Oil and natural gas constitute valuable resources as they continue to dominate world energy consumption, crowding out other alternative resources (nuclear power, renewable energy sources), which cover less than 20 percent of energy requirements. As a result, the regions of the Middle East and former Soviet Union, which hold the largest oil and gas reserves worldwide, naturally attract international players’ strong interest and fierce competition for the control of energy sources and routes.

Caspian oil reserves

Specifically, after the dissolution of the Soviet Union, the countries of the Middle East faced competition from new oil-producing countries around the Caspian Sea (notably Azerbaijan and Kazakhstan, as well as Uzbekistan and Turkmenistan), with Russia, Iran and ― naturally ― the United States as the leading players in the region, who either produce energy or try to control the oil and gas pipelines. The region of Southeastern Europe is strategically located in relation to energy flows to the European Union, which competes with emerging China in energy dependence and imports.

After a 15-year period that saw Russia lose its full control of the Caspian fields and the United States increasing its influence, we are now witnessing Russia’s dynamic comeback to the international scene, underpinned by its energy policy. Being the top gas and a major oil producer (second only to Saudi Arabia), Russia seeks to pursue its interests in the context of a reliable global energy supply and security system. At the same time, there is a build-up of strong US-Russian competition along the Caspian-Caucasus-Black Sea-Southeastern Europe zone, aimed at determining which countries’ energy resources will be channeled to the European markets, in what quantities and through which pipelines.

Energy networks

In this game, the strategically most important pipelines are: for the United States, the Baku-Ceyhan pipeline, inaugurated last June and aimed at reducing Russia’s influence and bypassing Iran (which provides the shortest route to the Persian Gulf); and for Russia, the upgrading of the Kazakhstan-Novorossiysk oil pipeline, and the Blue Stream underwater gas pipeline across the Black Sea, bypassing the unstable South Caucasus region.
Russia’s geostrategic interests extend to energy networks connecting its pipelines with Western European countries, through or bypassing Eastern Europe, as is suggested by for example the agreement with Germany to build an underwater gas pipeline across the Baltic Sea and the importance attached to the Southeastern European networks, such as the Turkey-Greece-Italy gas pipeline.

Russia wants the latter to carry Russian gas too, but comes up against reservations by the United States, which insists that Azeri gas is sufficient, and by the EU, which would not like the monopoly of the Russian giant Gazprom to expand to a pipeline to be constructed with funds from its trans-European network programs. Other ― for the time being only speculative ― alternatives include a Bulgaria-FYROM-Albania-Adriatic Sea pipeline and a Bulgaria-Romania-Hungary-Austria (Nabucco) pipeline, which would carry Azeri, Kazakh and Russian gas.

The role of Turkey

Against this background, Turkey, favored by its geographical position, claims a strategic role in energy, which would not be limited to collecting transit duties, but would include buying and reselling energy. Its permanent reservations about the Burgas-Alexandroupolis pipeline project are connected to its planning of the rival (but cost-ineffective) Samsun-Ceyhan pipeline. However, Turkey’s overambitious plans, combined with traffic bottlenecks in the Dardanelles, have increased Russia’s determination to ‘unblock’ the Burgas-Alexandroupolis pipeline project. Besides, the project is not opposed by the United States, as US-based Chevron controls Azeri oil, which, together with Kazakh and Russian oil, will be carried by the pipeline.

The European Union

The energy-dependent EU naturally focuses its interest on supply safety and on source and route diversification. In this context, several initiatives were developed, such as the energy dialogue with Russia, the Energy Community of Southeastern Europe and the European Neighborhood Policy, which, however, have not yielded any significant results. The lack of an integrated energy and foreign policy, compounded by ‘economic patriotism’ phenomena in the energy industry, undermine the cohesion of the EU and make it a small geopolitical player.

Greece

For Greece, the agreement on the construction of the Burgas-Alexandroupolis oil pipeline and the prospect of building the Turkey-Greece-Italy gas pipeline certainly help upgrade the country’s strategic importance, transforming it from an energy consumer into a transit center and an energy hub. At the same time, parallel investment relating to the construction and management of the project could boost growth in northern Greece.
However, it would be an exaggeration to say that Greece will assume a ‘leading role,’ since the control of energy flows is a game played on a larger scale, and is in the hands of stronger players. In this connection, it should be taken into account that 80 percent of the Turkey-Greece-Italy pipeline capacity has been conceded to Italy.
Theoretically, interconnecting energy networks will create common interests and a stability and safety net. On the other hand, the struggle for the control of energy flows gives rise to rival interests, conflicts and instability. In an extremely volatile international environment where there are no fixed and established interests, energy diplomacy certainly cannot only rely on the good intentions of cooperation programs developed in its context, but also requires tactful handling and qualitative strategic planning.

By Dr George Bakatsianos
Dr George Bakatsianos is ambassador at the Greek Ministry of Foreign Affairs and an expert in European Union affairs. The views expressed in this paper are the author’s and should not be attributed to the Greek Ministry of Foreign Affairs.

Greek Ministry of Foreign Affairs website: www.mfa.gr