turkish idea of the Big Middle East which is built through the use of the market of energy carriers, through transit use. If Turkey manages to construct TANAP, it will mean that she receives considerable control over moving of oil to Europe. Control will be based on technical, ecological and price requirements which Ankara can represent both to Russia, and to the European countries. If Turkey manages to make that is born in plans, from the point of view of potential risks it will be “monster” in ten times more terrible for Europe than Ukraine as incommensurably more resources will be concentrated here.

Why there is such change of interests? Because it is impossible to be guided only by political reasons without having the price confirmation. As “Nabucco” costs so expensive and ТАNAР, for comparison, costs 6-8 billion dollars on financial investments, Turkey makes a choice for the last. There is a notable difference in the price and return is possible in short-term prospect. Construction of the trans-Antalya pipeline “will actually close” “Nabucco” as this project was focused on the Azerbaijani gas, first of all from the Shah-Deniz field. Now there will be simply nothing to fill the gas pipeline advertised in Europe.

On this background the behaviour of the Russian “Gazprom” is explainable. Russia doesn't consider today the certainty of relationship only in the field of the competition and expression. Economic expression is possible not only by means of exile of the competitor from the market, but also by means of cooperation with it. This form of the competition has the name of competitive partnership and will consist in creation of consortia, joint hubs, pilot projects.

Turkmenistan – the east cunning and the Chinese investments.

The fields opened in Turkmenistan give very high level of production. In case of realization of the Turkmen-Iranian gas pipeline, Iran even is ready to the preservation of the fields under condition of intake of the Turkmen gas. Thus “Gazprom” cooperates with the Turkmen-Iranian project.

The issue of use of Turkmen gas remains very difficult. The Turkmen president made the promise about issue consideration of gas supply to Ukraine, but at the same time he made the promise about supply of gas to EU, Iran and Pakistan – typical east cunning. He has a lot of gas, but there are no pipelines for implementation of all these promises. Turkmen gas is pumped over generally via the Russian pipelines. Turkmenistan is very specific country and here the issues of prospects consideration of movement of energy carriers decide from the point of view of the maximum reduction of expenses. The policy and motives are rather simple – we have a lot of gas, it is rather cheap at production, the resource is rather demanded, therefore there is a possibility to choose the most favourable options of transportation. The country is in rather advantageous geographical position unlike Uzbekistan, there is an access to the sea, existence of the former Soviet pipelines. And such situation allows to establish a gradual, small rise in prices. Turkmen gas is cheaper than other offers in the market, but thus Turkmenistan imperceptibly raises the prices and receives the income.

If to speak about the validity and prospects of projects, it is possible to compare the pipelines in China and the Nabucco project. The pipe which is constructed from Turkmenistan to China was financed by China. “Nabucco” "is under construction" during 10 years – zero result. And here 4 years have passed from discussion till introduction into operation. These are high rates, but thus Turkmenistan carries out careful policy, without wishing to be involved in the potential interregional conflicts. The policy in the sphere of energy carriers considerably depends on an internal situation in this country because the economy completely depends on export of energy resources.

EU actions in the sphere of deliveries of energy carriers are the testimony of dependence on the USA.
Having considering a question of possible power policy of EU in connection with an arising new role of Turkey and prospective construction of the TANAP gas pipeline, it is necessary to make some important remarks.

Questions of relationship and choice of EU are limited to policy of the USA in many respects. Such conclusion can be made, analyzing behaviour of EU in the market of energy carriers and at the conclusion of contracts. EU makes absolutely illogical actions from the point of view of the interests. For example, when Russia offers EU an alternative route at lower price, more favourable commercial conditions that, eventually, leads to consumption reduction of price, Europe refuses such offers, motivating it with that it will begin to depend exclusively on “Gazprom” and Russia.
This is rather disputable statement for many reasons. Is it an exclusive dependence really? Europe uses not only the Russian gas, there are the deliveries from Qatar, Emirates. And there is nothing to speak about the monopoly, more than 78 % of a share of consumption even under a condition if Russia suddenly instantly carries out “Northern” and “Southern Streams”. From this point of view the myth which is duplicated in mass media breaks that Russia aspires to monopoly. Russia aspires to strengthening of the position in a certain commodity market, in this case in the market of energy carriers. This is the normal behaviour of any subject of the market. Actions of Europe on acceptance of a power charter, on influence on Ukraine, in relation to branches of “Gazprom” shows the obvious underestimation or refusal of own interests. It would be strange to assume that the unique geopolitical interest of Europe in that “Gazprom” won’t receive the extra income.
Concerning the mythical extra income, I argue as the economist that Russia doesn't receive any extra income because the production and transportation of the Russian energy carriers from Siberia and to the West – it is rather expensive action, especially in comparison with the same carriers from Qatar. These are non-comparable expenses. Therefore there is a question of obtaining the corresponding income and presence in the market.

At carrying out of such unfriendly policy, there is a similar problem of presence of Europe in the Russian market by all types of the finished commodity, the realization of which is extremely necessary for Europe in the conditions of crisis. And from this point of view, the loss which will be incurred by Europe, obviously outweigh the income, half-received by Russia. Therefore, in my opinion, Europe looks today rather operated from Washington. And the interests of the USA in the region are absolutely others. For Washington it is extremely important not to start up Russia to Europe to strengthen own presence at Central Asia, on the Caspian shelf owing to growth of requirements on energy carriers from these countries. Moreover, the USA in the declarations, in the strategy which are published, openly say that the Russian energy resources should be sent to the east to China not to give two dangerous players, Russia and China, actively to enter foreign markets, closing them on each other.

Thus, they aspire to disperse attention and financial resources of Russia in several directions for hindrance of an exit to the European territory.

In this case the Russian strategy is absolutely other - it a priori defines the movement to the west. For this reason Russia rather quietly looks at Turkmenistan, Kazakhstan, Uzbekistan which actively pump over the resources to China. For the last four years two branches were constructed, each of them on two lines - it is “Uzbekistan – China” and “Turkmenistan – China”. There is more ambitious project “Turkmenistan – Afghanistan – Pakistan – India” (TAPI) and also the joint project with Iran, but a political situation round this country interferes with its realization.

There is an essential difference of these projects from expected pipelines from the Central Asian region to Europe. Unlike “Nabucco”, both projects and finance are ready as the filling with existing fields is guaranteed. And unlike the trans-Antalya pipeline, the large volumes of deliveries are planned considerably. TANAP will be provided with only the Azerbaijani Shah-Deniz field - Turkmenistan and Kazakhstan didn't give the consent to transfer the resources on this route.

Thus, the strategy chosen by Russia allows to keep the predominating influence in the Central Asian countries as the main supplier of transport services and successfully to compete to projects of pipelines which are initiated by the western countries for strengthening of the positions in this region.