Friedrich-Ebert-Stiftung Regional Ofﬁce Soﬁa International Conference Black Sea Cooperation – Energy Supply and Energy Security Soﬁa, October 13, 2006 Soﬁa, 2006 1

The publication includes the papers presented at the International Conference„Black Sea Cooperation – Energy Supply and Energy Security“, organized on 13 October 2006 in Soﬁa by the Regional Ofﬁce Soﬁa of Friedrich Ebert Foundation. © Regional Ofﬁce Soﬁa of the Friedrich Ebert Foundation ISBN 978-954-9431-08-7 2

Contents 05 Angel Marin, Vice-president of the Republic of Bulgaria: „Black Sea Cooperation – Energy Supply and Energy Security“ 07 Hannes Swoboda, MEP, Vice-president of the Socialist Group of the European Parliament: „The common strategy for Europe’s foreign security and energy policy“ 16 Gernot Erler, MP, Minister of State, German Federal Foreign Ofﬁce: „Regional Cooperation and Energy Security” 24 Derek Taylor, Energy Advisor at the European Commission: „The Energy Policy of the European Union” 44 Britta Thomsen, Member of the Socialist Group of the European Parliament and Deputy Chairperson of the Committee for Industry, Science, and Energy: „Renewable Energy Sources and Sustainable Energy Policy” 52 Galina Toshewa, Deputy Minister of Economy and Energy: „The Energy Policy of Bulgaria“ 58 Tetyana Starodub, Doctor of Political Science, Chief Consultant at the Department of Global Security and EU Integration, National Institute of International Security at the National Security and Defence Council of Ukraine: „The Policy of Ukraine in the Energy Sector“ 3

68 Andrej Vorobjov, PhD., Deputy Director of the Information Policy Division at the Department of Information and Media, Ministry of Foreign Affairs, Moscow: „The Energy Dialogue between Russia and Europe” 76 Liviu Muresan, PhD., Executive President EURISC(European Institute for Risk, Security and Communication Management) in Bucharest: „Discovering Black Sea Region for the EU Energy Security Strategy“ 82 Giorgi Burduli, former Ambassador, Senior Adviser, GIOC(Georgian International Oil Corporation): „The Energy Policy of Georgia“ 91 Fasil Ahmedov, Chief Consultant of the State Oil Company of Azerbaijan Republic(SOCAR), Ministry of Industry and Energy of the Republic of Azerbaijan: „State and Perspectives of the Development of the Azeri Energy Market“ 97 Simeon Nikolov, Deputy Minister of Defence of the Republic of Bulgaria: „Bulgaria’s Contribution to Security in the Black Sea Region as a Prerequisite for Energy Supply and Energy Security” 4

Angel Marin: „Black Sea Cooperation – Energy Supply and Energy Security“ Angel Marin is Vice-president of the Republic of Bulgaria Esteemed parliamentarians and ministers, Your Excellencies, Ladies and gentlemen, It is a great honour and a great challenge for me to open today’s conference on Black Sea cooperation as a key prerequisite for energy supplies and energy security not only for the Black Sea countries, but for the entire European continent. Firstly, I would like to congratulate the organizers from the Friedrich Ebert Foundation for the choice of subject, timing and place for this forum, because: - The energy supplies and energy security of Europe are two issues which are extremely important and extremely urgent; - The Black Sea region with its geo-strategic location, and after the accession of Bulgaria and Romania with its“close neighbourhood”, will soon become a key factor for the energy security of most of the European countries; - Bulgaria as one of the biggest producers of electricity in Southeastern Europe and as an important transit and distribution hub has already become an energy centre on the Balkans. I believe that the presentations and discussions during the conference will go into further details with regards to the complex problematic of the subject, and this is why I will limit myself to sharing some more general political concepts that President Georgi Parvanov has always promoted as a Bulgarian head of state and as a representative of a Black Sea country: Firstly, The Black Sea region and its energy security should be 5

seen as an inseparable part of Europe which after the accession of the Western Balkans to the EU will have to become a priority for the next enlargement of the Union. Secondly, The Black Sea region, with its key geographic location between Europe and Asia, has established itself as one of the most important energy transport hubs between the two continents and this potential of the region is to be developed further by completing the existing transit networks and the construction of new pipelines, like the oil pipelines of Bourgas-Alexandrupolis and Bourgas-Vlora and the Nabuko gas pipeline. Thirdly, along with the transit of energy resources, the countries of the Black Sea region could develop its own electricity generation mostly through increasing the share of nuclear power and the wider use of renewable energy resources like biomass, water, solar energy, wind and geothermal waters. Fourthly, the energy supply and energy security of the Black Sea region, and Europe as a whole, cannot be achieved through confrontation of one country against another, but would require a close cooperation among all countries regardless of whether they are suppliers or consumers. The cooperation should be based on mutual trust, transparency and loyal competition – principles which characterize the free energy market in the EU and the European Economic Area. I can assure you that Bulgaria, which is at the threshold of its full membership in the EU, is ready to take its responsibility for promoting such cooperation and turning the Black Sea region into a pillar of energy security in Europe. In conclusion, I would like to wish you successful work in today’s conference which may lay the cornerstones of Black Sea cooperation as a key to the stable energy future of Europe. Good luck! 6

Hannes Swoboda: „The common strategy for Europe’s foreign security and energy policy“ Dr. Hannes Swoboda is Vice-president of the Socialist Group of the European Parliament In order to develop a common European strategy we need without any doubt a Common Foreign Security Policy and a Common Energy Policy. The Common Foreign Security Policy(CFSP) is in elaboration, many steps have been done and more steps still have to be done. The Constitution would have given it a boost, but even without the Constitution one should work on a real common European Strategy. Concerning energy policy until recently nobody spoke about a Common European Energy Policy. And we don’t have yet the legal basis to create a common energy policy. Again the Constitution would support that in the sense of an energy policy divided between the European Union as such and the individual member states. But since the crises in the beginning of this year between Ukraine and Russia even many people from the right wing who are mostly against common European policies demanded a Common European Energy Policy. Things changed apparently, and there is now a chance to develop a Common Foreign Security and Energy Strategy for the European Union in the coming months. Some decisions by the Council, the Greenbook by the commission and the Parliament’s position could contribute to the formulation of a common strategy. 1.) The main task to create a basis for common European energy policy in the foreign affairs ﬁeld is to raise the room of maneuver, especially concerning the fossil fuels. That means we have to decrease the dependence of the European countries and the European 7

Union as a whole from fossil fuels. What can we do? a) It is important to raise the energy efﬁciency and to develop clear concepts of energy saving. The less energy we use and consume the less we need fossil fuels and the more we have chances for our energy and foreign affairs policy. We have to develop all possible kinds of alternative sustainable forms of energy. If it is solar, wind, wave and tide or earth, if it is development of biomass, especially bio fuel: all these forms of energy production have to be developed. b) Much research has to be put into the development of alternative energies to make them viable and cost effective. Again: the more we can decrease the use of oil and gas the more possibilities for these kinds of alternative sustainable forms of energy we have. c) Coal comes in again. We recognize the development of clean coal technologies. But coal is not per se a safe technology. It is not a form of energy without problems facing the enormous number of accidents in winning coal. Nevertheless, the development of the technologies of Carbon Capture and Storage, CCS, is on the way to forward a more environmentally friendly and sustainable technology to use coal for winning energy, especially electricity, maybe also for fuel for transportation. One should not underestimate the possibilities, but one should also not negate the risks in connection with the use of coal for winning energy. d) The nuclear energy is a last point I want to mention in that respect. The European Union as such has no nuclear policy besides policies on safety and security. It is up to the member states to use or not to use nuclear technologies. What we have to be concerned with an ongoing spread of nuclear technology in energy is the question of safety. In this point the European Union must develop the highest standards of safety but also with security especially in connection with the proliferation question. Everything has to be done that the spread of nuclear energy does not result in the spread of 8

nuclear weapons. Therefore measures likes the mulitlateralisation of enrichment of uranium is one of the ways where we can try to give every country the right to use nuclear energy but in the same time to prevent as far as possible the spread and proliferation of nuclear technology for military, in any way non civil purposes. 2.) Another important point is the question of diversiﬁcation. To my point of view it is absolutely necessary to diversify the geographical areas of supply. The areas from where the resources oil and gas come are mainly Russia, but also the Middle East, North Africa, Central Africa and Central Asia. Many of these countries are countries of low stability and high risk. If you leave out still viable European sources like Norway you come to the conclusion that there is a strong tendency of a combination of a high amount of oil and gas and a high degree of instability and risk. Therefore diversiﬁcation is necessary to diversify and to lower the risks. Of course Russia is right when it argues that they too are dependent on consumers, in the moment especially on consumers in Europe as most of their distribution lines go versus Europe. We can understand that Russia is also trying to diversify their markets and is also going towards China and other countries. Nevertheless I think that Russia could and ﬁnally would do it at any time. Therefore I am convinced that t risk sharing and diversiﬁcation is going towards stronger interdependence. Diversiﬁcation of geographical areas of supply is of course not enough and not viable if you don’t extend and diversify the infrastructure for the distribution, especially in gas: Trans European networks with their connection to different geographical areas of pipelines and the so called LNG ports, ports for liqueﬁed natural gas.(Gas is brought by big ships in a liqueﬁed form to these ports and is transformed again into ﬂu i d g a s tran sp orte d to t h e d ifferent location s of con sump tion.) O ne of t h e s e p ro m inent connection s w o u l d b e t h e N a bu cco p i p eline fro m t h e area of Az er b ai j an to 9

E a s tern an d Central Eu ro p e(Aus tria), wh ic h w o u l d b e an i mp or tant in v e s t m ent in d i v er s i ﬁ cation. A n enor m o us p ro b le m w it h p ro m otin g d i v er s i ﬁ cation an d w it h t h e s tren g t h enin g of inter d e p en d ence i s t h e qu e s tion of li b erali s e d m ar k et s. Th e m ore m ar k et s are li b erali s e d t h e le ss in ﬂu ence fro m g o v ern m ent s i d e i s fea s i b le an d t h e m ore d if ﬁ c u lt it i s to d e v elo p a clear ener gy p olic y. Th erefore w e al w a ys h a v e to b e caref u l in co mb inin g a m ar k et s trate gy w it h s o m e b a s ic p olitical s teerin g p o ss i b ilitie s wh ic h g i v e p olitic s t h e c h ance to s ati s f y d e m an ds of o u r citi z en s an d h a v in g eno ugh ener gy supp l y for t h e nece ss ar y con sump tion in o u r econo m ie s. 3.) L a s t bu t not lea s t w e h a v e to t h in k a b o u t inter d e p en d ence. In t h e b e g innin g I alrea dy sp o k e a b o u t d e p en d ence an d t h e i mp or tance of le ss d e p en d ence on oil an d g a s. Bu t one can h ar d l y b e le ss d e p en d ent fro m ener gy o v er all. T a k in g into acco u nt all m ea su re s ta k en, fro m ener gy ef ﬁ cienc y to ener gy s a v in gs an d d e v elo pm ent of alternati v e ener gy, w e cannot t h in k t h at to d a y an d in t h e co m in g y ear s w e w ill li v e in an econo my an d s ociet y w it h o u t s till m a ss i v e us e of oil an d g a s. Bu t to s afe gu ar d t h e acce ss an d t h e supp l y of oil an d g a s w e h a v e to in s i s t on an inter d e p en d ent sys te m b et w een con sum er, p ro du ction an d tran s it co u ntrie s. O nl y if it i s clear t h at w e h a v e co mm on o w ner sh i p, co mm on enter p ri s e s an d treatie s t h at gu arantee t h e con sum er s t h at t h e p ro du cer s w o u l d d eli v er an d for t h e supp lie s t h at t h ere w ill b e con sum er s wh o w ill d e m an d an d b ot h of t h e m can tr us t t h at t h ere w ill b e co u ntrie s w it h free tran s it w it h o u t p oliticall y or ot h er w i s e m oti v ate d b loc k a d e s, t h en t h e sys te m can w or k to t h e b ene ﬁ t of t h e w orl d econo my an d t h e citi z en s. Th erefore I t h in k t h at to create t h i s inter d e p en d ence of mu t u al b ene ﬁ t s i s nece ss ar y in t h e ﬁ el d of e xp loitation, ﬁ nancin g, tec h no lo g ical coo p eration, of bu il d in g an d o w nin g t h e infra s tr u ct u re for 1 0

d i s tri bu tion, etc. Th ere are m an y ﬁ el ds of coo p eration in wh ic h w e h a v e to create t h at inter d e p en d ence. N e x t, I w o u l d li k e to d eal w it h s o m e of t h e re g ion s wh ere w e h a v e to d e v elo p a sp ecial p olic y. Esp eciall y Russ ia i s for us t h e m ain re g ion of supp l y concernin g oil an d e sp eciall y g a s. F or t h i s rea s on w e h a v e to h a v e a sp ecial concern a b o u t t h at relation sh i p. F or lot s of y ear s an d e v en d eca d e s Russ ia – t h e for m er S o v iet U nion – w ere v er y reli a b le s o u rce s of ener gy. Th e d eli v erance an d supp l y w a s a bs ol u tel y w it h o u t an y d o ub t an d all t h e contract s w ere k e p t to t h e p oint. W it h t h e Uk raine in t h e b e g innin g of t h i s y ear t h ere w a s t h e ﬁ r s t s i g n of c h an g in g contract s. N ot t h at t h ere w ere no rea s on s for Russ ia to a sk for h i gh er p rice s in t h e d irection of t h e w orl d m ar k et p rice. Bu t t h at w a s d one d eli b eratel y b efore t h e election s an d not by c h ance in ot h er co u ntrie s li k e B elar us in t h e ti m e after t h e election s. F ro m my p oint of v ie w t h i s sh o w e d t h e p olitical ele m ent. If one loo ks to t h e i mp ortance of G a sp ro m for p olitic s an d t h e in ﬂu ence of p olitic s s tartin g fro m P re s i d ent Pu tin on G a sp ro m it i s v er y clear t h at for Russ ia t h e econo m ic i mp ortance of g a s an d oil i s at t h e s a m e ti m e of h i gh p olitical rele v ance. A n d if one loo ks to t h e recent d e v elo pm ent s concernin g m a j or ﬁ el ds of e xp loitation, one s ee s t h at t h e Russ ian a u t h oritie s an d enter p ri s e s w ant to h a v e a s tron g er in ﬂu ence, p artl y by d e m an d in g ne w, m ore fa v o u ra b le contract s, p artl y by not acce p tin g offer s by international or g ani s ation s an d mu ltinational co mp anie s u n d er recentl y s till acce p te d con d ition s to p artici p ate in d eli v erin g tec h nolo g ie s, ﬁ nance, etc. to t h e e xp loitation of g a s an d oil ﬁ el ds. A p artic u lar critical p oint i s t h e fact t h at in sp ite of t h e recent G 8d eclaration of S t. P eter sbu r g Russ ia i s pu ttin g p re ssu re on c h an gin g e x i s tin g contract s. In t h e d eclaration on G lo b al E ner gy S ec urit y t h e follo w in g i s w ritten:“W e, t h e lea d er s of t h e G 8, co mm it to tran sp arent, acc u rate, s ta b le an d effecti v e le g al an d re gu lator y 11

fra m e w or k incl ud in g uph ol d contract s.” Th e ter m“uph ol d con tract s” i s pu t into d o ub t by t h e recent e v ent s. Th erefore I t h in k w e h a v e to sp ea k v er y s erio us l y w it h Russ ia h o w w e co u l d pu t ener gy in t h e centre of t h e f u t u re P artner sh i p an d Coo p eration Ag ree m ent(P C A). Russ ia d i d n’ t ratif y t h e E ner gy C h arter T reat y(bu t s o d i d n’ t d o N or w a y). W e can not acce p t t h at w it h o u t alternati v e. W e can not acce p t t h at t h ere are no clear r u le s wh ile it w a s w ritten in t h e G 8 d eclaration, to h a v e a tran sp ort re gu lator y fra m e w or k. W e nee d su c h a fra m e w or k of r u le in t h e relation sh i p b et w een t h e Eu ro p ean U nion an d Russ ia an d al s o con cernin g t h e w or k of mu ltinational co mp anie s. W e nee d r u le s concernin g t h e s ol u tion of d i spu te s. In t h i s s en s e w e nee d a d i spu te s ol v in g m ec h ani sm li k e in t h e WTO. Russ ia of co u r s e i s v er y acti v e in an area wh ic h i s t h eoretical an alternati v e for oil an d g a s for t h e Eu ro p ean U nion, e sp eciall y in t h e S o u t h Ca u ca sus an d in Central As ia. S o m e of t h e s e co u ntrie s li k e Az er b ai j an or K a z a khs tan are d if ﬁ c u lt bu t ne v ert h ele ss p artner s wh ere contact s are d one or co u l d b e en h ance d. O t h er co u ntrie s li k e for in s tance Tu r km eni s tan are a w f u l d ictator sh i ps. S till t h ere i s an enor m o us supp l y of ener gy in t h i s co u ntr y, bu t w e h a v e m an y d if ﬁ c u l tie s fro m t h e m oral an d hum an ri gh t s p oint of v ie w to en h ance t h e coo p eration b et w een t h e Eu ro p ean U nion an d e.g. Tu r km eni s tan. W e are s till in d o ub t, h o w t h i s relation sh o u l d b e d e v elo p e d. Concernin g t h e M i dd le E a s t it i s o bv io us t h at t h i s re g ion i s ﬁ r s t of all an enor m o us area for ener gy supp l y. Bu t it i s a v er y critical area w it h t h e s till on g oin g con ﬂ ict in P ale s tine an d t h e recent d e v elo pm ent s in L e b anon an d of co u r s e e sp eciall y w it h t h e s it u ation in Iran. W e h a v e a v er y fra g ile s it u ation. Th e m ore w e tr y to carr y on ne g otiation s to s ol v e s o m e of t h e p ro b le ms, t h at m ean s in t h e ﬁ r s t line t h e P ale s tinian p ro b le ms, bu t al s o t h e n u clear i ssu e w it h Iran, t h e m ore it w o u l d b e a contri bu tion to w ar ds s ta b ili s ation of t h e re g ion an d al s o o u r ener gy supp l y. 1 2

Ou t of m an y rea s on s it i s i mp ortant for Eu ro p e to p la y a b i gg er role fro m t h e s tart in or d er to re du ce an d s often t h e t h reat s an d t h e fear s in connection w it h t h at re g ion. Th at co u l d not onl y s a v e li v e s an d p re v ent ne w w ar s li k e t h e d rea d f u l w ar in Ira q, bu t co u l d al s o g i v e b oo s t for econo m ic an d p olitical s ta b ilit y. A n d t h i s ﬁ nall y w o u l d al s o u n d erline s ta b ilit y for ener gy supp lie s. P er h a ps ener gy i s not t h e m ain i ssu e in h a v in g a g oo d relation w it h t h e area. Bu t it i s of co u r s e one ele m ent t h at o u r citi z en s e xp ect, t h at ﬂ o ws for t h at re g ion are s ta b le, e v en if s o m e of t h e s e co u ntrie s are not t h e m ain supp lier s for Eu ro p e. I w ill not g o f u rt h er no w in d e s cri b in g an d pu ttin g t h e ot h er re g ion s of oil an d g a s supp l y for t h e Eu ro p ean U nion in a relation sh i p to EU p olic y. Bu t one of t h e m o s t d if ﬁ c u lt t h in gs concernin g N ort h A frica an d al s o Central A frica i s of co u r s e t h e qu e s tion of s ta b ilit y an d t h e contri bu tion of oil an d g a s p ro ﬁ t for t h e d e v elo pm ent of t h e co u ntrie s. Th ere i s v er y often a v icio us circle: e xp loitation wh ic h i s not lea d in g to inco m e for t h e d e v elo pm ent of t h e wh ole econo m ic s ociet y bu t m ore for t h e p ro ﬁ t of s o m e w arlor ds, sm all p art s of t h e s ociet y an d t h at w ill create u nre s t in t h e co u ntrie s concerne d an d ﬁ nall y contri bu te to p olitical in s ta b ilit y an d in t h at s en s e to in s ta b ilit y of ener gy supp lie s. W e nee d a d e v elo pm ent p olic y in t h e w i d er s en s e e sp eciall y in h el p in g t h at t h e h i gh p ro ﬁ t s fro m oil an d g a s for t h e co u ntrie s con cerne d are g oin g into sus taina b le d e v elo pm ent, incl ud in g in v e s t m ent s into t h e en v iron m ent an d into e du cation, etc. al s o by t h e b i g mu ltinational co mp anie s w o u l d b e a v er y i mp ortant contri bu tion to w ar ds s ta b ilit y in t h e re g ion d eci s i v e for o u r ener gy supp l y. Conclusions In or d er to create a Co mm on E ner gy an d a Co mm on F orei g n an d S ec u rit y P olic y in a co mb ine d s trate gy w e h a v e to f u l ﬁ l certain con d ition s an d w e h a v e to d e v elo p certain in s tr um ent s: 1 3

1. W e nee d s tron g er supp ort for m ea su re s rai s in g ener gy ef ﬁcienc y an d ener gy s a v in gs. 2. In g eneral w e h a v e to rai s e t h e non fo ss il f u el m i x in o u r co u ntrie s. 3. W e h a v e to d i v er s if y t h e supp l y fro m t h e d ifferent re g ion s in a m ore ri sk re du cin g m i x an d d i s tri bu tion of supp l y re g ion s. 4. W e h a v e to e x ten d an d a d e p t t h e d i s tri bu tion infra s tr u ct u re, t h at m ean s p i p eline s an d LNG p ort s. 5. W e h a v e to s tren g t h en t h e d ialo gu e b et w een t h e b i g d e m an d an d con sum er co u ntrie s li k e Eu ro p e, USA, C h ina an d In d ia to h a v e a m ore co mm on p olic y of t h e con sum er co u ntrie s in relation to t h e co mm on p olic y of p ro du cer co u ntrie s, e sp e ciall y OPE C, bu t al s o Russ ia. 6. W e h a v e to en h ance t h e tec h nolo gy tran s fer, e sp eciall y con cernin g ener gy ef ﬁ cienc y, ener gy s a v in gs an d t h e d e v elo pm ent of alternati v e for ms of ener gy incl ud in g re s earc h an d d e v elo pm ent in t h e s e ﬁ el ds to ot h er co u ntrie s in or d er to re du ce t h e w orl d d e m an d on ener gy, e sp eciall y to Russ ia, C h ina, In d ia, etc. 7. W it h Russ ia w e h a v e to h a v e a ne w P artner sh i p an d Coo p er ation Ag ree m ent w it h a m ore acc u rate an d b alance d relation sh i p b et w een Russ ia a s p ro du cer an d Eu ro p e a s con sum er. A n d w e h a v e e sp eciall y to incl ud e b in d in g r u le s on d i spu te re s ol u tion analo gu e to t h e r u le s of t h e WTO. 8. W e h a v e to h a v e a clo s e relation sh i p w it h nei ghb o u rin g co u ntrie s wh ic h are e sp eciall y tran s it co u ntrie s. W e sh o u l d d e v elo p s o m e s ort of an EU-B lac k S ea- Co mmu nit y incl udin g co u ntrie s li k e Uk raine, bu t al s o Tu r k e y or co u ntrie s fro m 1 4

S o u t h Ca u ca sus. S o m e of t h e s e co u ntrie s are clearl y Eu ro p ean. Tu r k e y i s alrea dy in ne g otiation s w it h t h e Eu ro p ean U nion. F or S o u t h Ca u ca sus t h ere i s no d eci s ion ta k en y et. Th i s sh o u l d not p re v ent t h at w e h a v e e sp eciall y in ener gy a v er y clo s e relation sh i p w it h t h e s e co u ntrie s. O n t h e ot h er h an d w e h a v e to h a v e of co u r s e clo s e relation to co u ntrie s of t h e M e d iterranean S ea( not onl y on ener gy). Th e EU-MED co mmu nit y co u l d en h ance t h i s coo p eration. In t h i s s en s e w e sh o u l d w or k w it h t h i s t w o nei ghb o u rin g re g ion s in a clo s e, al s o mu ltilateral coo p eration. 9. W e h a v e to h a v e a s trate gy for s tron g inter d e p en d ence on e xp loration, d i s tri bu tion an d con sump tion. W e nee d a clear s trate gy t h at no one can b lac km ail t h e ot h er b eca us e t h ere i s a co mm on sys te m. If one trie s to b lac km ail t h e p artner t h ere co u l d b e i mm e d iatel y ne w alternati v e s trea ms of supp l y an d d eli v er y. It w o u l d b e nece ss ar y t h erefore to in v ol v e e v er yb o dy into a p eacef u l d e v elo pm ent of a w orl d ener gy sys te m. A n d Eu ro p e h a s to b e in t h e forefront. It h a s t h e cleare s t s trate gy of ﬁ n d in g alternati v e s to t h e d e p en d ence on oil an d g a s on t h e one h an d. O n t h e ot h er h an d it s till h a s a s tron g intere s t of h a vin g s ta b ilit y in t h e supp l y an d d i s tri bu tion of fo ss il f u el s. 1 0. I t h in k w e h a v e to en h ance t h e contri bu tion fro m inco m e o u t of oil an d g a s e xp loitation an d supp l y to t h e d e v elo pm ent in t h e co u ntrie s concerne d. It i s irre sp on s i b le an d m orall y u nacce p ta b le t h at t h e s e qu e s tion s of p o ss i b le contri bu tion fro m t h e p ro ﬁ t of co u ntrie s an d t h e co mp anie s are v er y often d i s re g ar d e d an d d i s re sp ecte d. M ore tran sp arenc y, lon g ter m f u n ds for in v e s t m ent o u t of t h e s e p ro ﬁ t s an d contri bu tion s fro m t h e co mp anie s concerne d in t h e s en s e of Coo p erate S o cial R e sp on s i b ilit y are of enor m o us i mp ortance for creatin g s ta b ilit y in t h e m ain area s of oil an d g a s supp l y. 1 5

Gernot Erler: „Regional Cooperation and Energy Security” G ernot E rler i s M e mb er of t h e G er m an Bu n d e s ta g an d M ini s ter of S tate at t h e G er m an F e d eral F orei g n O f ﬁ ce Th e subj ect of ener gy s ec u rit y an d s ec u rit y of ener gy supp l y re qu ire s f u rt h er attention on t h e p art of t h e international co mmu nit y. It i s not by acci d ent t h at t h i s subj ect w a s a focal p oint at t h e G8 S aint P eter sbu r g summ it. It w ill re su rface a g ain in 2007 in t h e w or k p lan s of t h e d o ub le G er m an p re s i d enc y of b ot h t h e EU an d t h e G-8. Th i s h a s it s g ro u n ds: - Th e noticea b le d e p letion of fo ss il f u el s re su lt s in g ra du al d e crea s e of supp l y. Th e ra p i d econo m ic g ro w t h in t h e s o calle d ‘ ne w econo m ie s’ li k e C h ina an d In d ia, wh ic h are e m er g in g a s s erio us co mp etitor s on t h e d e m an d m ar k et, push e s t h e p rice s up. A b alance d co mp etition for ener gy re s o u rce s h a s s tarte d. - D ifferent s trate g ie s are b ein g e mp lo y e d in t h i s co mp etition. Th e US, a s t h e b i gg e s t ener gy re s o u rce con sum er in t h e w orl d, i s pu ttin g t h e e mph a s i s on t h e tra d itional p olitico-m ilitari s t a pp roac h to s ec u rin g t h e s trate g icall y i mp ortant P er s ian Gu lf re g ion. A co u ntr y li k e C h ina pu r su e s an a gg re ss i v e p olic y of ac qu irin g sh are s in entire ﬁ n ds. Th e F e d eral R e pub lic c h o s e to d i v er s if y it s supp lie s net w or k w it h t h e Russ ian F e d eration s till h ol d in g a b i g relati v e sh are an d t h i s a pp roac h h a s b een m o s tl y p o s iti v e s o far. In t h i s re sp ect, w e cannot bu t p oint o u t t h at co mp lete s ec u rit y w ill re m ain an ill us ion. Th i s i s b ein g ill us trate d by ne w e v ent s li k e t h e L e b anon w ar in Ju l y an d Augus t of 2006 wh ic h occ u rre d in d an g er o us v icinit y to t h e m o s t i mp ortant g a s an d oil ﬁ n ds in t h e w orl d, a s w ell a s t h e Iranian n u clear p ro g ra m cri s i s wh ic h affect s t h e co u n tr y w it h t h e s econ d b i gg e s t oil an d g a s re s er v e s in t h e w orl d. O r 1 6

t h e Russ ian-Uk rainian g a s con ﬂ ict at t h e b e g innin g of 2006 wh ic h d re w attention to t h e s i g ni ﬁ cance of tran s it co u ntrie s in a v er y d ra m atic m anner. Th i s e xp erience reinforce d t h e u n d er s tan d in g t h at ener gy s ec u rit y can b e acco mp li sh e d t h ro ugh b roa d re g ional coo p eration. A b al ance b et w een supp lier- co u ntrie s, tran s it- co u ntrie s an d con sum er co u ntrie s can b e ac h ie v e d w it h in t h e fra m e w or k of su c h re g ional coo p eration. Ap art fro m t h at a g ra du al interrelation b et w een t h e ener gy an d t h e econo m ic s ector s co u l d b e ac h ie v e d lea d in g to a la s tin g an d s ec u re ener gy supp l y b a s e d on mu t u al intere s t an d inter d e p en d ence. Th i s i s t h e p olitical rationale of t h e Eu ro p ean U nion wh ic h i s e sp eciall y clear w it h re g ar ds to t h e E ner gy Co mmu nit y w it h S o u t h- ea s tern Eu ro p e. Th e T reat y for t h e e s ta b li shm ent of su c h E ner gy Co mmu nit y s i g ne d on 25 O cto b er, 2005 le d to t h e creation of t h e b i gg e s t co mm on electricit y an d g a s m ar k et in t h e w orl d. P artie s to t h e treat y are t h e 25 EU m e mb er-s tate s a s w ell a s nine ot h er co u ntrie s, re sp ecti v el y entitie s: Croatia, B o s nia an d H er z e g o v ina, S er b ia, M ontene g ro, A l b ania, M ace d onia, R o m ania, Bu l g aria an d K o s o v o, wh ic h i s u n d er t h e UN tran s itional a u t h orit y. Th i s m ean s t h at to g et h er w it h t h e acce d in g Bu l g aria an d R o m ania, t h e W e s tern B al k an co u ntrie s, wh ic h h a v e p er sp ecti v e s for EU acce ss ion, are al s o p artner s to t h e EU u n d er t h i s T reat y. Th e e xp an s ion of t h e E ner gy Co mmu nit y w it h S o u t h- ea s tern Euro p e w it h t h e incl us ion of M ol d o v a an d Uk raine, a s w ell a s t h e li k e l y a dd ition of t h e S o u t h Ca u c us e s re pub lic s in t h e m i d- ter m m a y t u rn o u t to b e a k e y ele m ent in t h e inten s i v e nei ghb o u r h oo d p olicie s of t h e EU. Th i s fact i s al s o intere s tin g g i v en G er m an y’s g oal to s tren g t h en t h e EU nei ghb o u r h oo d p olicie s du rin g it s p re s i d enc y of t h e EU in t h e ﬁ r s t h alf of 2007. Th e a bb re v iation for t h i s initiati v e i s ENP+ an d it h a s an i mp ortant role to p la y in t h e f u t u re. 1 7

I s tron g l y b elie v e t h at t h e i mp ortance of t h e S o u t h- ea s tern E n er gy Co mmu nit y w a s u n d ere s ti m ate d initiall y. It s s i g ni ﬁ cance a s a n u clear ener gy centre an d a s tartin g p oint for a co mp re h en s i v e re g ional coo p eration e v en b e y on d t h e ener gy s ector h a s in fact b e co m e clear g ra du all y du rin g t h e d ifferent cri s e s t h i s y ear. Th e T reat y, t h at I a m sp ea k in g a b o u t h ere, w ill create an o pp ort unit y for t h e co u ntrie s of S o u t h- ea s tern Eu ro p e, after t h e fo u r b loo dsh e d w ar s in t h e B al k an s in t h e 90 ie s, to reac h an a g ree m ent on one central an d v er y s en s iti v e area an d to w or k o u t a co mm on p olitical v i s ion. Th e T reat y for t h e e s ta b li shm ent of an E ner gy Co mmu nit y i s a k e y ele m ent of t h e EU s trate gy for S o u t h- ea s tern Eu ro p e an d a w or k in g tool for Eu ro p ean inte g ration. In t h i s s en s e I pu t t h e S o u t h- ea s tern E ner gy Co mmu nit y on e qu al footin g w it h t h e t w o ot h er Eu ro p ean s trate g ie s for S o u t h- ea s tern Eu ro p e, e.g. t h e S ta b ilit y P act an d t h e S ta b ili z ation an d Ass ocia tion P roce ss – SAP. Th e E ner gy Co mmu nit y T reat y i s ai m e d at creatin g o pp ort u nitie s for co u ntrie s of t h e re g ion e v en b efore f u ll EU acce ss ion to b ene ﬁ t fro m t h e a dv anta g e s of t h e internal ener gy m ar k et wh ile at t h e s a m e ti m e t h e EU w o u l d qu ic k l y co mp lete it s o w n electricit y an d g a s internal m ar k et. Th e ar gum ent s for t h e e xp an s ion of t h i s internal m ar k et b e y on d t h e EU b or d er s are con v incin g. Th e e xp an s ion to w ar ds S o u t h- ea s tern Eu ro p e w o u l d re su lt in t h e e s ta b li shm ent of a re g ional m ar k et an d it s s ea m le ss incor p oration into t h e internal ener gy m ar k et of t h e EU. Th e i d ea of t h e co mm on internal m ar k et al s o m ean s t h at t h ere nee ds to b e a u ni ﬁ e d a pp roac h to forei g n tra d e an d a b oli shm ent of o bs tacle s to t h e internal ener gy m ar k et. Th i s p racticall y entail s t h e intro du ction of ac qu i s ition an d inte g ration in one central area wh ic h w ill b e locate d in co u ntrie s wh ic h h a v e not y et b eco m e EU m e mb er s, bu t h a v e a clear p er sp ecti v e to d o s o. Th e p ractical i mp le m entation of t h e E ner gy Co mmu nit y w it h 1 8

S o u t h- ea s tern Eu ro p e w ill lea d to inten s i v e re g ional coo p eration. M an y sp ea k er s h ere e v en clai m t h at it w ill b eco m e an e x a mp le for re g ional coo p eration. Th i s coo p eration, h o w e v er, i s lac k in g one i mp ortant ele m ent or rat h er, t h i s ele m ent i s u n d er d e v elo p e d. In t h e i d eal s cenario t h e re g ional ener gy coo p eration f u nction s a s inter loc k in g of t h e intere s t s of t h e p ro du cer- co u ntrie s, t h e tran s it- co u n trie s an d t h e con sum er- co u ntrie s. O f t h e 34 m e mb er-s tate s of t h e E ner gy Co mmu nit y, t h o ugh, onl y t w o can b e d e ﬁ ne d a s p ro du cer – co u ntrie s. Th o s e are Th e N et h erlan ds an d t h e U nite d K in gd o m, w it h t h e role of t h e UK a s a p ro du cer b ein g d i m ini sh e d an d t h e N et h erlan ds b ein g e xp ecte d to p la y t h i s role onl y in t h e m i d- ter m. Wh en w e sp ea k a b o u t t h e p o ss i b le incl us ion of Uk raine into t h e en er gy co mmu nit y an d G er m an y’s o bj ecti v e to s tren g t h en t h e ener gy d ialo gu e w it h Russ ia du rin g it s EU p re s i d enc y, t h i s i s b eca us e w e nee d to in v ol v e a s mu c h a s p o ss i b le an i mp ortant tran s it – co u ntr y an d an in d i sp en s a b le supp lier into su c h a sys te m of re g ional coo peration d e s i g ne d to ac h ie v e ener gy s ec u rit y. Su c h ar gum ent s are b ein g us e d in G er m an y u n d er t h e m otto of “ Con v er g ence t h ro ugh interloc k in g”. Th i s m otto w a s create d a s a p ra gm atic s i g nal d enotin g t h e g oal s of o u r p re s i d enc y an d o u r relation s w it h Russ ia. It sh o ws t h e w illin g ne ss an d intention to d e v elo p ener gy coo p eration to su c h an e x tent s o a s to ac h ie v e mu t u al inter d e p en d ence. W e b elie v e t h at onl y su c h a sys te m of ener gy co o p eration can w it hs tan d t h e ar b itrar y p olitical re shu f ﬂ e s an d p o litical c h an g e. Su c h a sys te m of inter d e p en d ence w o u l d b rin g to a m ini mum t h e ri sks to ener gy coo p eration. R e g ional j oint acti v itie s in t h e area of ener gy are not b ein g carrie d o u t in Eu ro p e alone. It i s an intere s tin g fact t h at t h ere are r um o u r s no w t h at In d ia h a s e xp re ss e d intere s t in b ein g supp lie d w it h Iranian g a s t h ro ugh P a k i s tan a s a tran s it- co u ntr y. If t h i s i s to h a pp en, In d ia w ill pu t it s elf u n d er t h e control of it s b itter ene my. Su c h re g ional co o p eration w o u l d b e an in d i spu ta b le e v i d ence of t h e c h an g e s t h at can 1 9

occ u r u n d er t h e p re ssu re of ac h ie v in g ener gy s ec u rit y. Th i s w o u l d b e a con s i d era b le p olitical c h an g e on t h e In d ian sub- continent. Th i s d e v elo pm ent al s o d e m on s trate s t h at t h e Eu ro p ean en d ea v o u r s, I sp o k e a b o u t, re ﬂ ect a w orl d tren d wh ic h h a s no alternati v e. Ev en su c h e x a mp le s of p o ss i b le p olitical c h an g e h a v e t h eir o w n h i s tor y. Su c h a p roce ss of“ re g ional j oint action s” w it h con s e qu ence s for t h e w orl d’s h i s tor y h a d alrea dy ta k en p lace in Eu ro p e. I a m tal k in g a b o u t t h e e s ta b li shm ent in 1 95 1 of t h e Eu ro p ean Coal an d S teel Co mmunit y or t h e s o calle d M ontan u nion. Th e T reat y to e s ta b li sh t h e E C S C b rin gs us b ac k to t h e S c hum an p lan for t h e creation of a co mmunit y for coal an d s teel, an initiati v e la u nc h e d by t h e F renc h F orei g n M ini s ter R o b ert S c hum an an d p ro p o s e d to t h e G er m an C h ancellor Conra d Ad ena u er. Ad ena u er a g ree d w it h t h e i d ea s ince it i mp lie d a j oint control o v er t h e in dus tr y, i. e. t h e ener gy an d s teel in dus tr y of t h e m e mb er – co u ntrie s w it h o u t i mp o s in g c us to ms du tie s. By t h e w a y, t h i s al s o m eant t h at t h e G er m an Ruh r P ro v ince, wh ic h h a d b een u n d er t h e control of an international co mm ittee of t h e co u ntrie s t h at w on WW II, u n d er B riti sh occ up ation an d wh o s e in dus trial facilitie s contin u e d to b e d i sm antle d, w o u l d recei v e an u ne xp ecte d c h ance for a re v i v al. Th i s c h ance, a s i s k no w n, w a s m a d e us e of an d t h e Ruh r P ro v ince w it h it s coal an d s teel in dus tr y in t h e h eart of G er m an y b eca m e t h e d ri v in g force for econo m ic recon s tr u ction. Th e m ain o bj ecti v e of t h e T reat y, accor d in g to S c hum an’s ar gum entation, w a s to s ec u re internal Eu ro p ean p eace t h ro ugh a co mmu nit y a pp roac h, i. e. mu t u al control of t h e i mp ortant m ilitar y in dus trie s of coal an d s teel an d en su rin g supp lie s for in dus tr y re con s tr u ction after WW II. M ontan u nion w a s t h e s tartin g p oint for t h e subs e qu ent T reat y for t h e Es ta b li shm ent of t h e Eu ro p ean E co no m ic Co mmu nit y an d t h e T reat y for t h e Eu ro p ean A to m ic E ner gy Co mmu nit y-”EURATOM” wh ic h in t u rn le d to t h e d e v elo pm ent of t h e Eu ro p ean Co mmu nit y wh ic h t h e M aa s tric h t T reat y of 1 992 tran s for m e d into t h e Eu ro p ean U nion. W e co u l d, t h erefore, ar gu e w it h o u t an y e x a gg eration t h at a sp eci ﬁ c for m of re g ional coo p era 20

tion in t h e area of ener gy co mp ara b le w it h t h e e s ta b li shm ent of t h e E ner gy Co mmu nit y w it h S o u t h- ea s tern Eu ro p e, s er v e d a s a cra d le for to d a y’s Eu ro p ean U nion. T o d a y, by t h e w a y, t h ere are al s o ot h er intere s tin g e x a mp le s of coo p eration b et w een p ro du cer an d con sum er co u ntrie s a p art fro m t h e E ner gy Co mmu nit y w it h S o u t h- ea s tern Eu ro p e. Th i s i s, for e xa mp le, t h e ca s e w it h t h e EU’s relation s w it h N or w a y. N or w a y i s s tri v in g after m e mb er sh i p in t h e E ner gy Co mmu nit y w it h S o u t hea s tern Eu ro p e an d in it s ca p acit y of a p ro du cer- co u ntr y h a s a s i gni ﬁ cant contri bu tion to t h e d i v er s i ﬁ cation w it h in t h e E ner gy Co mmu nit y. Wh at i s m ore, N or w a y p la ys a k e y role of a s afe p ort for t h e Eu ro p ean, an d e sp eciall y G er m an, ener gy supp lie s. Bu t t h ere are al s o ot h er in s tance s. A v er y p o s iti v e e x a mp le i s t h e coo p eration b et w een t h e US an d Cana d a, i. e. b et w een t w o econo m ie s wh ic h are mu c h m ore inte g rate d t h an t h o s e of G er m an y an d t h e N et h erlan ds, for in s tance. B a s e d on t h e re m ar k a b le re s er v e s of oil in t h e A l b erta P ro v ince in Cana d a, wh ic h are e s ti m ate d at 24 b illion ton s( of co u r s e, in t h e for m of oil s an ds) an d con s tit u te one of t h e b i gg e s t re s er v e s on t h e p lanet, Cana d a p la ys a s i m ilar role w it h re g ar ds to t h e US a s N or w a y for t h e EU. Th o s e t w o su cce ss f u l re g ional p artner sh i ps, b et w een N or w a y an d t h e EU an d t h e US an d Cana d a re sp ecti v el y, are in no w a y li m ite d to t h e ener gy area. Th e e x a mp le of t h e US an d Cana d a, a s w ell a s t h e e x a mp le of N or w a y an d t h e EU, d e m on s trate t h at t h e tr u e j oint action sh o u l d not b e re s tricte d to ener gy onl y. Th e j oint action s in t h e ener gy area can, of co u r s e, b eco m e a s tart in g p oint for re g ional coo p eration, bu t e xp erience sh o ws t h at t h i s i s li m ite d in ti m e. Wh en t h e ﬁ r s t ph a s e i s co mp lete d, wh at i s nee d e d i s a b roa d er an d m ore d i v er s e b a s i s for lon g- ter m, p er m anent co o p eration. O t h er w i s e, t h e re g ional coo p eration m a y t u rn o u t to b e a d ea d- en d s treet. F or e x a mp le, wh en t h e ener gy p rice s are fallin g, 2 1

t h i s i s at t h e e xp en s e of t h e p ro du cer an d tran s it co u ntrie s. Wh en p rice s g o up, t h i s affect s t h e con sum er s. R e g ional coo p eration can not b e ac h ie v e d on su c h an u n s ta b le fo u n d ation. In or d er to e s ta b li sh s ta b le re g ional co mmu nitie s, an d h ence en er gy s ec u rit y, it i s nece ss ar y to g o b e y on d ener gy p artner sh i ps. A n a dd e d p olitical an d econo m ic ele m ent i s al s o nee d e d. In t h i s re sp ect, w e nee d to d ifferentiate b et w een h o m o g eno us p artner s li k e t h e EU an d N or w a y, an d h etero g eneo us p artner s li k e J a p an an d Russ ia. Th e latter a pp lie s to Russ ian p artner sh i p w it h t h e co u ntrie s fro m Central As ia – a coo p eration wh ic h i s of k e y s i g ni ﬁ cance for us, Eu ro p ean s. It i s, h o w e v er, co mp licate d by t h e fact t h e Russ ia p la ys a d o ub le role h ere: on t h e one h an d it i s a tran s it- co u ntr y for t h e Central As ian g a s, an d on t h e ot h er, it i s an ener gy supp lier to Eu ro p e wh ic h al s o incl ud e s t h e Central As ian g a s supp lie s. R e g ional coo p eration in t h e ener gy s ector i s a relati v el y ne w ph e no m enon an d sh o u l d not b e ta k en for g rante d. Th i s can b e d e m on s trate d w it h t h e Am erican oil ﬁ n ds in N ort h ern A la sk a. A t t h e en d of t h e 60s an d t h e b e g innin g of t h e 70s t h e Am erican a dm ini s tra tion d eci d e d a g ain s t a p i p eline t h ro ugh Cana d a an d c h o s e a m ore d i s a dv anta g eo us s ol u tion. Th e ti m e w a s s i mp l y not ri gh t for t h e US to s ee t h e b ene ﬁ t s of re g ional ener gy coo p eration. Th e con s e qu ence s of ine p t ener gy coo p eration w ere s een in t h e d i spu te b et w een Russ ia an d Uk raine at t h e b e g innin g of t h i s y ear. Th e t u rnin g of t h e sw itc h to re du ce g a s supp lie s wh ic h w a s s een by t h e wh ole w orl d on TV h a d s i g ni ﬁ cant p olitical effect s. I t h in k t h at t h e Russ ian p olic y a s to why it d i d not p re d ict t h e e v ent w ill re m ain a mys ter y for qu ite s o m e ti m e. In Eu ro p e t h o s e TV sh ot s tri gg ere d off a d e b ate on d i v er s i ﬁ cation wh ic h w a s in no w a y to t h e a dv an ta g e of Russ ian intere s t s. Exp ert s h a d lon g b een in a g ree m ent t h at for a n umb er of co mmu nication rea s on s t h e con ﬂ ict w a s b o u n d to h a pp en. Bu t d e sp ite t h at, t h e qu e s tion re m ain s a s to why it nee d e d to b e s o d e m on s trati v el y aire d. 22

Th i s Russ ian-Uk rainian d i spu te on g a s p ro v e d in an i mp re ss i v e w a y t h e e x tent to wh ic h Eu ro p ean ener gy s ec u rit y i s d e p en d ent not onl y on t h e p ro du cer- co u ntrie s, bu t al s o on t h e tran s it- co u ntrie s. Th e G er m an F e d eral G o v ern m ent b elie v e s t h e s tate m ent s of b ot h s i d e s – Russ ia an d Uk raine – t h at t h e e v ent s of t h i s w inter wh ic h al m o s t ca us e d an ener gy an d p olitical sh a k e up w o u l d not h a pp en a g ain. S o m e e v en co mp are d t h o s e e v ent s to t h e sh oc k of t h e oil cri s i s in 1 973 an d t h e s econ d oil cri s i s after t h e o us tin g of t h e Iranian sh a h in 1 979. A n d no w let m e to u c h up on t h e g lo b al d i m en s ion. Th e in su f ﬁ cient coo p eration at re g ional le v el e v en a m on g p ro du cer- co u ntrie s co u l d in certain ca s e s h a v e g lo b al con s e qu ence s. A n e x a mp le for t h i s i s t h e con s e qu ence s fro m t h e Iran- Ira q w ar in t h e 80s wh ic h p racti call y re su lte d in b ot h co u ntrie s b ein g u na b le to e xp ort t h eir oil an d g a s us in g m ariti m e ro u te s. O nl y t h e su f ﬁ cient w orl d re s er v e s of ener gy re s o u rce s p re v ente d, a s w a s in t h e ca s e of t h e S econ d Gu lf W ar in 1 990/9 1, t h e occ u rrence of a ne w g lo b al cri s i s follo w e d by subs e qu ent econo m ic cri s e s. Th in gs w ere d ifferent in t h e re g ional Y on K i ppu r w ar in 1 973 wh ic h ca us e d t h e ﬁ r s t b i g oil cri s i s an d le d to a p erio d of d ee p rece ss ion in t h e w orl d. Th e s e e x a mp le s s er v e to sh o w t h at d e p en d in g on t h e c u rrent s tate of supp lie s, t h e d e ﬁ ciencie s of re g ional coo p eration an d a fail u re in t h e coo p eration sys te m in a s it u ation of re g ional cri s i s m a y h a v e a g lo b al i mp act. In concl us ion, w e nee d to b e w ell a w are of h o w interrelate d re g ional coo p eration an d ener gy s ec u rit y are. Th e E ner gy Co mmu ni t y w it h S o u t h- ea s tern Eu ro p e of 2005 create d a m o d ern in s tr um ent oriente d to w ar ds t h e f u t u re an d wh o s e s i g ni ﬁ cance b eca m e clear du rin g t h e cri s e s of 2006. Th e intro du ction of t h i s s trate g ic conce p t h a s lon g b een p art not onl y of t h e EU s trate gy for t h e B al k an s, bu t a k e y co mp onent of i mp ortance for t h e EU it s elf. Th e e xp an s ion of t h e co mmu nit y can b rin g p o s iti v e re su lt s. 23

Th e B lac k S ea re g ion i s a k e y z one for p rotectin g Eu ro p ean ener gy co mmu nit y. It i s t h e B lac k S ea re g ion wh ic h i s e xp ecte d to p la y an e v en m ore i mp ortant role for tran s itin g ener gy re s o u rce s fro m t h e Ca sp ian re g ion an d t h i s bu il ds up on t h e intere s t s an d acti v itie s of p ro du cer- co u ntrie s, tran s it- co u ntrie s an d con sum er- co u ntrie s in a w a y t h at i s u ni qu e for t h e w orl d. In t h i s re sp ect, I w o u l d li k e to m a k e an a pp eal to o u r Bu l g arian frien ds. F or a n umb er of rea s on s it w o u l d b e in t h e sp irit of t h e EU, if Bu l g aria w o u l d d eci d e to p la y a m ore s i g ni ﬁ cant role in relation to B lac k S ea coo p eration for t h e pu r p o s e of i mp le m entin g t h e p oli cie s of t h e E ner gy Co mmu nit y w it h S o u t h- ea s tern Eu ro p e. W e s ee t h at R o m ania too k t h e fa v o u ra b le o pp ort u nit y into acco u nt an d s et up t h e B lac k S ea F or um in Ju ne in Bu c h are s t. I w ill b e g la d if t h i s conference create s an a w arene ss t h at Bu l g aria nee ds to m a k e a b i gg er co mm it m ent to t h e m ore inten s i v e B lac k S ea coo p eration. Derek Taylor: „The Energy Policy of the European Union” D ere k T a y lor i s E ner gy Adv i s or at t h e Eu ro p ean Co mm i ss ion Th an k y o u v er y mu c h, M r. C h air m an. G oo d m ornin g la d ie s an d g entle m en. I mus t a dm it I’m v er y p lea s e d to b e h ere. It’s my v er y ﬁ r s t ti m e in Bu l g aria s o it’s a w on d erf u l o pp ort u nit y to act u all y s ee a p otential ne w m e mb er s tate or a ne w m e mb er s tate in b ein g. I t h in k it s 80 d a ys to g o, I s a w on t h e s creen near t h e p arlia m ent y e s ter d a y. B efore I s a y an y t h in g el s e I mus t p oint o u t t h at I’v e m o v e d to s it h ere not to d i stance mys elf fro m my Russ ian collea gu e t h ere or fro m my collea gu e fro m t h e Eu ro p ean P arlia m ent, bu t pu rel y s o I can s ee t h e s creen s o t h at my sp eec h d oe s n’ t g et totall y o u t of sy nc w it h t h e s li d e s. 24

Wh at I w ant to tal k a b o u t m ainl y i s t h e g reen p a p er on ener gy wh ic h t h e Co mm i ss ion a d o p te d in M arc h of t h i s y ear an d w ill for m t h e v er y b a s i s of t h e f u t u re Eu ro p ean co mm on p olic y in t h e ener gy s ector. As a v er y ﬁ r s t s te p, mu c h m ore w ill nee d to co m e. A lot of it w ill h a v e to b e d one du rin g t h e G er m an p re s i d enc y. Bu t t h i s i s t h e v er y ﬁ r s t s te p an d it s et o u t t h ree core p rinci p le s. Th e core p rin ci p le s w ere sus taina b ilit y of ener gy, co mp etiti v ene ss an d s ec u rit y of supp l y of ener gy. Th e s e w ere t h e t h ree core p rinci p le s. Th e s e are s elf e v i d ent, I t h in k, for an y m a j or ener gy i mp ortin g co u ntr y. If y o u are co mp letel y in d e p en d ent w it h y o u r ener gy s o u rce s t h en y o u can at lea s t not w orr y too mu c h a b o u t one or t w o of t h e s e. Bu t for a re g ion li k e t h e Eu ro p ean U nion all t h ree are v er y i mp ortant. Wh at d oe s it m ean“Th e t h ree d ifferent core p rinci p le s”? Th e ﬁ r s t one i s sus taina b ilit y an d t h e m ain one h ere i s en v iron m ent con cern s wh ic h are m ainl y of co u r s e relate d to car b on d io x i d e e m i ss ion s an d cli m ate c h an g e. Cli m ate c h an g e i s s o m et h in g w e h ear a b o u t on a d ail y if not m ore fre qu ent b a s i s no w a d a ys. A n d t h ere are t w o m ain s ector s in t h e EU re sp on s i b le for C O2 e m i ss ion s 25

wh ere t h e e m i ss ion s are g ro w in g an d wh ere t h e y are g ro w in g b e y on d t h o s e fro m 1 990. 1 990 of co u r s e i s a k e y d ate b eca us e of t h e Ky oto con v ention an d o u r o bj ecti v e i s to re du ce o u r e m i ss ion s to b elo w t h e 1 990 le v el. Bu t in t w o s ector s, wh ic h are tran sp ort an d electricit y g eneration w e are m o v in g a b o v e t h e 1 990 C O2 p ro du c tion. I w o u l d a dd at t h i s p oint, in p artic u lar for s o m e of o u r col lea gu e s h ere to ta k e note at t h i s, t h at p re s entl y p lanne d ph a s e o u t s of n u clear ca p acit y, to g et h er w it h a rene w e d intere s t in coal bu rn in s o m e m e mb er s tate s w ill s er v e to e x acer b ate t h e g ro w in g p ro b le m of C O2 e m i ss ion s. S o m e of t h e follo w in g g ra ph ic s are t h e b a s e ca s e m o d el for o u r p ro j ection s for EU 25. Th e y ta k e into acco u nt t h e ph a s e o u t of n u clear ca p acit y t h at h a s b een d eci d e d in a n umb er of m e mb er s tate s. A n d s o y o u w ill s ee a d ecrea s e of n u clear ca p acit y o v er t h e ne x t 25 y ear s. Th i s ne x t g ra ph sh o ws t h e EU e m i ss ion s by s ector, y o u’ ll s ee t h e lar g e s t C O2 e m i ss ion s in t h e Eu ro p ean U nion are fro m p o w er an d h eat g eneration by far. 26

A fter t h at tran sp ort i s t h e ne x t lar g e s t e m itter of car b on d io x i d e. A n d t h e s e are t h e c h an g e s I m entione d earlier. Y o u s ee t h at relati v e to 1 990, alrea dy tran sp ort by 2000 w a s qu ite a b o v e t h e 1 990 le v el s an d by 20 1 0 it’s e v en fart h er a b o v e an d by 2020 p o w er g eneration w ill al s o b e s i g ni ﬁ cantl y a b o v e t h e C O2 e m i ss ion s fro m 1 990. A n d t h e s e contin u e to increa s e a s y o u s ee w ell a b o v e 1 990 le v el s. Th e co mmu nit y a s a wh ole i s u nli k el y to m eet it s Ky oto tar g et s. A n d s e v eral m e mb er s’ s tate s w ill certain l y not m eet t h eir Ky oto tar g et s. Jus t in p a ss in g I w o u l d p oint o u t t h at I li k e t h i s ne x t g ra ph ic. Th e s e are t h e s o u rce s of Car b on d io xi d e. Th e a m o u nt s of Car b on d io x i d e e m itte d p er k ilo w att h o u r of electricit y g enerate d for t h e p o w er s ector an d y o u’ ll s ee t h e m ain s o u rce of co u r s e i s coal g eneration, follo w e d by oil. W e d on’ t us e a lot of oil in electricit y of co u r s e. N at u ral g a s al s o e m it s subs tantial qu antitie s of C O2. S o m e rene w a b le s p ro du ce m ore C O2 t h an t h e y act u all y d on’ t p ro du ce, if y o u s ee wh at I m ean. Nu clear p o w er i s t h e lo w e s t p ro du cer of C O2 p er k ilo w att h o u r in t h e wh ole s o u rce s for electricit y. S o t h at’s all for t h e i ssu e of sus taina b ilit y. 27

Competitiveness Th e co mp etiti v ene ss at t h e Eu ro p ean U nion w ill b e in ﬂu ence d by ener gy p rice s. Th e m ore o u r co mp anie s h a v e to p a y for t h eir en er gy t h e le ss co mp etiti v e t h e y b eco m e, u nle ss e v er yb o dy el s e in t h e w orl d i s p a y in g t h e s a m e, wh ic h i s a p ro b le m. W it h in t h e Eu ro p ean U nion, w e are tr y in g to li b erali z e t h e ener gy m ar k et, to m a k e it a co mm on ener gy m ar k et for electricit y an d for g a s, w it h t h e o bj ecti v e a s s tate d by t h e International E ner gy Ag enc y t h at tell s us t h at li b erali z ation d eli v er s lo w er p rice s an d i mp ro v e s s ec u rit y of supp l y. S o w e’ re d oin g t h e li b erali z ation of t h e s e m ar k et s an d s o m e b ene ﬁ t s h a v e alrea dy b een reali z e d. W e d i d g et for s o m e ti m e lo w er p rice s, w e g ot con v er g ence of p rice s b et w een m e mb er s tate s. Bu t t h e p roce ss i s far fro m co mp lete, t h e m ar k et s are far fro m b e in g totall y li b erali z e d an d o p en an d ener gy p rice s h a v e recentl y of co u r s e increa s e d. Th e y’ re h i gh er t h an t h e y w ere a y ear a g o. Th e ﬁ nal d e m an d by d ifferent t yp e s of f u el: w e s ee in t h i s ne x t g ra ph ic wh at w e p re d ict o v er t h e ne x t t w ent y-ﬁv e y ear s. O il d e m an d w ill g ro w, g a s d e m an d w ill al m o s t d o ub le. E lectricit y d e 28

m an d w ill g ro w. A ct u all y s oli d f u el s a pp ear in t h i s g ra ph ic to b e in relati v el y sm all a m o u nt an d rene w a b le s are an e v en sm aller p art. O ne of t h e m ain rea s on s for t h i s of co u r s e, w it h in t h e electricit y an d h eat, t h ere i s g a s, t h ere i s n u clear t h ere i s al s o s oli d f u el s, t h ere i s al s o rene w a b le s. Th e rene w a b le s in t h i s g ra ph ic are t h o s e in a dd ition to t h e electricit y g eneration jus t a s t h e g a s i s an a dd ition to wh at i s us e d for g eneratin g electricit y. Y o u s ee in t h e s e ﬁgu re s a g ro w in g d e m an d for ener gy an d al s o- in t h e ne x t g ra ph ic- increa s in g p rice s. Th e p rice s h a v e increa s e d a s y o u all k no w tre m en d o us l y in t h e la s t y ear or s o. Wh en t h i s g ra ph w a s d ra w n w e w ere h o p in g it m i gh t w ell co m e d o w n. O f co u r s e it w ent up after t h i s g ra ph w a s d ra w n bu t no w t h e y are b ac k d o w n aro u n d 60 d ollar s a b arrel- s o t h e y’ re s till aro u n d t h e to p corner of t h at g ra ph ic e v en t h o ugh t h e y h a v e co m e d o w n a b it. Wh en are t h e y g oin g to co m e d o w n mu c h f u rt h er? W e’ re not certain. W e can k ee p o u r ﬁ n g er s cro ss e d t h at t h e y w ill d o, bu t w e d on’ t k no w. In s o m e w a ys of co u r s e t h e h i gh p rice s h a v e a b ene ﬁ t for t h e m e d i um to lon g er ter m b eca us e t h ere h a s b een lac k of in v e s t m ent in t h e oil 29

an d g a s s ector for s o m e ti m e no w, wh ic h h a s ca us e d t h e v er y sm all sp are ca p acit y of p ro du ction o v er d e m an d. A n d it’s t h i s v er y sm all sp are ca p acit y in t h e p ro du ction an d t h e re ﬁ nin g p art s of t h e m ar k et t h at i s p artl y re sp on s i b le for t h e v er y h i gh p rice s. Th erefore t h e h i gh p rice s enco u ra g e g reater e xp loration an d p ro du ction s o co u l d b e a b ene ﬁ t in t h e lon g ter m – h o p ef u ll y, a s lon g a s w e can h a v e acce ss of t h e area s an d t h e re g ion s wh ere t h e oil an d g a s re s o u rce s e x i s t. If w e d on’ t h a v e acce ss to t h e m, t h e h i gh p rice s w ill not b en e ﬁ t us in t h at w a y. A l s o y o u s ee t h e electricit y p rice s h a v e g one up in W e s tern Euro p e o v er t h e la s t co up le of y ear s at a rea s ona b l y s tea dy rate of increa s e. Th e rea s on for t h i s i s rea s ona b l y clear once y o u loo k at s o u rce s of g eneration an d y o u s ee qu ite a lar g e sh are of g a s in t h ere, s o t h e increa s in g g a s p rice h a s s i g ni ﬁ cantl y increa s e d t h e electricit y p rice. Y o u s ee in t h i s ne x t g ra ph ic h o w w e e xp ect t h e g eneration by s o u rce to c h an g e o v er t h e ne x t 25 y ear s an d w e e xp ect a b i g increa s e in t h e g a s sh are, a g ain in electricit y g enera 30

tion. A n d s o m e wh at su r p ri s in g l y I supp o s e t h e increa s e in t h e us e of s oli d f u el s p o s t 20 1 5. I’ ll co m e b ac k to t h i s in a little wh ile an d y o u’ ll s ee a g ain a s I p ointe d o u t earlier t h e d ecrea s e in t h e n u clear sh are ca us e d by t h e p lant ph a s e o u t s. Security of supply Th e Eu ro p ean U nion’s d e p en d ent on i mp ort s for clo s e to 50% of it s ener gy, w e k no w t h i s, an d t h i s i s g oin g to ri s e to 60% by 2020 an d clo s e to 70% in 2030, u nle ss w e d ra s ticall y c h an g e o u r p olicie s. 3 1

A n d I m ean to d ra s ticall y c h an g e o u r p olicie s, w e mus t intro du ce all t h e i mp ro v e d ef ﬁ cienc y t h at w e w ant to d o, w e mus t increa s e t h e a m o u nt s of ne w an d rene w a b le s in line w it h t h e tar g et s t h at w e s et. A t t h e m o m ent neit h er s ee ms li k el y, bu t if w e can ac h ie v e it, t h en w e can s to p t h i s increa s e d d e p en d ence, t h at’s sh o w n t h ere. H o w e v er it w ill not b e eno ugh to k ee p us d o w n at 50% d e p en d in g, I d on’ t b elie v e. 32

By 2030, w e’ ll b e i mp ortin g 90% of t h e oil t h at w e nee d into t h e co mmu nit y. Ov er 80% of o u r g a s w ill b e i mp orte d, an d 65% of o u r s oli d f u el s. A n d, wh en y o u reali z e t h at t h e onl y s oli d f u el t h at w e i mp ort i s h ar d coal, b eca us e w e d on’ t i mp ort li g nite, y o u w ill u n d er s tan d w e are i mp ortin g a v er y h i gh p ercenta g e of o u r h ar d coal by 2030. G ra ph icall y it’s sh o w n li k e t h at. Y o u can s ee t h e nat u ral g a s – it’s g oin g up by far t h e fa s te s t, to g et h er w it h s oli d f u el s. I s ai d “s oli ds” – bu t t h i s i s h ar d coal i mp ort s, not li g nite i mp ort s. 33

Th e s e are t h e ori g in s of i mp ort in t h e Eu ro p ean U nion in 2004: A n d y o u s ee t h e m ain supp lier of oil w a s Russ ia. Qu ite con s i d er a b l y m ore t h an t h e total a m o u nt of oil w e recei v e fro m all of t h e M i dd le E a s t. Th e m ain supp lier of g a s w a s Russ ia. A lt h o ugh in 2004 it p ro du ce d a sm aller p ercenta g e of o u r i mp ort s t h an it usuall y d oe s, b eca us e usu all y it’s clo s e to 50% bu t for s o m e rea s on or ot h er 2004 w a s a relati v el y lo w n umb er, o v er a h i gh er one for N or w a y. Su r p ri s in g l y eno ugh, Russ ia w a s o u r s econ d lar g e s t supp lier of h ar d coal. A n d al s o, an d it’s not sh o w n on t h at g ra ph ic, o u r lar ge s t s in g le supp lier of u rani um. S o Russ ia i s o u r m ain ener gy supp lier. By far o u r g reate s t ener gy supp lier. S o wh en w e h ear wh at h a pp ene d b et w een Russ ia an d Uk raine in J an u ar y, y o u can u n d er s tan d t h e concern s t h at ran t h ro ugh t h e p olitical e s ta b li shm ent s. Bu t on t h e ot h er s i d e I sh o u l d al s o p oint o u t t h at for 30 y ear s Russ ia h a s supp lie d us w it h ener gy w it h o u t interr up tin g o u r supp l y. Th o s e are t h e t h ree core p rioritie s an d in re sp on s e w e pu t for w ar d a p ro p o s al co v erin g s i x“p riorit y area s”. W e h a v e t h ree core p rin 34

ci p le s an d w e h a v e s i x p riorit y area s t h at w e nee d to a dd re ss. Th e ﬁ r s t one i s t h e en v iron m ent. A n inte g rate d a pp roac h to tac k lin g cli m ate c h an g e. Th e s econ d one i s co mp letin g o u r internal m ar k et. Th e t h ir d i s h a v in g a d i v er s e an d sus taina b le ener gy m i x. Th e fo u rt h i s an internal ener gy supp l y p olic y. S oli d arit y b et w een t h e m e mb er s tate s an d supp l y. A lot of t h i s of co u r s e relate s to s toc kp ile s an d k ee p in g s toc kp ile s to p rotect us in t h e e v ent of sh orta g e s. A not h er p riorit y i s“ ener gy tec h nolo gy an d inno v ation. Th i s m ainl y refer s to f u t u re re s earc h, incl ud in g of co u r s e o u r s e v ent h fra m e w or k re s earc h p ro g ra m, t h e budg et for wh ic h i s p re s entl y s till b ein g d e b ate d. A n d ﬁ nall y, e x ternal relation s, of co u r s e. Th e co h erent e x ternal rela tion s p olic y w it h t h e o bj ecti v e of 25 or s oon 27 m e mb er s tate s ne g o tiatin g fro m a s tron g er p o s ition t h an in d i v i du al m e mb er s tate s can. N o w I w on’ t tal k on t h e la s t t h ree i ssu e s, p artl y b eca us e t h e y h a v e alrea dy b een co v ere d qu ite e x ten s i v el y alrea dy t h i s m ornin g an d al s o y o u can g i v e a totall y s e p arate sp eec h on t h e re s earc h, co v er in g all t h e a sp ect s. S o I w on’ t tal k on t h at eit h er. Bu t I’ ll concen trate for t h e re s t of my tal k on t h e ﬁ r s t t h ree ite ms, t h e en v iron m ent, t h e internal m ar k et an d t h e ener gy m i x. The environment W e nee d to re du ce o u r C O2 e m i ss ion s. Th at i s clear. W e mus t re du ce t h e a m o u nt s of C O2 w e p ro du ce. W e’v e s i g ne d up to t h e Ky o to p rotocol, a s I s ai d, bu t m an y m e mb er s tate s are h a v in g d if ﬁ c u lt y in ac h ie v in g t h eir tar g et. A g reat d eal of d if ﬁ c u lt y. S e v eral w ill m i ss t h e m by a lon g w a y. W e h a v e t h e e m i ss ion tra d in g s c h e m e, a s y o u w ill all k no w wh ic h alrea dy co v er s 1 0,000 in s tallation s acro ss t h e Eu ro p ean U nion. In fact s o m e b o dy s ai d a co up le of d a ys a g o t h at it’s 1 2,000, s o I’m not su re wh at t h e e x act n umb er i s. A n d it’s clearl y h a v in g an i mp act. Bu t w e’ re not certain t h e i mp act it’s h a vin g i s act u all y lon g ter m. It m a y b e jus t p eo p le sw itc h in g supp l y fro m one d a y al m o s t to t h e ne x t d e p en d in g on t h e p rice of C O2 p er m it s. D e p en d in g on t h e p rice of car b on on t h e m ar k et. A n d w e 35

d on’ t t h in k y et it’s d ri v in g t h e d irection of lon g ter m in v e s t m ent s a w a y fro m C O2 e m ittin g tec h nolo g ie s. A n d it h a s not b een w it h o u t it s p ro b le ms. I t h in k y o u m a y k no w a b o u t t h e cra sh in t h e p rice t h at occ u rre d, I t h in k it w a s in Ap ril or M a y, wh en t h e p rice m ore t h an h al v e d in a fe w d a ys. L e ss t h an t h at. S o it’s not w it h o u t it s p ro ble ms an d w it h o u t a rea s ona b l y s ta b le p rice( of co u r s e t h e tra d er s d on’ t reall y w ant a s ta b le p rice, t h e y m a k e t h eir m one y on t h e b i g ﬂu ct u ation s) bu t w it h o u t a rea s ona b le s ta b le p rice w e w ill not d ri v e t h e tec h nolo gy in an y one d irection b eca us e t h ere w ill contin u e to b e u ncertaint y in t h e m ar k et. W e are in t h e p roce ss of re v ie w in g t h e e m i ss ion tra d in g s c h e m e, an d t h ere w ill b e a re p ort o u t later t h i s y ear I h o p e. Th en w e w ill loo k at h o w it sh o u l d b e e x ten d e d, h o w it sh o u l d b e re v i s e d in ph a s e t w o, wh ic h i s for t h e p erio d 2008-20 1 2. A n d al s o w e w ill loo k wh at w e sh o u l d d o b e y on d 20 1 2 on w ar ds. It’s li k el y t h at w e w ill p ro p o s e m o d i ﬁ cation s for 2008-20 1 2, an d t h en for 20 1 2 on w ar ds it i s m ore t h an li k el y t h at t h ere w ill b e a p ro p o s al pu t to t h e Co mm i ss ion, an d wh en t h e Co mm i ss ion w ill a d o p t it, co mm ittin g t h e e m i ss ion tra d in g s c h e m e in t h e f u t u re, b e y on d 20 1 2. H o w far into t h e f u t u re it w ill b e e x ten d e d, of co u r s e w ill in t h e en d b e left v er y mu c h to t h e m e mb er s tate s to d eci d e. A n d I’d li k e to m a k e a little a s i d e on t h i s one, b eca us e o u r co mp anie s w ant s ta b ilit y. Th e y w ant a re gu lator y fra m e w or k t h at i s s ta b le, t h at t h e y can p re d ict. Wh en y o u k no w a p o w er p lant i s g oin g to li v e for 40, 50, or e v en 60 y ear s in t h e ca s e of s o m e n u clear p lant s, y o u w ant to k no w t h at t h e fra m e w or k i s g oin g to b e rea s ona b l y s ta b le. S o y o u can’ t w or k w it h a s c h e m e t h at m i gh t c h an g e in 5 y ear s or m i gh t not c h an g e in 5 y ear s. I’m su re t h at my collea gu e s in DG E n v iron m ent w ill pu t a d ate far eno ugh into t h e f u t u re. I tal k e d a fe w d a ys a g o to s o m e co u nter p art s fro m t h e US. Th e s e are p eo p le not fro m M r. Bush’s p er su a s ion. Th e s e p eo p le act u all y b elie v e in cli m ate c h an g e. A n d t h e y al s o t h in k t h e e m i ss ion tra d in g s c h e m e i s a g oo d t h in g an d t h e y b elie v e t h e Am erican s w ill intro du ce an e m i ss ion tra d in g s c h e m e. Th e onl y t h in g i s t h e y d on’ t e xp ect t h e Am eri can s to intro du ce an e m i ss ion tra d in g s c h e m e for p o ss i b l y 1 0 to 1 5 y ear s. Bu t in t h e m eanti m e t h e Am erican s w ant us to contin u e 36

to us e o u r e m i ss ion tra d in g s c h e m e. O f co u r s e it a dds to t h e co s t for o u r in dus tr y. H o w e v er t h e Am erican s s ai d t h at if w e d on’ t con tin u e o u r tra d in g s c h e m e, it’s u nli k el y t h at t h e Am erican s w ill e v er a d o p t one. S o t h e y w ant us to contin u e it al m o s t in a v ac uum in t h e h o p e t h at s o m e d a y t h e Am erican s w ill a d o p t one a s w ell. B eca us e an e m i ss ion tra d in g s c h e m e pu rel y for t h e EU 25 co u l d b eco m e a bu r d en aro u n d o u r nec k w it h p ro b a b l y li m ite d lon g ter m i mp act on t h e en v iron m ent. S o t h i s i s s o m et h in g w e’v e g ot to w atc h. G i v e a s tron g re gu lator y lon g ter m fra m e w or k, bu t at t h e ri sk of lo s in g o u r co mp etiti v ene ss if ot h er s d on’ t j oin us. S o w e nee d a lot of p re ssu re an d w e nee d e v er yb o dy to h el p supp ort us to push for ot h er s to j oin us in b attlin g cli m ate c h an g e. W e can’ t d o it alone fore v er. Efﬁciency D ecrea s in g o u r ener gy con sump tion wh ene v er p o ss i b le i s t h e b e s t w a y to sus taina b ilit y. Th e ener gy y o u d on’ t us e i s t h e b e s t for m of ener gy. Th at’s clear, w e mus t push for ener gy ef ﬁ cienc y an d a s y o u k no w t h e Co mm i ss ion pub li sh e d a g reen p a p er t h at foc us e d on ener gy ef ﬁ cienc y t h at s ai d w e can m a k e 20% ener gy s a v in g on o u r con sump tion w it h a tar g et d ate of 2020 for ac h ie v in g t h i s 20% i mp ro v e m ent in ef ﬁ cienc y. W e’ re in t h e p roce ss of ﬁ nali z in g an action p lan on ener gy ef ﬁ cienc y to ac h ie v e t h i s 20%. W atc h t h i s sp ace, t h e act u al p ro p o s al sh o u l d b e a d o p te d by t h e Co mm i ss ion ne x t w ee k. It w ill in v ol v e m ainl y b etter i mp le m entation of e x i s tin g re gu lation, increa s in g pub lic a w arene ss, b eca us e a lot of t h e s a v in gs h a v e g ot to b e d one by in d i v i du al s no w. A n d it w ill al s o loo k at ne w re gu la tion s, p ro b a b l y t h e bu il d in g s ector to i mp ro v e t h e ener gy ef ﬁ cien c y of bu il d in gs. Bu t al s o on tran sp ort to increa s e t h e ef ﬁ cienc y or e m i ss ion of tran sp ort. Th i s i s of co u r s e a m a j or i ssu e. Completing the internal market Sus taina b ilit y co mp etiti v ene ss an d s ec u re ener gy nee ds a co mp etiti v e ener gy m ar k et. W e nee d co mp etition b et w een co mp anie s, loo k in g to b eco m e Eu ro p ean w i d e co mp anie s not jus t d o m inant national p la y er s. Op en m ar k et s an d not p rotectioni sm sh o u l d 37

s tren g t h en Eu ro p e. If w e can g et a p ro p er o p en m ar k et w e co u l d b rin g d o w n p rice s an d i mp ro v e s ec u rit y of o u r supp l y an d b oo s t o u r co mp etiti v ene ss a s lon g a s w e can w or k it p ro p erl y. A co mp lete, effecti v e s in g le Eu ro p ean E lectricit y an d g a s m ar k et w o u l d ac h ie v e t h at. A n d y o u can al s o h el p m a k e co mp anie s clo s e t h e le ss ef ﬁ cient ener gy p lant s, wh ic h w ill b e g oo d for t h e p rice s an d al s o g oo d for t h e en v iron m ent. In b rief h o w e v er t h e m ain p ro b le m i s t h e lac k of inte g ration b et w een national m ar k et s. Th ere’s a real lac k of inte g ration an d a k e y in d icator of t h i s i s t h e a bs ence of p rice con v er g ence s acro ss t h e EU. Th ere’s s till d ra m aticall y d iffer ent p ricin g. Th ere are d ra m aticall y d ifferent p rice s for one m e mb er s tate to anot h er, bu t e v en s o m eti m e s w it h in m e mb er s tate s. A not her in d icator i s t h e relati v el y lo w le v el of cro ss b or d er tra d e w it h in Eu ro p e. It’s g enerall y du e to e x i s tin g b arrier s for entr y, ina d e qu ate us e of e x i s tin g infra s tr u ct u re an d in su f ﬁ cient interconnection b e t w een m e mb er s tate s, wh ic h lea ds to con g e s tion an d b ottlenec ks at t h e connector s b et w een m e mb er s tate s. A lot of co mp anie s are m a k in g m one y on t h i s con g e s tion, s o t h e y d on’ t h a v e a g reat d eal of incenti v e to c h an g e it. W e’v e g ot to tr y an d p ro v i d e t h e m w it h t h e incenti v e to c h an g e it. W e’v e g ot to i mp ro v e t h e a m o u nt of in terconnection to g et ri d of a lot of t h i s con g e s tion t h at e x i s t s. W e’ re loo k in g for e x a mp le for electricit y m ini mum of 1 0% of electricit y ca p acit y. 1 0% of it s ca p acit y sh o u l d b e co v ere d by interconnec tion s w it h a dj acent m e mb er s tate s, w it h nei ghb o u r s. A b i g p ro ble m, of co u r s e t h o ugh i s s till w e w ill nee d at lea s t 500 g i g a w att s of ne w electrical ca p acit y by 2030. A t lea s t 500 g i g a w att s, s o m e p eo p le s a y 700 g i g a w att s of ne w electrical ca p acit y. H o w are w e g oin g to incenti v e s t h e bu il d in g of t h i s ca p acit y? Co mp anie s s a y t h e y w ant a clear re gu lator y fra m e w or k. Th e y w ant to k no w if t h e internal m ar k et’s g oin g to w or k an d y et t h e m ar k et’s c h an g in g, t h e re gu lation s are c h an g in g, t h e wh ole fra m e w or k, t h e g ran d r u le s of t h e g a m e are c h an g in g, s o w e nee d to g et a clear g ro u n d r u le s, ot her w i s e w e w on’ t g et t h e in v e s t m ent t h at’s nee d e d in t h e Eu ro p ean U nion’s m ar k et. 38

Level playing ﬁeld. W e nee d a le v el p la y in g ﬁ el d an d t h e k e y w or d h ere i s“u n bu n d lin g”. W e’v e trie d le g al u n bu n d lin g, wh ere t h e s e b i g co mp anie s h a v e g ot to le g all y d i v i d e off t h e o w ner sh i p of t h eir p ro du ction, t h eir tran sp ort an d t h eir d i s tri bu tion. It h a s n’ t w or k e d v er y w ell. S o t h e ne x t t h at w e’ re p ro b a b l y g oin g to g o for- t h e k e y w or d no w i s“ o w ner sh i p u n bu n d lin g”. It’s not v er y p o pu lar w it h m an y of t h e co mp anie s of co u r s e. Th e y d on’ t w ant to b e“u n bu n d le d”. Bu t t h i s i s t h e ne x t p o ss i b ilit y. W e mus t m a k e su re t h at w e b oo s t t h e co mp etiti v ene ss of Eu ro p ean in dus tr y. S o m eti m e s s o m e of t h e t h in gs w e d o are not jus t relate d to t h e internal m ar k et bu t al s o to sus tain a b ilit y an d s ec u rit y of supp l y an d t h e y co u l d h a v e a ne g ati v e i mp act on co mp etiti v ene ss. W e h a v e to b e v er y caref u l t h at w e g et t h e ri gh t b alance. Th e b alance b et w een sus taina b ilit y, co mp etiti v ene ss an d s ec u rit y of supp l y i s a v ital one an d v er y d if ﬁ c u lt to ac h ie v e. The energy mix E ac h m e mb er s tate an d ener gy co mp an y c h oo s e s it s o w n ener gy m i x. Th at i s clear. H o w e v er t h e c h oice m a d e by one s tate, of co u r s e can affect anot h er s tate an d it s nei ghb o u r s a s w ell a s t h e co mmunit y a s a wh ole. H ere are a co up le of e x a mp le s ta k en s trai gh t fro m t h e g reen p a p er, if an yb o dy h a s rea d o u t of t h e g reen p a p er h ere, t h e y w ill reco g ni z e t h e s e t w o – t h e m o v e to nat u ral g a s for p o w er g eneration co u l d h a v e a s i g ni ﬁ cant effect on t h e s ec u rit y of supp l y of a nei ghb o u rin g co u ntrie s in t h e e v ent of a g a s sh orta g e. A n d al s o a d eci s ion by m e mb er s tate relate d to n u clear ener gy can al s o h a v e s i g ni ﬁ cant con s e qu ence s on ot h er m e mb er s tate s in ter ms of t h e EU’s d e p en d ence on i mp orte d fo ss il f u el s an d of co u r s e on C O2 e m i ss ion s. Th e s e s tate m ent s are s trai gh t o u t of t h e g reen p a p er. Tu rnin g v er y b rie ﬂy to t h e ener gy m i x an d coal, b eca us e I s a y coal an d li g nite p ro du ce one t h ir d of o u r electricit y, co u ntin g for a b o u t 1 5% of o u r total con sump tion. Cli m ate c h an g e h o w e v er m ean s t h at t h i s tec h nolo gy, bu rnin g coal an d li g nite i s onl y sus taina b le if acco mp anie d by clean coal tec h nolo g ie s i. e. i mp ro v e d ef ﬁ cienc y 39

of coal bu rn an d co mm erciali z e d car b on ca p t u re s tora g e – CC S tec h nolo gy. S o coal an d li g nite can onl y contin u e in t h e m i x if w e can m a k e t h e m lo w car b on, or near z ero car b on e m i ss ion s. W e h a v e a co mmu nication co m in g on wh at w e call sus taina b le coal. Sus taina b le coal i s a m i x t u re of clean coal an d car b on ca p t u re d s tora g e, wh ic h w ill loo k at p o ss i b le tar g et s for ac h ie v in g near z ero car b on e m i ss ion electricit y g eneration. Tw o of t h e n umb er s w e are d i s c uss in g no w i s t h at w e sh o u l d not licen s e in Eu ro p e an y p o w er g eneratin g p lant after 2020 t h at d oe s not h a v e car b on ca p t u rin g s tora g e incl ud e d in t h e d e s i g n. P o s t 2020 no coal bu rnin g p lant sh o u l d b e licen s e d u nle ss t h e y’ re e qu i pp e d w it h car b on ca p t u re d s tora g e. W it h t h e o bj ecti v e t h at by 2050 all car b on e m ittin g p o w er g eneratin g p lant s w ill b e clo s e d or ph a s e d o u t of t h e m i x i. e. by 2050 o u r electricit y g eneration sh o u l d b e near z ero car b on e m i ss ion t h ro ugh o u t Eu ro p e. Th o s e are n umb er s t h at h a v e not y et b een a d o p te d by t h e Co mm i ss ion. Th e s e v ent h re s earc h p ro g ra m, wh ic h w a s m entione d, pu t s e mph a s i s on b ot h clean coal an d car b on ca pt u rin g s tora g e, incl ud in g wh at i s calle d a z ero e m i ss ion fo ss il f u el p o w er p lant tec h nolo gy p latfor m, wh ic h h a d it s ﬁ r s t b i g s ta k e h ol der g at h erin g a fe w w ee ks a g o, wh ic h w a s v er y w ell atten d e d an d h a s g ot a v er y p reci s e s trate g ic action p lan an d re s earc h a g en d a wh ic h I w ill reco mm en d to y o u. Y o u can acce ss it fro m t h e tec hnolo gy p latfor m’s w e bs ite an d t h i s i s t h e k in d of a ﬂ a gsh i p of o u r clean coal an d car b on ca p t u re an d s tora g e re s earc h p ro g ra m. Brieﬂy on energy mix and nuclear Nu clear al s o contri bu te s ro ugh l y one t h ir d of t h e EU’s electric it y p ro du ction. Wh ile w e nee d to m a k e su re it’s an i ssu e of w a s te an d s afet y, if it i s w ell m ana g e d it d oe s re p re s ent t h e lar g e s t s in g le car b on free ener gy s o u rce in Eu ro p e at t h i s m o m ent. Th e s trate g ic ener gy re v ie w, wh ic h I’ ll m ention v er y b rie ﬂy in a m o m ent, sh o u l d allo w a tran sp arent an d o bj ecti v e d e b ate on t h e f u t u re role of n uclear ener gy in t h e Eu ro p ean U nion. T ran sp arent an d o bj ecti v e, not p olari z e d to i d eolo g ical d e b ate, h o p ef u ll y, wh ic h i s al w a ys d if ﬁ c u lt w it h n u clear, a s m entione d earlier. A n d w e b elie v e t h e Eu ro p ean 40

U nion can p a y a us ef u l role in m a k in g su re t h at all t h e i ssu e s are p ro p erl y d i s c uss e d in a w ell infor m e d, o bj ecti v e an d tran sp arent w a y. Th i s co mm ent i s s trai gh t o u t of t h e g reen p a p er a g ain. A n d in a fe w w ee ks ti m e t h ere sh o u l d b e an ill us trati v e n u clear p ro g ra m, a d o p te d by t h e Co mm i ss ion, wh ic h w ill re v ie w t h e p ro g re ss on n uclear. Wh at’s b een h a pp enin g, wh at it co u l d b e d oin g in t h e f u t u re an d t h e co s t s an d b ene ﬁ t s of it in line w it h wh at w a s re qu e s te d. I m entione d a s trate g ic ener gy re v ie w an d w e w ant to pu t in t h ere s o m e wh ere an o v erall s trate g ic o bj ecti v e for ener gy in t h e Eu ro p ean U nion t h at b alance s t h e t h ree core p rinci p le s. Th e one w e are d i s c uss in g at t h e m o m ent m i gh t to b e ai m at a m ini mum le v el in t h e ener gy m i x of s ec u re an d lo w car b on ener gy s o u rce s. A m ini mum le v el of t h o s e t yp e s of s o u rce s in t h e ener gy m i x, wh ic h w ill e v ol v e o v er ti m e. I h a v en’ t h ear d t h e late s t on t h e p ercenta g e s of t h e lo w car b on an d s ec u re ener gy t h at co u l d b e in t h e m i x, bu t p eo p le I’v e h ear d of tal k e d of 50% an d e v en g reater by 2050. O t h er p o ss i b le in d icator s are al s o b ein g d i s c uss e d. W e sh o u l d k no w s oon. A n d t h e o bj ecti v e: t h e te x t on t h i s s li d e i s a d irect qu ote fro m t h e G reen P a p er. Th e in d icator to b e a d o p te d sh o u l d p oint to wh ere w e’ re g o in g an d al s o b e a gu i d e for f u t u re re gu lation t h at m i gh t b e nee d e d to d ri v e ener gy p olic y in t h i s d irection. W e can not tell m e mb er s tate s wh at m i x t h e y sh o u l d h a v e, bu t wh at w e can d o i s to ai m at a m ini mum p ercenta g e of lo w car b on ener gy in t h e co mmu nitie s m i x. W e can g et m e mb er s tate s h o p ef u ll y to a g ree to t h at. The follow-up to the green paper W e’v e h a d a pub lic con su ltation p roce ss, wh ic h I h o p e s o m e, if not all of y o u h a v e b een in v ol v e d in, wh ic h ﬁ ni sh e d a fe w w ee ks a g o. W e h a d 1 ,500 in d i v i du al re sp on s e s an d 1 50 p o s ition p a p er s fro m t h e m ain ener gy b a s e d or g ani z ation s an d al s o fro m s e v eral m e mb er s tate s. A n d in D ece mb er of t h i s y ear or J an u ar y ne x t y ear t h e Co mm i ss ion p lan s to a d o p t an ener gy p ac k a g e. Th i s w ill b e n umb er of re p ort s, co mmu nication s an d p ro p o s al s for le g i s lation, co v erin g a n umb er of d ifferent area s. I’v e m entione d s o m e of t h e m alrea dy incl ud in g t h e one on ener gy ef ﬁ cienc y wh ic h w ill b e a d o p te d s oon. 4 1

W e h a v e to ac h ie v e t h e 20% ener gy ef ﬁ cienc y. Th ere w ill al s o b e n um ero us one s on ne w an d rene w a b le s, wh ic h I t h in k my collea gu e fro m t h e p arlia m ent w ill m ention later. Th ere’s al s o t h e one on t h e n u clear p olic y an d t h e one on sus taina b le coal. Th e co v erin g one for t h i s w ill b e t h e s trate g ic ener gy re v ie w, wh ic h w ill b e t h e real su cce ss or to t h e g reen p a p er a s a ne x t s te p. Th e y w ill re p re s ent a n umb er of relati v el y sm all s te ps, bu t i mp ortant s te ps to w ar ds a Euro p ean ener gy p olic y. Th e d oc um ent s w ill all lan d, all ten or t w el v e d oc um ent s w ill all lan d w it h a v er y b i g t hump on t h e ta b le of t h e G er m an p re s i d enc y, an d s o t h e y’ ll h a v e to d eal w it h t h i s. E ner gy i ssu e s h a v e sh ot up t h e g lo b al p olitical a g en d a. A n d t h i s i s p artl y d ri v en of co u r s e by increa s in g concern s o v er s ec u rit y of o u r supp lie s, e sp eciall y o u r i mp ort s. A n d s o m et h in g h ere wh ic h I’v e not reall y m entione d at all an d it h a s al m o s t b een m entione d in p a ss in g by ot h er sp ea k er s i s t h e p ro b le m of In d ia an d C h ina. Th e s e are ra p i d l y g ro w in g w it h i mp re ss i v e econo m ic g ro w t h. Th e y’ re in crea s in g t h eir d e m an d an d t h e y’ re o u r co mp etitor s on t h e w orl d m ar k et. A n d t h e y’ re co mp etin g in e x actl y t h e s a m e m ar k et s t h at w e are in m an y w a ys. A n d t h e y’ re g ro w in g in s tren g t h an d t h e y’ re al s o g ro w in g in mus cle, e sp eciall y C h ina. C h ina i s qu ite h a ppy to g o into area s an d s a y“W e w ant to buy t h at re s o u rce! P lea s e p ro du ce it for us an d h ere’s t h e m one y!” Th e y’ re not too w orrie d a b o u t m ar k et p rice s. Th e y g o in, t h e y h a v e t h e m one y, t h e y buy wh at t h e y w ant. Th e y w ant t h eir re s o u rce s. S o t h e y’ re c h an g in g t h e r u le s of t h e g a m e to a lar g e e x tent. A n d of co u r s e t h ere’s t h e US a s w ell, wh ic h i s s till by far t h e m a j or ener gy con sum er t h at w e al s o nee d to tal k to m ore clo s el y. It’s d one p artl y d ri v en by reco g nition t h at cli m ate c h an g e i s al rea dy h a pp enin g. W e can’ t s to p it. A ll w e can d o I t h in k i s s lo w it d o w n. A n d learn to li v e w it h it of co u r s e. Bu t w e nee d to s lo w it d o w n, b eca us e ot h er w i s e w e’ re in a b i g e xp eri m ent, o v er wh ic h w e h a v e no control an d w e d on’ t h a v e reall y an y real cl u e o v er wh at w ill h a pp en. O f co u r s e it s d ri v en p artl y by concern s o v er t h e 42

co mp etiti v ene ss of Eu ro p ean in dus tr y. Th i s I t h in k w a s s o m et h in g t h at h a s not b een b ro ugh t o u t s tron g l y eno ugh in t h e ﬁ r s t g reen p a p er in M arc h. O ne of t h e m ain critici sms I’v e h ear d an d one I mus t a dm it I ten d to symp at h i z e w it h i s t h at t h e ﬁ r s t p a p er pu t too mu c h e mph a s i s on sus taina b ilit y an d on s ec u rit y of supp l y an d not eno ugh on o u r co mp etiti v ene ss. B eca us e if o u r in dus tr y loo s e s co mp etiti v ene ss b eca us e of o u r p olicie s an d b eca us e of t h e co s t of ener gy, wh at h a pp en s? Th e y g o off sh ore an d t h e y g o to co u ntrie s wh ere t h e y can p ro du ce t h eir g oo ds w it h o u t w orr y in g h o w mu c h car b on d io x i d e t h e y e m it an d g et c h ea p electricit y. Wh at h a pp en s of co u r s e, w e loo s e e mp lo ym ent in Eu ro p e, w e lo s e in dus tr y, w e s to p b ein g co mp etiti v e in t h e w orl d an d y et o u r en v iron m ent d ete riorate s b eca us e t h e s e co mp anie s are p ro du cin g m ore C O2 o v er s ea s. S o it’s a lo s e- lo s e s it u ation, u nle ss w e m a k e su re wh at w e d o d oe s not h a v e an a dv er s e effect on t h e co mp etiti v ene ss of Eu ro p ean in dus tr y. S o b a s icall y a s a la s t w or d, t h e g reat ener gy d e b ate, a s w e refer to, h a s b een la u nc h e d. Bu t action mus t follo w qu ic k l y. W e can’ t jus t d e b ate it, w e’v e g ot to h a v e s o m e action, w e rel y of co u r s e, a s I m entione d earlier a co up le of ti m e s no w, on t h e G er m an p re s i d enc y to m a k e su re t h i s action act u all y d oe s follo w. Bu t w e mus t all p la y o u r p art, wh et h er w e are m e mb er s alrea dy or a b o u t to j oin t h e Euro p ean U nion, bu t al s o o u r m a j or supp lier s an d fello w con sum er s mus t all p la y a p art in m a k in g su re t h at t h e ener gy d e b ate co m e s to a su cce ss f u l concl us ion an d t h at w e h a v e an ener gy ric h w orl d. Th an k y o u v er y mu c h for li s tenin g. 43

Britta Thomsen: „Renewable Energy Sources and Sustainable Energy Policy“ B ritta Th o ms en i s a M e mb er of t h e S ociali s t G ro up of t h e Eu ro p ean P arlia m ent an d D e pu t y C h air p er s on of t h e Co mm ittee for In dus tr y, S cience, an d E ner gy L a d ie s an d g entle m en, F ir s t of all I w ant to t h an k y o u for in v itin g m e to sp ea k at t h i s conference. Wh en y o u rea d t h e m ain Eu ro p ean ne wsp a p er s to d a y, y o u w ill h a v e a h ar d ti m e ﬁ n d in g a p a p er wh ere t h e ener gy i ssu e d oe s not d o m i nate an d m o s t of t h e s e article s are d o m inate d by one w or d: rene wa b le s. Th i s i s du e to t h e fact t h at a w arene ss of o u r ener gy s it u ation i s ri s in g. P eo p le can feel it d irectl y on t h eir w allet s an d pu r s e s, wh en t h e y p a y for g a s oline an d h eatin g b ill s. Th e ri s in g w orl d d e m an d, e sp eciall y p ro p elle d by t h e ri s in g C h ine s e ener gy con sump tion, h a s tri gg ere d a ne w s it u ation for Eu ro p ean p ro du cer s an d con sum er s. Th e h i gh ener gy p rice s are h ere to s ta y an d if w e d on‘ t react to t h i s ne w ener gy s it u ation, t h e p rice w ill k ee p ri s in g to t h e d i s a dv anta g e of t h e econo my an d citi z en s in t h e Eu ro p ean U nion. Th e recent g reen p a p er fro m t h e Eu ro p ean Co mm i ss ion for a„Eu ro p ean S trate gy for Sus taina b le, Co mp etiti v e an d S ec u re E ner gy“ sh o ws a rat h er p e ss i m i s tic s cenario for t h e f u t u re Eu ro p ean ener gy s it u ation. Th e d e m an d for oil h a s increa s e d by 20% s ince 1 994, an d g lo b al oil d e m an d i s p ro j ecte d to g ro w by 1.6% p er y ear. C O2 e m i ss ion s are e xp ecte d to ri s e by s o m e 60% by 2030. Th i s h a s an effect on o u r cli m ate. A ccor d in g to t h e Inter g o v ern m ental P anel on Cli m ate C h an g e( I P CC), g reen h o us e g a s e m i ss ion s h a v e alrea dy m a d e t h e w orl d 0.6 d e g ree s w ar m er. If no action i s ta k en t h ere w ill b e an increa s e of b et w een 1.4 an d 5.8 d e g ree s by t h e en d of t h e cent u r y Th e Eu ro p ean d e p en d enc y on i mp ort i s al s o ri s in g. In t h e ne x t 20 44

to 30 y ear s aro u n d 70% of t h e U nion’s ener gy re qu ire m ent s w ill b e fro m i mp orte d p ro du ct s co mp are d to 50% to d a y. S o m e of t h e i mp ort w ill co m e fro m u n s ta b le an d in s ec u re re g ion s. F ace d w it h t h e s e c h allen g e s w e h a v e s e v eral re sp on s e s. W e tal k a b o u t ener gy ef ﬁ cienc y, ener gy s a v in gs, car b on ca p t u re tec h nolo g ie s, n u clear p o w er an d s o fort h. It i s my intention to p ro v i d e y o u w it h rene w a b le s ener gy s o u rce s a s an an sw er to t h e ener gy c h allen g e. R ene w a b le s are in d ee d ca p a b le of s ol v in g t h e p ro b le ms of ener gy supp l y an d sus taina b le g ro w t h. L et us ﬁ r s t tal k a b o u t ener gy supp l y. Th e qu e s tion i s: can rene wa b le s supp l y eno ugh ener gy for t h e ri s in g ener gy d e m an d? L et m e s tate t h e fact, t h at rene w a b le s are jus t a s ca p a b le of s ol v in g t h e p ro b le m of supp l y a s an y ot h er ener gy s o u rce s- an d s till b e co mp etiti v e! A n d it i s o bv io us t h at f u rt h er econo m ic g ro w t h h a s to us e an increa s in g sh are of rene w a b le s to b e sus taina b le. Th e p re s ent us e of fo ss il ener gy s o u rce s are in su f ﬁ cient in s ol v in g t h e p ro b le m of s ec u rit y of supp l y an d sus taina b le g ro w t h, wh ic h i s du e to t h e fact, t h at fo ss il f u el s nee ds to b e i mp orte d an d t h e y p ol l u te. Th ere i s al s o a ﬁ nite a m o u nt of fo ss il f u el s. Wh et h er w e r u n o u t in 30, 40 or e v en a 1 00 y ear s i s not reall y i mp ortant. Bu t w e are g oin g to r u n o u t. Th at i s a certaint y. Th e us a g e of g a s i s g ettin g m ore an d m ore e xp en s i v e an d recent s t ud ie s sh o ws t h at t h e m ain e xp orter of g a s, Russ ia, w ill not b e a b le to s ati s f y Eu ro p ean d e m an ds, b eca us e of t h e lac k of in v e s t m ent in infra s tr u ct u re. As re g ar ds to n u clear p o w er t h e p rice of electricit y i s al s o ri s in g. Th e co s t of u rani um h a s ri s en d ra m aticall y fro m$ 26 p r. k ilo in 2003 to$ 94 in 2006. A n d in t h i s p rice w e h a v en‘ t incl ud e d t h e increa s in g co s t of w a s te d i sp o s al. 45

E ner gy ef ﬁ cienc y an d ener gy s a v in gs are in d ee d i mp ortant subj ect s, wh ere m e mb er-s tate s an d EU h a v e to act an d i mp le m ent mu c h nee d e d p olicie s. Ev en t h o ugh EU ener gy con sump tion i s t w ice a s ef ﬁ cient a s USA an d ﬁv e ti m e s m ore ef ﬁ cient t h an C h ina, t h ere are s till lot s of w a ys to re du ce t h e w a s te of ener gy in bu il din gs an d ener gy p ro du ction. A g oo d e x a mp le of t h e i mp ortance of ener gy s a v in gs co m e s fro m D en m ar k, wh ere w e h a v e su ccee d e d in d o ub lin g o u r G ro ss D o m e s tic P ro du ct w it h o u t rai s in g o u r ener gy con sump tion! Th e qu e stion of ener gy ef ﬁ cienc y i s t hus a m atter t h at tran s cen ds all t yp e s of ener gy-m i x e s, an d a s trate gy t h at can b e co mb ine d w it h d ifferent w a ys of ener gy p ro du ction. Th i s b rin gs m e b ac k to t h e subj ect on ener gy p ro du ction fro m re ne w a b le s. I s tate d earlier t h at rene w a b le s are jus t a s co mp etiti v e a s ot h er ener gy re s o u rce s an d can s ec u re t h e ener gy supp l y in Eu ro p e. Th i s i s not jus t w or ds co m in g fro m a„g reen fanatic“, wh o h a s a ro m antic v i s ion a b o u t M ot h er N at u re d oin g t h e w or k for us. N o, a recent s t udy fro m t h e Wupp ertal In s tit u te for Cli m ate, E n v iron m ent an d E ner gy sh o ws t h an rene w a b le s are t h e b e s t w a y of h an d lin g t h e p ro b le m of ener gy supp l y an d sus taina b le g ro w t h in t h e f u t u re. Th e s t udy w a s re qu e s te d fro m t h e Co mm ittee of In dus tr y, R e s earc h an d E ner gy in t h e Eu ro p ean P arlia m ent. D ifferent ener gy s cenario s w ere sk etc h e d o u t, incl ud in g one wh ere Eu ro p e relie d on m ore n u clear ener gy, one w it h m ore ener gy ef ﬁ cienc y an d one w it h m ore rene w a b le s. A ll of t h e t h ree s cenario s w ere p ro j ecte d a g ain s t a b a s eline, wh ere EU p olicie s w ere bus ine ss a s usu al. Th e anal ys i s sh o ws t h at in 2030 t h e rene w a b le s s cenario w a s no ticea b l y sup erior to t h e ot h er s s cenario s in all m ea su re d p ara m eter s su c h a s re du cin g i mp ort d e p en d enc y, increa s e ener gy ef ﬁ cienc y an d re du cin g C O2 e m i ss ion s. 46

Bu t can t h i s reall y b e tr u e? Th ere w ere s o m e critical co mm ent s to t h e s t udy in t h e d e b ate t h at follo w e d t h e p re s entation. O ne s ai d t h at not all co u ntrie s w ere su ita b le for p ro du ction fro m rene w a b le s. A not h er t h at rene w a b le s can‘ t subs tit u te coal- an d n u clear p o w er p lant s no w or in a fore s eea b le f u t u re. It i s tr u e t h at su nn y area s are m ore ca p a b le of rea p in g t h e g ain s of ph oto v oltaic ener gy p ro du ction, an d co u ntrie s su rro u n d e d by m o u ntain s can‘ t e xp loit w in d ener gy in t h e s a m e s cale a s ﬂ at co u n trie s clo s e to t h e s ea li k e my h o m e- co u ntr y of D en m ar k. It i s al s o tr u e t h at w e s till h a v e to b ear ot h er ener gy s o u rce s in m in d, wh en w e d eci d e t h e ener gy-m i x for o u r f u t u re ener gy p ro du ction. Bu t it i s not o u r intention to s a y t h at all o u r ener gy p ro du ction h a s to b e fro m rene w a b le s! Ou r m e ss a g e i s t h at rene w a b le s are jus t a s co mp etiti v e a s a coal or n u clear p o w er p lant. N ot lea s t du e to t h e fact, t h at t h ere s till are hug e u ne xp loite d p oten tial in rene w a b le s. W in dm ill s, for e x a mp le, are g ettin g m ore an d m ore sp eciali z e d, s o t h at t h e y can ﬁ t to d ifferent w in d an d g eo g ra phic con d ition s, not to m ention t h e en h ance d electricit y p ro du ction at w ea k er an d m o d erate w in d-s tren g t hs. Th e s t udy sh o ws t h at t h e p o tential for w in d-p o w er for e x a mp le in t h e ne w m e mb er-s tate s i s a s h i gh a s 1 9% of t h e p o w er g enerate d by 2020. It i s al s o calc u late d t h at t h e p rice of in v e s t m ent w ill fall by 25% fro m 2002 to 2020. In D en m ar k w e h a v e for one d eca d e le d an offen s i v e p olic y a pp roac h w it h re g ar ds to rene w a b le s. Pub lic in v e s t m ent in rene w a b le s an d con centrate d re s earc h effort s h a s g i v en D en m ar k a lea d p o s ition wh en it co m e s to ener gy p ro du ction fro m rene w a b le s ener gy s o u rce s. T o d a y 25% of t h e D ani sh ener gy p ro du ction i s fro m rene w a b le s ener gy s o u rce s, an d w e h a v e a p otential of rai s in g t h at sh are to 50%. Th e m ain o bs tacle to w in d-p o w er i s t h e connection re qu ire m ent an d e x ten s ion of electricit y g ri d infra s tr u ct u re. It mus t b e ac k no w le dg e d 47

t h o ugh, t h at t h e nee d for infra s tr u ct u re in v e s t m ent i s not onl y rel e v ant for w in d ener gy, bu t b ene ﬁ t s all t yp e s of sys te m us er s. A m o derni z ation of t h e Eu ro p ean g ri d infra s tr u ct u re i s in d ee d nece ss ar y for all t yp e s of ener gy-m i x, an d it w ill f u rt h er en h ance p otential s for rene w a b le s, if ot h er m e mb er-s tate s are ca p a b le of recei v in g p o w er fro m w ater in N or w a y, fro m w in d in G er m an y an d fro m t h e su n in Sp ain. Thus rene w a b le s i s mu c h b etter t h an it s re pu tation. A not h er h ot to p ic ri gh t no w wh en it co m e s to rene w a b le s i s b io m a ss an d b io f u el s. Th e b ene ﬁ t s fro m b io m a ss for ener gy are m an y, su c h a s rai s in g t h e sh are of rene w a b le s in ener gy p ro du ction an d re du cin g C O2 e m i ss ion an d oil d e p en d enc y. Th e EU c u rrentl y m eet s 4% of it s ener gy nee ds fro m b io m a ss. If it m a d e f u ll us e of it s p otential, it w o u l d m ore t h an d o ub le b io m a ss us e by 20 1 0. Th i s i s d oc um ente d by t h e Co mm i ss ion s p a p er on B io m a ss fro m 2005. A hug e p otential lie s in b io f u el s. S ince t h e a b o v e m entione d rene wa b le ener gy s o u rce s m o s tl y are a pp lica b le for ener gy p ro du ction, b io- f u el s are a pp lica b le in a hug e ener gy- con sum in g an d p oll u tin g in dus tr y: na m el y tran sp ortation. Th e tran sp ort s ector i s re sp on s i b le for 2 1% of t h e total EU C O2 e m i ss ion s. H encefort h it i s i mp erati v e to re du ce fo ss il f u el s in tran sp ortation to co mb at g lo b al w ar m in g an d m eet criteria in t h e Ky oto p rotocol. As to t h i s p oint t h e m o s t co mp etiti v e b io- f u el i s b io- et h anol p ro du ce d fro m sug arcane. Th i s p ro du ction re qu ire s a tro p ical cli m ate, wh ic h m ean s w e can‘ t p ro du ce eno ugh to m eet EU d e m an d an d h a v e to i mp ort a lar g e sh are fro m ot h er co u ntrie s, na m el y B ra z il. Th i s d oe s n‘ t m ean t h at w e h a v e to subs tit u te one k in d of f u el d e p en d enc y for anot h er. O ne of t h e m o s t p ro m i s in g s econ d-g enera tion b io f u el tec h nolo g ie s – li g nocell u lo s ic p roce ss in g – i s alrea dy w ell a dv ance d. Th ree p ilot p lant s h a v e b een e s ta b li sh e d in t h e EU, in Sw e d en, Sp ain an d D en m ar k. O t h er tec h nolo g ie s to con v ert b io m a ss to 48

li qu i d b io f u el s(B t L) incl ud e F i s c h er-T ro ps c h b io d ie s el an d b io DME(d i m et hy l et h er). D e m on s tration p lant s are in o p eration in G er m an y an d Sw e d en. T o p re p are for t h e lar g e-s cale us e of co s t- co mp etiti v e b io f u el s, contin u e d re s earc h an d d e v elo pm ent i s nee d e d to m a k e t h e ne w tec h nolo g ie s su cce ss f u l. Th e Eu ro p ean B io Fu el s T ec h nolo gy P lat for m an d ot h er tec h nolo gy p latfor ms can p la y a v ital role in ac h ie vin g t h i s. W or k sh o u l d al s o b e enco u ra g e d on t h e d e v elo pm ent of d e d icate d fee d s toc ks an d to increa s e t h e ran g e of ra w m aterial s t h at can b e us e d to m a k e b io f u el s. Adv ance d b io f u el tec h nolo g ie s co u l d al s o p ro v i d e a s te pp in g s tone to rene w a b l y-p ro du ce d hyd ro g en, wh ic h offer s t h e p ro sp ect of v irt u all y e m i ss ion- free tran sp ort. H o w e v er, hyd ro g en f u el cell s re qu ire ne w en g ine tec h nolo gy a s w ell a s a b i g in v e s t m ent in p lant s to p ro du ce t h e hyd ro g en an d a ne w d i s tri bu tion sys te m. Th at m ean s t h at a sh ift to w ar ds hyd ro g en tec h nolo gy at p re s ent re qu ire s a lar g e-s cale, lon g- ter m s trate gy. Wh at i s t h e Eu ro p ean s trate gy an d wh ic h s te p sh o u l d b e ta k en w it h re g ar ds to rene w a b le s? S ince 1 997, t h e U nion h a s b een w or k in g to w ar ds t h e a mb itio us tar g et of a 1 2% sh are of rene w a b le ener gy in g ro ss inlan d con sumption by 20 1 0. U nfort u natel y, p ro g re ss in t h i s ﬁ el d h a s b een v er y s lo w. In 1 997, t h e sh are of rene w a b le ener gy w a s 5.4%; by 200 1 it s till onl y a m o u nte d to 6%. In t h e Tu r m e s re p ort, t h e P arlia m ent s tate d t h at rene w a b le s can an d sh o u l d acco u nt for an increa s in g l y lar g e p art of o u r ener gy-m i x. Th e lac k in g i mp le m entation of t h e d irecti v e s on rene w a b le ener gy sh o u l d not b e s een a s a call for s lo w in g d o w n p olic y d e v elo pm ent s. O n t h e contrar y: Th e y call for f u rt h er concentration of re s o u rce s. Th e recent G reen p a p er fro m t h e Co mm i ss ion e mph a s i z e s t h e nee d to act no w, if EU w ant s to s ec u re t h eir ener gy supp l y t h e ne x t m an y 49

y ear s an d li v e up to t h e Ky oto p rotocol. In my p arlia m entarian g ro up, t h e Eu ro p ean S ocial D e m ocrat s, w e ﬁgh t for b in d in g tar g et s for lo w er car b on ener gy p ro du ction an d m ore rene w a b le s in t h e G reen P a p er. W e h a v e to h a v e a lon g ter m s trate gy no w to co mb at g lo b al w ar m in g an d m e d iate t h e effect s of ri s in g te mp erat u re s. W e h a v e to act in or d er to lea v e a w orl d to o u r c h il d ren w ort h li v in g in. Bu t not h in g co m e s by it s elf. Th erefore, to ac h ie v e tar g et s on rene w a b le s, a s w ell a s t h e Eu ro p ean cli m ate an d s ec u rit y- of-supp l y o bj ecti v e s, w e nee d m ore re s earc h in t h e w i d e d i v er s it y of rene w a b le ener gy tec h nolo g ie s. A n d w e nee d to reco g ni z e t h at all non-m at u re ener gy tec h nolo g ie s nee d a certain a m o u nt of supp ort in t h e ﬁ r s t y ear s of d e v elo pm ent. A c k no w le dg in g t h i s, t h e P arlia m ent re s ol u tion of S e p te mb er 29, al s o foc us e d on t h e nee d for t h e S e v ent h F ra m e w or k P ro g ra mm e on re s earc h an d tec h nolo g ical d e v elo pm ent( r u nnin g fro m 200720 1 3) to increa s e f u n d in g for rene w a b le s o u rce s of ener gy an d en er gy ef ﬁ cienc y, an d in s i s te d t h at t h e sp eci ﬁ c p ro g ra mm e s in FP7 sh o u l d incl ud e a subs tantial a m o u nt b e d e d icate d to rene w a b le en er g ie s an d to ener gy ef ﬁ cienc y. A ﬁx e d budg et b rea kd o w n w o u l d re du ce t h e ri sk of d i s contin u o us re s earc h f u n d in g an d co u l d p ro v i d e t h e s ort of a ssu rance nece ss ar y to con v ince in dus tr y to m a k e lon g- ter m s trate g ic in v e s t m ent s in rene w a b le ener gy tec h nolo gy. H eatin g an d coolin g fro m rene w a b le ener gy s o u rce s i s t h e one m i ssin g s ector in an ot h er w i s e i mp re ss i v e p olic y fra m e w or k on rene wa b le s, a d o p te d in p re v io us y ear s. Th e h eatin g an d coolin g s ector i s re sp on s i b le for nearl y 50% of o u r total p ri m ar y ener gy con sumption. Bu t u nli k e t h e b io f u el s an d electricit y s ector s, wh ere clearl y for mu late d tar g et s an d s trate g ie s h a v e b een a g ree d, t h e U nion h a s not for mu late d concrete p olic y for h eatin g an d coolin g s o far. Th e Eu ro p ean P arlia m ent trie d to s ei z e t h e initiati v e an d d rafte d an o w n- initiati v e re p ort on“h eatin g an d coolin g fro m rene w a b le ener gy s o u rce s”, by M r s. M ec h t h il d R ot h e, a d o p te d by P arlia m ent at t h e b e g innin g of 2006. S o far t h e Co mm i ss ion h a s not reacte d, 50

bu t t h e P arlia m ent h o p e s w e h a v e k ic k e d off a p roce ss t h at w ill fee d s o m e nee d e d EU p olicie s. S o la d ie s an d g entle m en, W e are at a d e ﬁ nin g m o m ent in t h e h i s tor y of ener gy supp l y. I s t h ere literall y sp ea k in g li gh t at t h e en d of t h e t u nnel, or are w e m o v in g to w ar ds p er p et u al d ar k ne ss? Ev er yd a y, wh en w e o p en t h e ne wsp a p er, w e are confronte d w it h ne w s torie s t h at d e m on s trate t h e enor m o us ta sk w e are facin g wh en it co m e s to s ec u rin g Eu ro p e’s f u t u re ener gy supp l y. O il an d g a s p rice s are s oarin g an d fe w e xp ect t h e m to co m e d o w n w it h in t h e fore s eea b le f u t u re. Th e ri sk of supp l y d i s r up tion s i s increa s in g a s w e w itne ss e d in t h e ﬁ r s t w ee ks of t h i s y ear w it h t h e Russ ia-Uk raine g a s supp l y d i s r up tion. A t t h e s a m e ti m e, o u r d e m an d k ee ps g ro w in g wh ile Eu ro p e’s o w n con v entional ener gy re s o u rce s are g ra du all y d e p letin g. I h one s tl y b elie v e t h at rene w a b le s are jus t a s co mp etiti v e a s an y ot h er ener gy s o u rce s, w e c h oo s e to us e. S cience an d recent d e v el o pm ent b ac ks m e up in t h i s. S o t h e qu e s tion i s h o w w e p rioriti z e a s p olitician s. W e mus t s ec u re t h at ener gy i s a v aila b le to o u r citi z en s. W e mus t al s o en su re t h at o u r ener gy supp l y i s affor d a b le for t h e Eu ro p ean h o us e h ol ds an d bus ine ss e s. F inall y, w e mus t en su re t h at o u r supp lie s are en v iron m entall y sus taina b le s o w e d o not h an d o v er an en v iron m ental ti m e b o mb, an d t h e co s t of cleanin g up, to f u t u re g eneration s. In ot h er w or ds, w e h a v e a m a j or re sp on s i b ilit y to w ar ds to d a y’s a s w ell a s f u t u re Eu ro p ean citi z en s. G i v en t h e c u r rent ener gy s it u ation, t h at i s a m a ss i v e ta sk. Bu t I a m con ﬁd ent t h at w it h w ill in o u r h eart s an d d eter m ination in o u r v oice, it i s p o ss i b le to o v erco m e t h i s c h allen g e an d create a Eu ro p e, wh ere ener gy p ro du ction an d con sump tion i s s ec u re, sustaina b le an d co mp etiti v e. I t h an k y o u for y o u r ti m e an d w i sh y o u all a v er y p lea s ant con ference. 5 1

Galina Tosheva: „The Energy Policy of Bulgaria“ G alina T o sh e w a, D e pu t y M ini s ter of E cono my an d E ner gy A llo w m e to ﬁ r s t p oint o u t t h at it i s an h ono u r for m e to ta k e p art in t h i s conference on B lac k S ea Coo p eration – E ner gy Supp l y an d E ner gy S ec u rit y, or g ani z e d by t h e F rie d ric h Eb ert F o u n d ation, a conference wh ic h i s v er y i mp ortant for Bu l g aria, t h e Eu ro p ean U nion an d t h e co u ntrie s of t h e B lac k S ea re g ion, e sp eciall y g i v en t h e fact t h at Bu l g aria, a s a B lac k S ea co u ntr y, h a s al w a ys ta k en ac ti v e p art in t h e ener gy initiati v e s of t h e O r g ani z ation for B lac k S ea E cono m ic Coo p eration(OBSE C) a s w ell a s in t h e i mp le m entation of t h e k e y ener gy infra s tr u ct u re p ro j ect s in t h e B lac k S ea re g ion an d S o u t h E a s tern Eu ro p e. Th e i ssu e of ener gy s ec u rit y, wh ic h i s t h e m ain to p ic of to d a y’s conference, i s a s i g ni ﬁ cant ele m ent of t h e national ener gy p olic y of o u r co u ntr y. Th e m ain p rioritie s of Bu l g aria’s ener gy p olic y are relate d to t h e d e v elo pm ent of a co mp etiti v e national, re g ional an d co mm on Euro p ean ener gy m ar k et o bs er v in g t h e en v iron m ent p rotection re gu lation s an d en su rin g t h e s ec u rit y of ener gy supp lie s. Th e co mm it m ent s t h at Bu l g aria m a d e in t h e EU ne g otiation p roce ss u n d er C h a p ter 1 4“E ner gy” re su lte d in an accelerate d intro du ction of t h e EU ener gy le g i s lation, t h e i mp le m entation of t h e nece ss ar y refor ms an d t h e initiation of m ea su re s for t h e li b erali z ation of t h e ener gy s ector. Bu l g aria i s acti v el y in v ol v e d in t h e EU d e b ate on t h e for m ation of a ne w ener gy p olic y of t h e U nion an d supp ort s t h e p rioritie s an d g oal s o u tline d in t h e ne w G reen P a p er“Eu ro p ean S trate gy for S e c u re, Co mp etiti v e an d Sus taina b le E ner gy” a d o p te d on M arc h 8 t h , 2006. Th e s i x p riorit y area s s et o u t in t h e G reen P a p er( f u ll y co m52

p etiti v e internal ener gy m ar k et, d i v er s i ﬁ cation of ener gy s o u rce s, s oli d arit y a m on g M e mb er S tate s, sus taina b le d e v elo pm ent, inno v ation s, co h erent e x ternal ener gy p olic y of t h e EU) corre sp on d to t h e Bu l g arian v i s ion for t h e d e v elo pm ent of t h e ener gy s ector. Bu l g aria i s a k e y p artici p ant in t h e p roce ss of e s ta b li sh in g a re g ion al ener gy m ar k et in SEE an d w a s in s tr um ental in t h e s i g nin g of t h e T reat y for a Co mm on E ner gy Co mmu nit y b et w een t h e EU an d t h e co u ntrie s fro m SEE on O cto b er 25 t h , 2005 an d it s subs e qu ent co min g into force on Ju l y 1 s t , 2006. Th ro ugh o u t t h e p a s t y ear s, at d ifferent p oint s in ti m e t h e Bu l g arian ener gy in dus tr y co v ere d b et w een 45% an d 1 00% of t h e d e ﬁ cit in t h e electricit y g eneration b alance of t h e SEE co u ntrie s- net i mp ort er s of electricit y. Th i s i s a s i g ni ﬁ cant contri bu tion to t h e econo m ic an d p olitical s ta b ili z ation of t h e re g ion. Th e role of t h e Bu l g arian ener gy s ector in t h e re g ion i s al s o subs tantiate d by t h e fact t h at a con s i d era b le sh are of t h e in v e s t m ent s m a d e in t h e ener gy in dus tr y in SEE h a s co m e to t h e Bu l g arian ener gy s ector. Th i s y ear t h e Bu l g arian ener gy s ector i s u n d erta k in g a s erie s of ener gy p ro j ect s w it h a pp ro v e d f u n d in g a m o u ntin g to a total of 3.2 b illion Eu ro s, an d by t h e en d of 2007 t h e v ol um e of in v e s t m ent i s e xp ecte d to e x cee d 6 b illion Eu ro s, wh ic h con s tit u te s a s i g ni ﬁ cant sh are of t h e inco m in g p ri v ate an d pub lic in v e s t m ent s w it h o u t g o v ern m ent collateral. G i v en t h e ri s in g ener gy p rice s an d t h e increa s in g d i s cre p ancie s in p rice le v el s a m on g t h e co u ntrie s, a s w ell a s t h e g ro w in g nee d for in v e s t m ent, t h e k e y i ssu e no w i s h o w to en su re a h i gh le v el of co mp etition in or d er to ac h ie v e h i gh er ef ﬁ cienc y an d qu alit y of ener gy s er v ice s wh ile at t h e s a m e ti m e p ro v i d in g m a x i mum b ene ﬁ t s fro m t h e Co mm on ener gy m ar k et to e v er y m ar k et p la y er. Ou t of t h e v ariet y of a pp roac h e s o u tline d in t h e re sp ecti v e EU D i recti v e s e v er y co u ntr y nee ds to c h oo s e su c h sp eci ﬁ c s ol u tion s for increa s in g co mp etiti v ene ss an d ef ﬁ cienc y wh ic h are b a s e d on care 53

f u l anal ys i s an d intro du ction of g oo d p ractice s, incl ud in g re s tr u c t u rin g to create o pp ort u nitie s for i mp ro v e d con sum er s’ w elfare. A k e y p rinci p le to b e follo w e d i s t h e s tren g t h enin g of re g ional in te g ration, liftin g t h e phys ical an d tra d e b arrier s for ener gy supp lie s b et w een nei ghb o u rin g co u ntrie s wh ic h w ill lea d to increa s e d d i v er s i ﬁ cation of supp lie s, b etter m ar k et li qu i d it y an d m ore acti v e coo p eration ai m e d at o v erco m in g t h e ne g ati v e e x ternal i mp act on t h e co s t an d s ec u rit y of supp lie s. A s i g ni ﬁ cant i ssu e for Eu ro p e, an d Bu l g aria an d t h e re g ion e sp e ciall y, i s t h e e s ta b li shm ent of a pp ro p riate m ec h ani sms to m eet t h e re qu ire m ent s of t h e EU en v iron m ental d irecti v e s a s w ell a s t h e Ky oto tar g et s. Th e m ain o bj ecti v e w ill b e to pu t sp ecial effort s in m aintainin g t h e co mp etiti v e p o s ition s of t h e coal in dus tr y. Th e o bj ecti v e s of t h e Bu l g arian ener gy p olic y are in h ar m on y w it h t h e re g ional an d Eu ro p ean tren ds an d are relate d w it h t h e ac h ie v e m ent of ef ﬁ cient an d acce ss i b le ener gy s er v ice s p ro m otin g eco no m ic g ro w t h an d contri bu tin g to t h e s ocial w elfare of t h e p eo p le. Th e fort h co m in g c h an g e s re su ltin g fro m t h e e s ta b li shm ent of a f u nctionin g an d relia b le ener gy m ar k et re qu ire coor d inate d action at re g ional le v el. W it h a v ie w of o v erco m in g t h e phys ical an d tra d e b arrier s an d en su rin g e qu al acce ss to ener gy infra s tr u ct u re Bu l g aria’s ener gy s ector i s u n d er g oin g a s erie s of re s tr u ct u rin gs wh ic h are ai m e d at s e p aratin g t h e net w or k sys te m o p erator s in co mp liance w it h t h e EU G a s an d E lectricit y D irecti v e s. Th e g oal i s to create gu aran tee s for a clear an d fair acce ss to t h e net w or k an d p re v entin g an y p o ss i b le a bus e of p o s ition on t h e p art of t h e nat u ral m ono p ol y s tr u ct u re s. Th i s i s to b e d one by e s ta b li sh in g effecti v e re gu lator y control m ec h ani sms. Th e subs e qu ent re s tr u ct u rin g w ill entail t h e a m al g a m ation of cor p orate s tr u ct u re s in accor d ance w it h t h e EU d irecti v e s, o bs er v in g t h e r u le s of co mp etition an d clearl y re gu lat in g t h e m ar k et role of eac h p la y er. 54

Th e effecti v e re gu lator y control i s of cr u cial i mp ortance in t h i s re sp ect, s ince t h e effort s of t h e re gu lator y b o dy w ill d eter m ine t h e e x tent to wh ic h t h e d e v elo pm ent of t h e internal m ar k et w ill b e s ti mu late d. Th e a dd itional m ar k et o p tion s at re g ional le v el w ill f u rt h er contri bu te to t h e con s i d era b le lo w erin g of tra d e ri sk an d b oo s t of co mp etition. W it h re g ar ds to en v iron m ental p rotection an d m eetin g Bu l g aria’s en v iron m ental p rotection co mm it m ent s w it h o u t d ecrea s in g t h e co mp etiti v ene ss of t h e Bu l g arian ener gy in dus tr y t h e effort s w ill b e foc us e d on clarif y in g t h e lon g- ter m en v iron m ental o b li g ation s of t h e co u ntr y, allocatin g t h e m on s ectoral le v el an d i d entif y in g t h e p ol l u ter co mp anie s. A not h er i mp ortant ta sk i s to m a k e an a ss e ssm ent of t h e ﬁ nancial p ara m eter s of t h e en v iron m ental o b li g ation s an d w or k o u t a pp ro p riate ﬁ nancial m ec h ani sms for en v iron m ental in v e s t m ent an d enco u ra g in g e m i ss ion tra d in g s c h e m e s. Th i s i s t h e b a s i s for d e ter m inin g t h e Bu l g arian intere s t in i mp le m entin g p ro j ect s for re h a b ilitation an d m o d erni z ation of e x i s tin g p ro du ction facilitie s. P aral lel w it h t h i s, sp ecial attention w ill b e p ai d on bu il d in g ne w facilitie s li k e t h e B elene Nu clear P o w er P lant, M arit s a I z to k 1 Th er m al P o w er P lant an d Ts an k o v K a m a k Hyd roelectric s tation a s w ell a s t h e e xp an s ion an d m o d erni z ation of t h e ener gy d i s tri bu tion net w or k. A not h er p riorit y i s t h e d e v elo pm ent of en v iron m entall y frien d l y alternati v e s wh ic h incl ud e: accelerate d g a s i ﬁ cation an d d e v elo pm ent of t h e g a s tran sm i ss ion net w or k, enco u ra g in g electricit y g eneration in hyd roelectric s tation s an d m eetin g t h e 11% tar g et for electricit y g eneration fro m hyd roelectric s tation s by 20 11, an d sus taina b le d e v elo pm ent of t h e h eat m ar k et an d s ti mu latin g t h e co mb ine d p ro du ction of electricit y an d h eat. It i s in t h i s re sp ect t h at sp ecial attention w ill b e p ai d on ener gy ef ﬁ cienc y an d s a v in g. Bu l g aria h ol ds a g reat p otential for ener gy s a v in g wh ic h i s why coor d inate d effort s are nece ss ar y to: i mp ro v e t h e ef ﬁ cienc y of t h e us e d p ri m ar y ener gy re s o u rce s for h eatin g at 55

t h e en d- con sum er; i mp ro v in g ef ﬁ cienc y in ener gy tran s for m ation an d enco u ra g in g in v e s t m ent in ener gy ef ﬁ cienc y at t h e le v el of t h e en d- con sum er. Th e ti m el y m o b ili z ation of t h i s ne w ener gy s o u rce w ill lea d to a m ore co mp etiti v e econo my a s w ell a s re du ce d en v iron m ental o b li g ation s an d an o pp ort u nit y for econo m ic g ro w t h w it h lo w er con sump tion of ener gy. Add itional effort s nee d to b e pu t in attractin g in v e s t m ent in a m ar k et en v iron m ent. Th e m ain g oal i s to foc us t h e in v e s t m ent acti v i tie s of t h e g o v ern m ent on supp ortin g tran s-b or d er infra s tr u ct u re p ro j ect s t hus liftin g t h e phys ical b arrier s to t h e co u ntr y’s acce ss ion an d m a k in g b e s t us e of t h e b ene ﬁ t s of t h e g oo d g eo g ra ph ic loca tion of Bu l g aria a s p artici p ant in t h e Co mm on E ner gy M ar k et s. B a s e d on t h e re su lt s of t h e anal ys e s m a d e, t h e g ro w in g d e p en d enc y on ener gy i mp ort m a k e s it nece ss ar y to s earc h for m ec h ani sms en su r in g t h e s ec u rit y of ener gy supp lie s m o s tl y t h ro ugh d i v er s i ﬁ cation. In t h i s re sp ect, t h e sp eci ﬁ c infra s tr u ct u ral p ro j ect s wh ic h t h e Bu l g arian s tate i s acti v el y in v ol v e d w it h an d wh ic h are a p riorit y in t h e 2006 N ational S trate gy on D e v elo p in g Infra s tr u ct u re are t h e follo w in g: A priority for Bulgaria in the electricity sector are the electricity projects along the route of European corridor N8(Bulgaria–Macedonia-Albania-Italy) wh ic h incl ud e t h e electricit y tran sm i ss ion line s li k e t h e electricit y tran sm i ss ion subs tation s C h er v ena M o g ila(Bu l g aria) – Sh ti p(M ace d onia) a s w ell a s t h e s econ d electricit y inter sys te m connection b et w een Bu l g aria an d G reece- t h e M arit s a I z to k subs tation(Bu l g aria) an d Ph ili p i or N ea S anta subs tation(G reece). In the area of natural gas t h e m ain o pp ort u nit y for d i v er s i ﬁ cation of g a s supp lie s at t h i s p oint i s t h e reali z ation of t h e priority EU project of the NABUKO gas pipeline. Bu l g aria i s a m on g t h e k e y p artici p ant co u ntrie s. Th i s p ro j ect w ill m a k e it p o ss i b le to tran sp ort nat u ral g a s fro m t h e Ca sp ian re g ion, Iran, Ira q an d Egyp t (v ia a connection w it h t h e T ran s A ra b ian g a s p i p eline) t h ro ugh 56

Tu r k e y, Bu l g aria, R o m ania, Hu n g ar y to Aus tria an d fro m t h ere to Central an d W e s tern Eu ro p e. Bu l g aria al s o g i v e s p riorit y to t h e g a s projects along the European corridor N 8, or t h e s o calle d Trans Adriatic gas pipeline. A clear s i g n of t h e Bu l g arian supp ort of t h i s initiati v e i s t h e M e m oran dum of U n d er s tan d in g s i g ne d on O cto b er 4 t h , 2006 b et w een E nel an d Bu l g ar g a s en d or s in g t h e p ro j ect. In t h e area of oil supp lie s Bu l g aria w or ks acti v el y for t h e i mp le m entation of t w o s trate g ic p ro j ect s for SEE, t h e EU an d t h e B lac k S ea re g ion- t h e oil pipelines Bourgas-Alexandrupolis and Bourgas-Macedonia-Vlora. Th e con s tr u ction of t h e s e p i p eline s i s e xtre m el y i mp ortant b ot h econo m icall y an d g eo p oliticall y. T a k in g into con s i d eration t h e o bj ecti v e s s et an d t h e act u al ca p a b ili tie s of ac h ie v in g t h e m, t h e co mp etiti v e p o s itionin g an d econo m i call y s o u n d p artici p ation of Bu l g aria in su c h tran s-b or d er initia ti v e s re qu ire s s erio us national effort an d s i g ni ﬁ cant f u n ds, bu t in t h e lon g r u n t h e i mp le m entation of t h o s e p ro j ect s w ill contri bu te to t h e p ractical inte g ration of Bu l g aria into t h e re g ional an d co mm on ener gy m ar k et of t h e EU. Th an k y o u for y o u r attention. 57

Tetyana Starodub: „The Policy of Ukraine in the Energy Sector“ T et y ana S taro dub i s D octor of P olitical S cience, C h ief Con su ltant at t h e D e p art m ent of G lo b al S ec u rit y an d EU Inte g ration, N ational In s tit u te of International S ec u rit y at t h e N ational S ec u rit y an d D e fence Co u ncil of Uk raine L a d ie s an d g entle m en, I re p re s ent Uk raine at t h i s conference s o allo w m e to m a k e a p re s entation on t h e p olic y of Uk raine in t h e ener gy s ector. A t t h i s s ta g e t h e p roce ss of d eli b eration re g ar d in g t h e role an d p lace of ener gy s ec u rit y in t h e o v erall sys te m of p rotection of national intere s t s an d t h e interrelation of ener gy s ec u rit y w it h t h e ot h er subsys te ms of Uk raine’s national s ec u rit y h a s not b een co mp lete d y et. Th i s p roce ss i s c h aracteri z e d by g ra du al d e v elo pm ent of t h e s cien ti ﬁ c an d m et h o d olo g ical fo u n d ation s for t h e sys te m ic d e ﬁ nition of t h e nat u re of ener gy s ec u rit y a s it relate s to t h e d e v elo pm ent of t h e le g i s lati v e an d re gu lator y fra m e w or k re g ar d in g d ifferent area s of acti v it y an d h a s not y et ac h ie v e d f u ll corre sp on d ence w it h t h e re alitie s of m ar k et refor m, an d s ocial- econo m ic c h an g e s ta k in g p lace in Uk raine in t h e p a s t y ear s. As a r u le, t h e concrete d e ﬁ nition of t h e ter m“ ener gy s ec u rit y” i s b a s e d on a d o m inatin g in dus tr y p rinci p le. In t h i s re sp ect t h e i mp re ss ion i s t h at t h e ter m“ ener gy in dus tr y” onl y refer s to t h e t h er m al p o w er s tation s(TP C) of t h e co u ntr y. W e w o u l d li k e to p ro p o s e t h e follo w in g d e ﬁ nition of ener gy s ec urit y wh ic h enco mp a ss e s t h e f u ll arra y of ener gy i ssu e s. E ner gy s ec u rit y – t h e co mb ination of nece ss ar y con d ition s for econo m ic s o v erei g nt y of Uk raine in s ec u rin g t h e co u ntr y’s ener gy supp lie s, o b tainin g t h e s ta b le an d h ar m onio us s ocial an d p olitical d e v elo pm ent of s ociet y, m eetin g t h e c u rrent an d f u t u re nee ds for h i gh-qu alit y an d econo m icall y acce ss i b le ener gy by ta k in g into 58

con s i d eration t h e sp eci ﬁ c m o d e of o p eration of t h e ener gy g enera tion s ector in cri s i s s it u ation s, t h e a b ilit y of t h e s tate to a dd re ss e x i s tin g or p otential t h reat s d eri v in g fro m t h e ne g ati v e i mp act of internal or e x ternal factor s. Th e threats to the energy security of Ukraine in the area of electricity generation are a s follo ws: • s i g ni ﬁ cant e xp ort sh are s an d u n d er d e v elo p e d electricit y net w or k infra s tr u ct u re; • p oor s tr u ct u re of t h e g eneration facilitie s in t h e inte g rate d elec tricit y p ro du ction sys te m of Uk raine for t h e re gu lation of t h e con sump tion s c h e du le a s relate d to t h e lac k of o p ti m al b alance b et w een b a s ic an d m a x i mum p o w er nee d e d to re gu late t h e d ai l y an d s ea s onal d i s cre p ancie s of con sump tion a s w ell a s t h e fre qu enc y an d s c h e du le of e x ternal con sump tion; • cata s tro ph ic e xp ort of m ain f u n ds in t h e h eat p ro du ction in dus tr y; • re du ction of electricit y p ro du ction by t h er m al p o w er s tation s wh ic h i s acco mp anie d by t h e a pp roac h in g licen s e e xp iration of m o s t of t h e n u clear reactor s. The emergence of negative trends in the electricity production system of the country could potentially result in: • p o w er sh orta g e s for t h e national econo my wh ic h w ill lea d to increa s e d d e p en d enc y on i mp orte d ener gy re s o u rce s; • d eterioration of t h e econo m ic p ara m eter s in t h e ener gy in dus tr y; • ne g ati v e en v iron m ental con s e qu ence s relate d to t h e increa s e d h eat e m i ss ion s wh ic h m i gh t create o bs tacle s to EU inte g ration du e to t h e ina b ilit y of t h e d o m e s tic TP C to m eet t h e EU en v iron m ental in d icator s an d t h e h i gh er tran s-b or d er h a z ar d o us e m i ss ion s. O ne of t h e m o s t effecti v e s ol u tion s to t h e a b o v e p ro b le ms i s t h e d e v elo pm ent of a sys te m of d ecentrali z e d facilitie s for ener gy g en eration w it h in t h e re g ional sys te m of ener gy tran sm i ss ion a s p art of t h e s tr u ct u re of t h e g eneration facilitie s TP C in t h e co u ntr y. 59

Th e p ractical a pp lication of t h e in s tallation s in t h e d ecentrali z e d ener gy p ro du ction sys te m re qu ire s t h at t h e y b e d e p lo y e d on t h e territor y or in t h e clo s e v icinit y of t h e con sum er s. In t h i s ca s e no electricit y tran sm i ss ion line s w o u l d b e nece ss ar y. The development of decentralized energy industry would beneﬁt: • t h e con sum er s of electricit y – by re du cin g electricit y tran sm i ss ion lo ss e s; • t h e ener gy ef ﬁ cient enter p ri s e s – by re du cin g t h e co s t s relate d to t h e tec h nical upg ra d e an d m aintenance of t h e net w or k subs tation s. Th i s i s t h e internal a sp ect of Uk raine’s ener gy p olic y. In t h e p ro ce ss of i mp le m entation of t h e ne w re g ional p olic y of Uk raine, h o w e v er, an d e sp eciall y in ter ms of it s ener gy co mp onent, w e nee d to pu t sp ecial e mph a s i s on t h e ener gy initiati v e s an d sp eci ﬁ c p ro ject s wh ic h are b ein g carrie d o u t w it h in t h e B lac k S ea re g ion. Th e p ro j ect D an ub e E ner gy T ran sp ortation B ri dg e i s one su c h initiati v e p ro p o s e d by Uk raine to t h e GUAM(G eor g ia, Uk raine, Az er b ai j an, M ol d o v a) co u ntrie s in 2005. In t h i s conte x t w e nee d to qu ote fro m t h e P rotocol of t h e J oint M eetin g of t h e M ini s ter s of econo my, en er gy, tran sp ort an d h ea ds of c us to ms s er v ice s of GUAM fro m M a y 22 n d , 2006“ to p ro p o s e to t h e g o v ern m ent s of t h e GUAM co u n trie s w it h in a t h ree m ont h p erio d to con s i d er t h e econo m ic p ro j ect D an ub e E ner gy T ran sp ortation B ri dg e an d m a k e sugg e s tion s for f u rt h er d e v elo pm ent an d coor d ination to t h e Uk rainian p art y”. The project Danube Energy Transportation Bridge sets out to perform the following tasks: • con s i s tent i mp le m entation of sp eci ﬁ c p ractical acti v itie s for t h e re s ol u tion of t h e e x i s tin g national p ro b le ms of t h e GUAM co u ntrie s, increa s in g t h e le v el of p olitical, econo m ic an d en er gy s ec u rit y of t h e m e mb er – s tate s; • g ra du al e s ta b li shm ent of a tec h nical an d re s o u rce b a s e wh ic h w o u l d s ec u re an d i mp ro v e t h e ener gy in d e p en d ence of t h e 60

GUAM co u ntrie s, o p ti m i z ation of t h e tran s-b or d er an d tran sp ort- co mmu nication facilitie s, e xp an s ion of tra d e an d econo mic lin ks; • d e v elo pm ent of a coor d inate d s trate gy of t h e GUAM co u ntrie s w it h re g ar ds to t h e j oint ener gy an d tran sp ort, an d co mmu nica tion s p olic y in t h e area s of forei g n relation s an d forei g n tra d e. The main priorities of the project are: • create con d ition s for re du cin g t h e ener gy d e p en d ence, increa sin g t h e le v el of ener gy s ec u rit y of t h e GUAM m e mb er s tate s; • d e v elo pm ent of co mm on ener gy m ar k et s an d t h eir g ra du al li berali z ation; • o p ti m i z ation of t h e tran sp ort an d co mmu nication s lin ks b a s e d on t h e intro du ction of m o d ern lo g i s tical s c h e m e s, i mp ro v e m ent an d d e v elo pm ent of t h e e x i s tin g infra s tr u ct u re; • contri bu te to t h e s ol u tion of t h e econo m ic an d s ocial-p olitical p ro b le ms of t h e GUAM co u ntrie s. Th e main goals of the project are: In the area of reducing the energy dependence and increasing the level of energy security of the GUAM member states: • to increa s e t h e v ol um e of e xp loration w or ks for oil an d g a s alon g t h e N ort h-W e s t sh elf of t h e B lac k S ea, to enco u ra g e t h e us e an d m inin g of hyd rocar b on m aterial s an d d e v elo p t h e infra s tr u ct u re nee d e d for t h eir tran sp ortation an d p roce ss in g; • to o p ti m i z e an d increa s e t h e relia b ilit y of t h e electricit y net w or ks w it h a v ie w of creatin g con d ition s for t h eir m er g er into t h e electricit y sys te ms of t h e OBSE C co u ntrie s; • to e s ta b li sh a sys te m of s trate g ic ener gy re s er v e s, oil an d oil p ro du ct s in p artic u lar, ai m e d at p re v entin g or o v erco m in g p o ss i b le cri s i s s it u ation s; • to e s ta b li sh p ro du ction an d tec h nolo gy infra s tr u ct u re for t h e g en eration of ener gy re s o u rce s us in g local m aterial s, p ro du ction an d h o us e h ol d w a s te, an d ot h er u ntra d itional s o u rce s of ener gy; 6 1

In the area of developing common energy markets and their gradual liberalization: • to p ro g re ss i v el y i d entif y an d re s ol v e t h e e x i s tin g d i spu te s an d contro v er s ie s in t h e ener gy area a m on g t h e GUAM co u ntrie s, ﬁ r s tl y w it h in t h e fra m e w or k of tran s-b or d er coo p eration; • to create a dd itional electricit y g eneration facilitie s w it h a v ie w of o p ti m i z in g ener gy con sump tion in t h e D an ub e re g ion, in crea s in g t h e e xp ort p otential of t h e R o m ania- t h e B al k an s-Tu r k e y a x i s; • to for mu late t h e b a s ic p rinci p le s for t h e e s ta b li shm ent of co mm on ener gy m ar k et s in t h e B lac k S ea an d D an ub e re g ion s; In the area of optimization of the transport and communication links: • to con s i s tentl y i d entif y an d re s ol v e t h e e x i s tin g contro v er s ie s in t h e tran sp ort an d co mmu nication s sph ere a m on g t h e GUAM co u ntrie s, ﬁ r s tl y w it h in t h e fra m e w or k of tran s-b or d er coo p eration; • to d e v elo p ne w lo g i s tical s c h e m e s w it h a v ie w of b oo s tin g t h e co mp etiti v ene ss of t h e j oint acti v itie s of t h e GUAM co u ntrie s on t h e tran sp ort an d co mmu nication s m ar k et, to o p ti m i z e an d increa s e t h e v ol um e of tran s it tran sp ort alon g t h e Eu ro p e- Cen tral As ia – Ca u c us e s ro u te an d m a x i mum u tili z ation of t h e e xi s tin g tran sp ort co mmu nication s alon g t h e Central As ia – D an ub e re g ion – Central Eu ro p e line; • to create con d ition s for t h e f u ll in v ol v e m ent of t h e GUAM co u ntrie s in t h e OBSE C p ro j ect s for t h e e s ta b li shm ent of a B lac k S ea tran sp ortation rin g. In the area of solving other problems and unresolved disputes: • to create con d ition s in t h e s ocial an d hum anitarian sph ere for m eetin g t h e ener gy an d co mmu nication nee ds of t h e ci v il s oci etie s in t h e GUAM co u ntrie s a dh erin g to t h e EU s tan d ar ds; • in t h e econo m ic area- to create con d ition s en su rin g t h e s ta b le an d relia b le f u nctionin g of t h e enter p ri s e s in t h e GUAM co u n 62

trie s an d t h eir re g ion s; • in t h e area of u nre s ol v e d con ﬂ ict s – to create m ec h ani sms for m o v in g t h e relation s a w a y fro m p olitical confrontation an d to w ar ds co mm on econo m ic intere s t by w a y of i mp le m entation of sp eci ﬁ c p ro j ect s. The mechanism of project implementation i s b a s e d on t h e e x i stence of organizational capacity, con s i s tin g of p olitical, econo m ic, an d s cienti ﬁ c an d tec h nolo g ical co mp onent s: Political component: - supp ort for t h e p ro j ect by t h e P arlia m entar y Ass e mb l y of GUAM; - supp ort for t h e p ro j ect by t h e Co mm ittee of N ational Coor d ina tor s of GUAM; - a pp ro v al of t h e p ro j ect by t h e S ec u rit y Co u ncil s of t h e GUAM m e mb er-s tate s; Economic component: - e s ta b li shm ent of an E ner gy Ag enc y of t h e GUAM co u ntrie s – a b o dy re sp on s i b le for t h e d e v elo pm ent an d i mp le m entation of a co mm on re g ional an d inter- re g ional ener gy p olic y, a pp ro v al of p ro p o s al s an d re p ort s by t h e national w or k in g an d e xp ert g ro ups re g ar d in g t h e reali z ation of ener gy p ro j ect s, or g ani z a tion an d coor d ination of tra d e an d p ro du ction acti v itie s in t h e ener gy s ector; - e s ta b li shm ent of an International T ran sp ort an d Co mmu nica tion s L o g i s tical Center of GUAM – a b o dy re sp on s i b le for t h e for m ation of mu t u all y b ene ﬁ cial co mmu nication s an d tra d e lin ks b a s e d on co mm ercial p rinci p le s; - a pp ro v al of t h e p ro j ect by t h e re sp ecti v e e x ec u ti v e b o d ie s in t h e GUAM m e mb er-s tate s; Scientiﬁc and technological component: - e s ta b li shm ent of an International E ner gy S cienti ﬁ c an d T ec h ni 63

cal Center – a j oint b o dy re sp on s i b le for t h e or g ani z ation an d i mp le m entation of re s earc h an d d e v elo pm ent acti v itie s, o u t pu t of e qu i pm ent, p re p aration of qu ali ﬁ e d p er s onnel for t h e GUAM co u ntrie s; Legislative and regulatory support: - co mp liance w it h t h e nor ms, r u le s, etc b in d in g for t h e GUAM co u ntrie s, an d w it h t h e international re gu lation s an d national le g i s lation; - le g i s lati v e an d re gu lator y d raftin g of p roce du re s for t h e j oint control of t h e d ifferent t yp e s of econo m ic acti v it y on t h e ter ritor y of p ro j ect i mp le m entation in accor d ance w it h P rotocol N2 of t h e Eu ro p ean F ra m e w or k Con v ention on T ran s-B or d er Coo p eration b et w een territorial u nit s or a u t h oritie s, e sp eciall y a s it relate s to inter- territorial coo p eration; Scientiﬁc, methodological and technological support: - to d eter m ine t h e b a s ic p rinci p le s of or g ani z ation of t h e s toc k e x c h an g e a s an or g anic p art of t h e m ar k et infra s tr u ct u re in t h e ener gy s ector; - to la y t h e conce p t u al fo u n d ation for t h e creation of a sys te m of s trate g ic re s er v e s, oil in p artic u lar; - to d e v elo p an d a pp ro v e t h e intro du ction of ener gy ef ﬁ cient tec h nolo g ie s; - to p ro v i d e for t h e intro du ction of u ntra d itional s o u rce s of en er gy w it h a v ie w of s tren g t h enin g t h e ener gy in d e p en d ence of t h e GUAM co u ntrie s; Information and statistics support for p ro j ect reali z ation incl ud e s t h e e s ta b li shm ent of an effecti v e sys te m for m onitorin g, p ro du c tion, supp l y, tran sp ort, con sump tion an d p a ym ent of ener gy re s o u rce s an d p ro v i s ion of tran sp ort an d co mmu nication s s er v ice s by w a y of: - e s ta b li shm ent of an International Infor m ation an d S tati s tic s D ata B a s e of GUAM; 64

- e s ta b li shm ent of a S it u ational F oreca s t an d A nal ys i s Center at t h e Infor m ation O f ﬁ ce of GUAM; P roduction and technological support: - d e v elo pm ent of t h e tran sp ort an d co mmu nication s infra s tr u c t u re of t h e GUAM co u ntrie s; - increa s in g t h e ca p acit y of t h e connection b et w een t h e B lac k S ea an d t h e D an ub e ai m e d at e xp an d in g t h e econo m ic p re s ence of GUAM an d t h e ot h er co u ntrie s of t h e B lac k S ea re g ion on t h e Eu ro p ean m ar k et; - e s ta b li shm ent of ne w ener gy p ro du ction facilitate s an d d e v el o pm ent of t h e e xp ort an d electricit y tran sm i ss ion p otential; - increa s e d p artici p ation of t h e enter p ri s e s in t h e p roce ss of m an u fact u rin g of sp ecial-pu r p o s e e qu i pm ent. Material and technical support would be provided by: - t h e e x i s tin g an d e m er g in g a dd itional ener gy tran sp ort facilitie s of t h e GUAM co u ntrie s - o p ti mum e xp loitation of t h e national in dus trial co mp le x e s, li cen s e s; - i mp ort of e qu i pm ent in t h e ca s e s of a lac k of national e qu i v a lent s; The ﬁnancial support will come from: - f u n ds fro m t h e national budg et s of t h e GUAM m e mb er s tate s; - f u n ds fro m t h e s ta b ili z ation f u n d, wh ic h w o u l d b e ﬁ nance d by p ro du ction an d tra d e re v en u e s fro m it s o p eration; - f u n ds fro m t h e In v e s t m ent B an k of GUAM; - forei g n in v e s t m ent The expected results: - increa s e d le v el of p olitical, econo m ic an d ener gy s ec u rit y; - ne w o pp ort u nitie s for coo p eration w it h t h e Eu ro p ean co u ntrie s; - d e v elo pm ent of mu t u all y b ene ﬁ cial coo p eration w it h in t h e OBSE C; 65

- e s ta b li shm ent of ne w o pp ort u nitie s for t h e e xp an s ion of t h e B altic-B lac k S ea A lliance; - sp eci ﬁ cation an d i mp ro v e m ent of t h e ener gy co mp onent in t h e forei g n p olic y of t h e GUAM co u ntrie s; - e s ta b li shm ent of a dd itional m ec h ani sms for re s ol u tion of d i spu te s an d con ﬂ ict s. - In t h i s w a y, a s a re su lt of t h e D an ub e E ner gy T ran sp ortation B ri dg e p ro j ect GUAM w o u l d b eco m e an in ﬂu ential or g ani z a tion in t h e area s of forei g n p olic y an d forei g n tra d e. - Th ere i s anot h er p ro j ect t h at I nee d to d ra w y o u r attention to an d it i s t h e oil p i p eline Od e s a(Uk raine) – B ro d i(Uk raine) – P lot sk(P olan d). The Ukrainian position is that the realization of this project would to an extent contribute to: - t h e f u rt h er e xp loitation of t h e p ro b in g facilitie s of t h e Ca sp ian co u ntrie s, f u ll us e of t h e ca p acit y of t h e Ca sp ian P i p eline Con s orti um an d increa s e of tran s it s to Central Eu ro p e, t h e B altic s tate s an d S can d ina v ia to 9- 1 4 m illion ton s; - t h e p ro p ortional(28-45%) s ol u tion to t h e p ro b le m w it h t h e tran sp ort o v erloa d t h ro ugh t h e Tu r k i sh s trait s; Politically, Ukraine’s position is that the proposed project will contribute to: - t h e d i v er s i ﬁ cation of not onl y t h e oil ro u te s to Eu ro p e, bu t al s o d i v er s i ﬁ cation of s o u rce s of ener gy v ia t h e a dd itional c h annel s p ro v i d in g acce ss of ne w ra w-m aterial p ro du cer- co u ntrie s to t h e Eu ro p ean, B altic an d S can d ina v ian m ar k et s; - t h e d e v elo pm ent of m ar k et m ec h ani sms for ener gy supp l y, t h eir li b erali z ation an d t h e eli m ination of Russ ia’s m ono p ol y in t h i s area; - ra d ical s ol u tion to t h e ener gy s ec u rit y i ssu e in E a s tern Eu ro p e; increa s e d relia b ilit y of ener gy supp lie s, lo w er co s t of m aintain in g t h e EU s tan d ar ds for t h e ne w EU m e mb er s; - lo w erin g of t h e p olitical ri sks relate d to Eu ro p e’s d e p en d enc y 66

on Russ ian oil supp lie s. It i s p o ss i b le t h at t h e ph ilo s o phy of t h e p ro j ect m a y re qu ire a re v ie w an d an entirel y ne w for mu lation of t h e p ro j ect i d ea wh ic h w o u l d create gu arantee s for t h e b alance of intere s t s of all s ta k e h ol d er s tate s. Th i s refer s to not onl y t h e tra d itional trian g le of in tere s t s fro m t h e p a s t – p ro du cer s/ tran s it co u ntrie s/ con sum er s – to t h e e x i s tence or lac k of t h e re sp ecti v e contract s an d a g ree m ent s, bu t in o u r o p inion t h e reali z ation of t h e p ro j ect co u l d b e s een in an entirel y d ifferent p er sp ecti v e. Ou r p ro p o s al i s to e s ta b li sh a T ran s national In dus trial an d T ec hnolo g ical Co mp le x on t h e territor y of E a s tern Eu ro p e a s an in ternational con s orti um incl ud in g Uk raine. Th i s Con s orti um w o u l d incl ud e in d i v i du al s tate s or cor p orate s tr u ct u re s an d w o u l d, w it h in t h e fra m e w or k of t h e pub lic-p ri v ate p artner sh i p, carr y o u t co mp le x acti v itie s in t h e area s of e x traction, tran sp ortation an d tran s it of ener gy re s o u rce s, oil re ﬁ nin g, c h e m ical in dus tr y an d ot h er, a s w ell a s i mp le m ent e xp loration w or ks an d o b tain hyd rocar b on s fro m t h e territorie s u n d er t h e p ro j ect. G i v en an a pp ro v al of all s ta k e h ol d er co u ntrie s an d t h e nee d e d p olitical w ill are in p lace, t h e follo w in g a dv anta g e s w ill b e ac h ie v e d: - free econo m ic an d tra d e z one s; - inte g rate d d e v elo pm ent s trate g ie s an d re sp ecti v e re sp on s i b ili tie s for t h eir reali z ation. One of the instruments for such cooperation may be the implementation of speciﬁc economic projects within the framework of GUAM. In particular: - t h e alliance b et w een G eor g ia, Uk raine, Az er b ai j an an d M ol d o v a co u l d p ro v i d e for t h e e x traction an d supp l y of 4-6 m illion ton s of oil alon g t h e Od e s a – B ro d i – P lot sk ro u te w it h o u t hu rtin g t h e intere s t s of an y of t h e p artici p atin g co u ntrie s. 2-3 m illion ton s co u l d b e d eri v e d fro m t h e D an ub e an d B lac k S ea re s er v e s. 67

- t h e coo p eration b et w een Uk raine, Az er b ai j an an d G eor g ia in t h e area of oil tran sp ortation in t h e B lac k S ea co u l d contri bu te to t h e e s ta b li shm ent of t h e re sp ecti v e infra s tr u ct u re of ter m i nal s an d p ort s li k e t h e S o u t h Co mp le x in Uk raine us e d for tran s it of oil to Eu ro p e; - t h e coo p eration of t h e GUAM co u ntrie s w it h t h e co u ntrie s of Central an d E a s tern Eu ro p e(S lo v a k ia, Th e C z ec h R e pub lic, P olan d an d ot h er s) co u l d la y t h e b a s i s for t h e d e v elo pm ent of in dus trial co mp le x e s for oil p roce ss in g an d ener gy g eneration in accor d ance w it h t h e ener gy s ec u rit y s trate g ie s; - t h e in v ol v e m ent of Russ ia in t h e p ro j ect w o u l d p ro v i d e gu ar antee s for t h e supp l y an d tran sp ortation of a dd itional re s o u rce s an d w o u l d contri bu te to t h e e s ta b li shm ent of b ac k up m ec h a ni sms for p ro j ect i mp le m entation. - Th i s i s t h e a pp roac h wh ic h Uk raine i s a pp l y in g at p re s ent to s ol v e it s ener gy p ro b le ms in accor d ance w it h it s ne w for ei g n an d re g ional p olicie s t h at re ﬂ ect t h e intere s t s of not onl y Uk raine, bu t t h e B lac k S ea re g ion a s w ell. Th an k y o u for y o u r attention. Andrej Vorobyov: „The Energy Dialogue between Russia and Europe“ D r. A n d re j V oro bj o v i s D e pu t y D irector of t h e Infor m ation P olic y D i v i s ion at t h e D e p art m ent of Infor m ation an d M e d ia, M ini s tr y of F orei g n A ffair s, M o s co w A llo w m e to ﬁ r s t of all e xp re ss my g ratit ud e to t h e G er m an or g a ni z er s of t h i s conference – Th e F rie d ric h Eb ert F o u n d ation – for in v itin g m e to Bu l g aria, wh ere I h a v e w or k e d for s e v eral u nfor g et ta b le y ear s an d wh ere Russ ian s are treate d v er y fa v o u ra b l y. I nee d 68

to p oint o u t t h at su c h a fa v o u ra b le en v iron m ent i s al s o in p lace w it h re g ar ds to t h e Russ ian ener gy bus ine ss: in an y ca s e Luk oil h a s o p erate d in Bu l g aria for ten y ear s no w an d t h e d eci s ion for t h at w a s m a d e by t h e g o v ern m ent of I v an K o s to v. T o d a y I a m li s tenin g to t h e p re s entation s of t h e collea gu e s an d I cannot sh a k e off t h e i mp re ss ion t h at m an y of t h e m – p o ss i b l y du e to t h e co m in g w inter – are qu ite concerne d a b o u t t h e ener gy s ec urit y of t h e continent. F or s e v eral d eca d e s of j oint w or k in t h i s area Russ ia, it s ee ms, h a v e not g i v en g ro u n ds to d o ub t it s re pu tation of a relia b le p artner. T a k in g into con s i d eration, h o w e v er, t h e m ar k e d concern of o u r Eu ro p ean collea gu e s, w e, a s y o u k no w, are d oin g o u r b e s t to h a v e a d etaile d, mu ltilateral ener gy d ialo gu e w it h o u r Eu ro p ean p artner s. S o m e ele m ent s of t h i s ener gy d ialo gu e are t h e O cto b er v i s it to M o s co w of t h e EU Co mm i ss ioner for E ner gy A. P ie b al gs, t h e in for m al EU summ it in L a h ti wh ere Russ ian P re s i d ent Pu tin i s in v it e d, t h e Russ ia- EU summ it in N o v e mb er, etc. T o d a y’s conference i s u n d o ub te d l y anot h er ele m ent of o u r d ialo gu e. Th e b a s ic p rere qu i s ite for“ ener gy d ialo gu e” i s t h e o bj ecti v e in ter d e p en d ence an d interrelation of intere s t s. A t t h e b e g innin g of t h e 2 1 s t cent u r y Russ ia, wh ic h h a s t h e g reate s t re s er v e s of g a s in t h e w orl d( o u r g a s e xp ort in 2005, I’d li k e to re m in d y o u, a m o u nt e d to 1 52.4 b illion c ub ic m eter s, wh ic h i s 8% m ore t h an in 2004; an d oil e xp ort w a s 470.2 m illion ton s wh ic h i s 2.5% h i gh er t h an in 2004), an d Eu ro p e, wh o s e re s er v e s con s tit u te onl y 3% of t h e w orl d’s, s ee m m ore econo m icall y interconnecte d t h an at an y ot h er p oint of o u r co mm on h i s tor y. Th ere are not t h at m an y s ta b le oil an d g a s re g ion s in t h e w orl d –p re d o m inantl y Russ ia an d s o m e of t h e Ca sp ian co u ntrie s. Th i s sh o u l d b e ta k en into acco u nt g i v en t h e re du ce d acce ss to p ro m i s in g p ro j ect s for hyd rocar b on e x traction ( co mp are d to t h e 60 ie s wh en international cor p oration s h a d free acce ss to 85% of t h e ﬁ el ds, no w t h e p ercenta g e i s onl y 1 6%). Th e g a s in dus tr y i s a k e y co mp onent of t h e ener gy d ialo gu e b et w een 69

Russ ia an d t h e EU. F ir s tl y, t h e sh are of g a s con sump tion in t h e g en eral con sump tion of ener gy in Eu ro p e i s g ro w in g. S econ d l y, it i s t h e g a s supp lie s du e to t h e sys te m ic li m itation s of t h e tran sp ortation m ec h ani sms t h at for m t h e clo s e s t lin ks b et w een supp lier s an d con sum er s t hus contri bu tin g to t h e e s ta b li shm ent of re g ional alliance s. Th e c u rrent s it u ation sh o ws t h at t h e g a s m ar k et i s con sum er-d ri ven, an d not supp lier-d ri v en. A ll Russ ian p i p eline s g o to Eu ro p e wh erea s t h e sh are of Russ ian nat u ral g a s d e m an d in t h e Eu ro p ean ener gy m i x i s one t h ir d. G i v en t h e increa s in g d e m an d for g a s in Eu ro p e, an d t h e d e p letin g re s er v e s in t h e N ort h S ea, an d g i v en t h e econo m ic g ro w t h in t h e EU m e mb er s tate s, t h e s i g ni ﬁ cance an d p rice, in t h e v er y b roa d s en s e of t h i s w orl d, of Russ ian supp lie s w o u l d ri s e, e sp eciall y in t h e in d i v i du al co u ntrie s. Th e follo w in g s tati s tic s i s in d icati v e: G er m an y co v er s 42% of it s g a s nee ds w it h Russ ian g a s, Ital y – 32%, F rance – 30%, Aus tria – 75% an d F in lan d – 1 00%. Th e in d icator s are h i gh in ter ms of oil supp lie s a s w ell( a m ar k e d increa s e of ener gy supp lie s can b e note d in t h e US, wh ic h i mp orte d Russ ian oil for 8 b illion USD la s t y ear). Th e w ei gh t of Russ ian g a s supp lie s to Eu ro p e i s e v en m ore s i g ni ﬁcant, if w e loo k at t h e p rice m ar g in s for t h e supp lier an d con sum er. Th e S i b erian g a s supp lie d to t h e centre of Eu ro p e at ﬁ r s t o p tion p rice s reac h e s t h e en d con sum er s at con s i d era b l y h i gh er p rice s( t h e d ifference co m e s for m t h e ta x an d s ocial p olicie s of t h e EU). Th e co s t of g a s at t h e e x it p oint of t h e S i b erian p i p e i s 7 Eu ro p er a t h o us an d c ub ic m eter s, an d t h e p rice at t h e h eater of t h e Eu ro p ean con sum er total s 450 Eu ro p er one t h o us an d c ub ic m eter s. W e nee d to al w a ys re m e mb er t h i s wh en w e tal k a b o u t t h e acce ss of forei g n co mp anie s to e xp lorin g Russ ian ﬁ el ds an d a b o u t t h e d ifferent con trol in s tr um ent s w it h re g ar ds to t h e national re s er v e s. Su c h p re ssu re h a s b een e x erte d for qu ite a wh ile, bu t u ntil no w s o m e s ort of mu t u al ne u tralit y h a s b een m aintaine d. O n t h e one h an d, t h e EU an d t h e US b loc k e d t h e acce ss of Russ ian co mp anie s to t h e internal m ar k et s of t h e wh ole s ale buy er s an d w o u l d not al 70

lo w t h e pu rc h a s e of tran sp ortation infra s tr u ct u re subj ect to p ri v a ti z ation in E a s tern Eu ro p e(Hu n g ar y an d t h e C z ec h R e pub lic) an d t h e for m er USSR(Uk raine). O n t h e ot h er h an d, t h e Russ ian s i d e d i d not allo w forei g n co mp anie s to ta k e p art in t h e e xp loration of Russ ian ﬁ el ds. T o d a y t h i s b alance of non- intr us ion co u l d c h an g e. W e a g ree to o p en t h e inacce ss i b le re s o u rce m ar k et of Russ ia g i v en a reci p rocal entrance of Russ ian p la y er s on t h e Eu ro p ean tran s it an d p roce ss in g m ar k et. Th ere alrea dy are e x a mp le s of reci p rocal e xp loration of o u r ﬁ el ds – w it h G er m an p artner s in p artic u lar. Th e acce ss of forei g ner s to t h e s toc ks of G a sp ro m i s alrea dy in p lace( t h e US co mp an y Conoco Ph illi ps inten ds to b eco m e a s trate g ic in v e s tor). Sh ell tran s ferre d 25% of it s a ss et s in t h e S a kh alin E ner gy to G a sp ro m recei v in g in t u rn 50% of t h e G a sp ro m ﬁ el d in W e s tern S i b eria. In t h i s w a y w e are w illin g to f u rt h er d e v elo p t h e mu t u all y b ene ﬁ cial coo p eration ta k in g into con s i d eration t h e bus ine ss intere s t s of o u r p artner s an d p rotectin g o u r o w n co mm ercial intere s t. In t h i s re sp ect, it i s e v i d ent to all e xp ert s p re s ent h ere t h at t h e p olitici z ation of t h e p ro b le ms wh ic h aro s e in relation to t h e S a kh alin 2 p ro j ect i s co mp letel y u n g ro u n d e d. Th e p ro b le ms b oil d o w n to a ﬁ erce b attle of bus ine ss intere s t s connecte d w it h a p ro m i s in g bus ine ss p ro j ect. N ot lon g a g o t h i s w a s con ﬁ r m e d by t h e B riti sh e xp ert co mmu nit y wh ic h a dm it te d t h at Sh ell initiall y u n d ere s ti m ate d t h e co s t of it s p ro j ect in or d er to p ro v e t h e p ro j ect’s co mm ercial v ia b ilit y an d are no w atte mp tin g to ﬁ n d a s ol u tion at s o m e b o dy el s e’s e xp en s e. W e are not p lannin g to re v o k e t h e e xp loration p er m it s for t h e S a kh alin ﬁ el ds, bu t t h ere are s erio us concern s a b o u t t h e en v iron m ental i mp act of t h e p ro j ect not onl y in Russ ia, bu t on t h e p art of t h e international ﬁ nancial in s tit u tion s a s w ell. EBRD i s s till con s i d erin g wh et h er to f u n d Ph a s e 2 of t h e P ro du ction Sh arin g Ag ree m ent(PSA) relate d to t h e p lat for m in s tallation off sh ore S a kh alin. Th e d eci s ion w a s pu t off a g ain for an u nli m ite d p erio d of ti m e for en v iron m ental rea s on s. Th e co mm ercial rationale for t h e p ro b le ms re g ar d in g t h e S toc k7 1

m an ﬁ el d i s e qu all y e v i d ent: t h e p ro b e s sh o w e d su c h g a s ﬂ o ws t h at it w a s nece ss ar y to re- calc u late t h e re s er v e s. N o co mp an y w a s a b le to p ro v i d e t h e a ss et s, wh ic h co u l d b e e x c h an g e d at mu t u al b ene ﬁ t for t h e re sp ecti v e sh are of t h e S toc km an re s er v e s. Th i s d oe s not m ean, h o w e v er, t h at t h e ﬁ el d i s not acce ss i b le to forei g n co mp a nie s. W e are rea dy to s i g n bus ine ss contract s for it s e xp loration. In t h e p re s ence of su c h to p le v el re p re s entati v e s of t h e Eu ro p ean P arlia m ent an d Eu ro p ean Co mm i ss ion I cannot h el p it bu t to u c h up on t h e i ssu e of t h e Eu ro p ean E ner gy C h arter. It i s not a w ell k no w n fact t h at Russ ia i s not t h e onl y co u ntr y wh ic h ref us e s to ratif y t h i s d oc um ent. It i s intere s tin g to ﬁ n d o u t wh et h er N or w a y i s subj ecte d to t h e s a m e p re ssu re – N or w a y i s anot h er b i g ener gy re s o u rce supp lier wh ic h h a s not j oine d t h e C h arter. It s ee ms t h at t h e ca u tio us N or w e g ian s p refer to w ait an d s ee t h e o u tco m e of t h i s e xp eri m ent w it h Russ ia b efore m a k in g a ﬁ nal d eci s ion a s to wh et h er to ta k e t h at ri sk. O ne of t h e i mp ortant factor s in t h e Russ ia-Eu ro p e ener gy d ialo gu e i s t h e i ssu e of e qu ali z in g Russ ia’s d o m e s tic g a s an d ot h er re s o u rce p rice s w it h t h o s e on t h e co mm on Eu ro p ean m ar k et. Th i s h ot i ssu e in t h e relation s w it h t h e EU h a s not b een re s ol v e d an d w ill not b e re s ol v e d e v en up on co mp letion of t h e WTO ne g otiation s. In fact, it i s incor p orate d in t h e v er y m o d el of t h e Russ ia—EU relation s an d ﬁ n ds it s m anife s tation in t h e“ co mm on area” conce p t. O ne of t h e p ara m eter s of t h e co mm on ener gy area( a s a p art of t h e Eu ro p ean E cono m ic A rea) i s t h e sys te m of p rice s ettin g. Th e EU w o u l d li k e to a v oi d“ ener gy dump in g” wh ic h i s t h e rea s on why Russ ian in dus trial con sum er s o b tain acce ss to g a s supp lie s at a p rice wh ic h i s ﬁv e ti m e s lo w er t h at t h e e xp ort p rice. By d oin g t h i s, t h e EU clai ms, t h e Russ ian g o v ern m ent subs i d i z e s Russ ian in dus tr y“ to t h e d i sa dv anta g e of international co mp etitor s”. A s i g ni ﬁ cant sh are of t h e Russ ian e xp ort to t h e EU i s ta k en by ener gy con sum in g g oo ds li k e m etal s an d c h e m ical s an d it t u rn s o u t t h at t h e Eu ro p ean s w ant t h e m to b e m ore e xp en s i v e. 72

Th e p er sp ecti v e of o u r collea gu e s fro m t h e EU i s u n d er s tan d a b le an d w e are rea dy to m a k e co mp ro m i s e s. Th ere are u nof ﬁ cial ac co u nt s in t h e p re ss t h at t h e ne g otiation tar g et of t h e EU i s a p rice of 60 USD p er one t h o us an d c ub ic m eter s for t h e Russ ian in dus tr y. C u rrentl y, t h e d o m e s tic con sum er s are buy in g ener gy re s o u rce s fro m G a sp ro m at a p rice s et by t h e g o v ern m ent – 40 USD p er one t h o us an d c ub ic m eter s. In o u r o p inion a p rice le v el of 60 USD p er one t h o us an d c ub ic m eter s i s p erfectl y ac h ie v a b le by t h e y ear 20 1 0. O n to p of t h i s, a n umb er of in dus trial s ector s are alrea dy buy in g g a s at 80 USD( e.g. RAO“UES of Russ ia”- Russ ian J oint S toc k Co mp an y- U ni ﬁ e d E ner gy Sys te m of Russ ia). As a re su lt t h e Russ ian ener gy p ro du ction co mp anie s w o u l d re cei v e b etter re v en u e s to in v e s t in ne w e xp ort p ro j ect s, an d t h e co mp etition for t h e EU s teel an d c h e m ical in dus tr y w o u l d b e re du ce d. W e cannot bu t w on d er, h o w e v er, why t h e s a m e ar gum ent s are not a pp lie d to t h e i ssu e of g a s p rice s to Uk raine: h ere are t h e subs i d ie s for t h e Uk rainian c h e m ical an d s teel in dus tr y: t h e con sump tion of Uk raine i s 70 bm c p er y ear a s co mp are d to P olan d wh ere it i s onl y 1 4 bm c. A not h er i mp ortant to p ic in o u r d ialo gu e h a s b eco m e t h e p oten tial of Russ ian ener gy supp lie s to t h e As ian-P aci ﬁ c re g ion an d t h e atte mp t s to b loc k t h e m. Su c h atte mp t s are by all m ean s in d irect. Th e m oti v ation b e h in d t h e m i s on t h e su rface, t h o ugh. In t h e ﬁ r s t p lace, t h e EU h a s an o bj ecti v e intere s t in m aintainin g t h e Eu ro d e p en d ence of t h e Russ ian ener gy s ector wh ic h at t h i s m o m ent i s phys icall y u na b le to s ell t h e s a m e g a s an ywh ere el s e bu t to Eu ro p e. S econ d l y, in t h e W e s t, an d m o s t of all in t h e US, t h ere i s an intere s t in s trate g icall y c u r b in g t h e g ro w in g econo m ie s of C h ina, In d ia an d t h e ot h er co u ntrie s fro m t h e As ia-P aci ﬁ c. Th e i ssu e of t h e ener gy d e ﬁ cit s in t h o s e econo m ie s, wh ic h con s tit u te a“g lo b al factor y” in t h e w orl d’s d i v i s ion of la b o u r, re m ain s a k e y factor for controllin g t h eir d e v elo pm ent. 73

In d ia, C h ina, J a p an an d t h e ot h er As ian – P aci ﬁ c co u ntrie s h a v e a s erio us intere s t in o b tainin g Russ ian ener gy supp lie s an d are w illin g to in v e s t in t h e re sp ecti v e infra s tr u ct u re. Th e C h ine s e – s o m et h in g v er y i mp ortant to us – are rea dy to e x c h an g e a ss et s: su c h a m er g er w o u l d g i v e us an o pp ort u nit y to j ointl y an d effecti v el y e xp lore t h e g a s ﬁ el ds not onl y in E a s tern S i b eria. I nee d to p oint o u t, t h at t h e C h ine s e are acti v el y s ee k in g in v ol v e m ent in t h e Ca sp ian re g ion, in p artic u lar by w a y of buy in g o u t s econ d- rate o u t s i d er co mp anie s m o s tl y in K a z a khs tan an d Az er b ai j an. Th e C h ine s e N ational O il Co mp an y h a s recentl y a pp roac h e d G a sp ro m w it h a p ro p o s al to ac qu ire t h e a ss et s of t h e in s ol v ent YUKOS. Thus, e v en if w e d o not supp l y ener gy re s o u rce s to t h e As ian P aci ﬁ c re g ion, t h e As ian-P aci ﬁ c co u ntrie s w ill e s ta b li sh a p re sence in Central As ia an yw a y. A n d t h en t h e oil fro m t h e b i gg e s t K a z a kh ﬁ el d K a sh a g an w o u l d g o E a s t, an d not to Eu ro p e. In t h i s ca s e m an y of t h e g lo b al p lan s w o u l d nee d to b e recon s i d ere d. Th e b roa d l y pub lici z e d B a ku-Tb ili s i- Ce yh an p i p eline w o u l d onl y m a k e s en s e, if it tran sp ort s K a z a kh oil. Bu t w o u l d t h e u n p re d ict a b le Ca u c us e s d irection b e a p riorit y for K a z a kh e xp ort? N.A. N a z ar b ae v w o u l d h ar d l y c h oo s e t h e d o ub tf u l p olitical g a m e s o v er t h e clear econo m ic p ro ﬁ t. W e sh o u l d not for g et t h e en v iron m ental factor a s w ell: e v er y en v iron m ental or g ani z ation in t h e w orl d i s o pp o s in g t h e tran sp ortation of oil v ia t h e Ca u c us e s w it h t h e Am erican G reen p eace lea d in g t h e p ac k, wh erea s t h e tran s it p ro j ect s t h ro ugh Central As ia d o not tri gg er off t h e s a m e aller g ic reaction on t h eir p art. In t h i s re sp ect I nee d to al s o to u c h up on t h e atte mp t s to e s ta b li sh a non-Russ ian ener gy supp l y infra s tr u ct u re to t h e EU in t h e p o s t-S o v iet area. Th i s i s one of t h e g oal s aro u n d wh ic h re g ional alliance s li k e GUAM re v ol v e. I w ill s tre ss h ere t h at w e supp ort all t yp e s of p ro j ect s p ro v i d e d t h at t h e y are b a s e d in realit y- e v en t h e B a kuTb ili s i- Ce yh an(BT C) p i p eline. I t h in k t h at m an y of t h e p eo p le p re s ent h ere h a v e p ai d attention to t h e fact t h at recentl y s o m e p ro 74

p o s al s h a v e b een m a d e to Russ ian co mp anie s to ta k e acti v e p art in e xp loitin g t h e p i p eline. A t t h e s a m e ti m e, I nee d to re m in d y o u t h at Russ ia h a s a mp le e xp erience in b rin g in g d o w n tran s it co s t s to a m ini mum: in F e b r uar y t h e con s tr u ction of t h e B altic P i p eline Sys te m(BPS) w o u l d b e co mp lete d an d t hus v ia t h e L enin g ra d d i s trict 65 m illion ton s of oil w ill b e tran sp orte d to fart h er forei g n co u ntrie s. Th e ﬁ r s t t w o line s g a v e us an o pp ort u nit y to co mp letel y w it hd ra w fro m t h e p ort s of V ent sp il s, P or v oo, Muug a an d Bu tin g e, wh o s e m ono p ol y p o s ition in t h e oil e xp ort s ince S o v iet ti m e s m a d e it p o ss i b le for t h e m to c h ar g e 5 USD m ore t h en t h e ot h er s. Th e o p eration of t h e BPS re su lte d in re v en u e lo ss e s for t h e B altic co u ntrie s, s ince 25% of t h eir budg et s us e d to b e for m e d b a s e d on re v en u e s fro m tran s it of Russ ian oil. BPS w ill al s o allo w us to re du ce t h e total a m o u nt of supp lie s alon g t h e D r uzb a p i p eline t h ro ugh t h e territor y of Uk raine. T a k in g into con s i d eration t h e e v ent u al co mp letion of t h e N ort hEu ro p ean g a s p i p eline w e can b e h o p ef u l t h at in t h e ne x t ﬁv e y ear s Russ ia w ill h a v e f u ll y reor g ani z e d it s e xp ort s c h e m e s: ne w tran s it ro u te s an d ter m inal s, a tran s ition to g a s con d en s ation. It i s clear t h at it i s t h e tran s it – co u ntrie s t h at are acti v el y tr y in g to o pp o s e t h e con s tr u ction of t h e N ort h-Eu ro p ean g a s p i p eline: m an y of t h e m are acc us to m e d to recei v in g re v en u e s fro m re- e xp ort of ener gy re s o u rce s(By elor uss ia an d P olan d are carr y in g o u t re- e xp ortation, an d Uk raine i s in v ol v e d in u n s anctione d g a s t h eft wh ic h for m er Uk rainian PM Eh an u ro v pub licl y a dm itte d t h i s w inter). Russ ia an d Eu ro p e are d oo m e d to coo p eration. It i s nice t h at t h i s u n qu e s tiona b le fact i s w i d el y acce p te d in m an y Eu ro p ean ca p i tal s. As far a s Russ ia i s concerne d, e v en du rin g t h e ﬁ erce s t b attle s b et w een t h e P ro-W e s tern an d P ro- Con s er v ati v e p ro p onent s of Russ ia’s d e v elo pm ent, e v en t h e latter sh are d t h e o p inion of A.S. H o my a k o v wh o w rote“D o y o u k no w, la d ie s an d g entle m en, wh at Eu ro p e i s? It i s s o m et h in g inti m i d atin g an d s acre d.” Th ere i s s o m e t h in g s acre d, in d ee d. 75

My o p inion i s t h at w e co u l d b e h a ppy w it h t h e o u tco m e of to d a y’s conference. It for m e d p art of o u r inten s i v e ener gy d ialo gu e an d o u r h ar d w or k on e s ta b li sh in g a Russ ia-EU alliance wh ic h i s b en e ﬁ cial for b ot h p artie s. Obv io us l y su c h an alliance sh o u l d b e b a s e d on mu t u al b ene ﬁ t, inter d e p en d ence an d interrelate d d e v elo pm ent p ro sp ect s. O nl y su c h an a pp roac h w o u l d re ﬂ ect t h e s tan d ar d of Eu ro p ean m o d erni z ation. Liviu Muresan: „Discovering Black Sea Region for the EU Energy Security Strategy“ D r. L i v i u Mu re s an i s Ex ec u ti v e P re s i d ent of EUR I S C(Eu ro p ean In s tit u te for R i sk, S ec u rit y an d Co mmu nication M ana g e m ent) in Bu c h are s t T o loo k at t h e B lac k S ea A rea an d it s p ro b le m atic in 2006 w e t h in k t h at it i s nece ss ar y to refer to t h ree m ain e v ent s in t h e area or t h o s e wh ic h h a d affecte d it. F ir s t of all, Th e B lac k S ea F or um(Ju ne 2006) in Bu c h are s t, R o m ania, h a s d e m on s trate d b ot h t h e s tren g t hs an d w ea k ne ss e s not onl y of t h e or g ani z er s bu t al s o of t h e re g ion it s elf. 1 Th e F or um inten ds to h ol d in y ear s to co m e summ it s at t h e h i gh e s t le v el an d in rotation for m at to or g ani z e t h e e v ent, eac h y ear, in anot h er co u n tr y fro m t h e re g ion. Th e re su lt s alrea dy ac h ie v e d- t h e increa s e d p otential of coo p eration, t h e intere s t of h a v in g ne w a pp roac h e s, s ta b ilit y, s ec u rit y an d d e v elo pm ent of t h e re g ion- w ere p artiall y o v er sh a d o w e d by s o m e d i s t u r b in g s i g nal s co m in g fro m Russ ia an d Tu r k e y.(V. S ocor, Ju ne 6, 2006). 1 Mu re s an L i v i u„B lac k S ea – N o lon g er i g nore d” R o m anian J o u rnal for International an d R e g ional A ffair s, EUR I S C- I RS I 1 – 2/2006, p a g. 69- 75 76

Bu t, b e s i d e an y d i s a pp oint m ent s, t h e B lac k S ea F or um su ccee de d to u n d erline t h e nee d for d ialo gu e in t h e re g ion, t h e c h ance of la u nc h in g co mm on p ro j ect s an d s en d s i g nal s to B r uss el s, W a sh in gton an d ot h er ca p ital s t h at t h e B lac k S ea A rea nee ds to b e con s i stentl y incl ud e d in t h e m ain f u t u re s trate g ie s for t h i s f uzzy contact line b et w een Eu ro p e an d As ia. S econ d, t h e o p enin g of BT C p i p eline h a s t h e p otential not onl y of an econo m ic su cce ss bu t al s o t h at of a p olitical ne w i mp et uo us of“g eo- econo m ic s in action”. Tu r k e y, a s a k e y p la y er, t h ro ugh it s u ni qu e g eo g ra ph ic p o s ition an d a s an arc h itect of ne w re g ional coo p eration initiati v e s an d s tr u ct u re s h a s p ro v e d it s p otential a s f u t u re EU m e mb er. T o g et h er w it h t h e recentl y s ettle d NABU CC O p ro j ect, Tu r k e y a ssum e d an i mp ortant role in contri bu tin g to t h e ener gy s ec u rit y of t h e Eu ro p ean oil an d g a s a dd icte d co u ntrie s. L a s t bu t not lea s t, t h e t h ir d e v ent co u l d b e con s i d ere d t h e G8 Summ it in S an k t P eter sbu r g w it h ener gy s ec u rit y a s a p riorit y on t h e a g en d a. Ev en if t h e B lac k S ea A rea w a s not e xp licitl y p art of t h e a g en d a, t h e re g ion h a s t h e c h ance to con s i d er t h e G8 Summ it a s a cr u cial m o m ent in p rioriti z in g t h e lin k b et w een ener gy an d s ec u rit y. S an k t P eter sbu r g i s t h e Russ ian cit y wh ere in 1 9 1 7 t h ere w a s la u nc h e d t h e G reat S ociali s t O cto b er R e v ol u tion wh ic h h a d a m a j or i mp act on t h e international p olitical en v iron m ent. A fter nine d eca d e s, S an k t P eter sbu r g b ro ugh t in t h e international attention to t h e e v ol u tion of t h e ener gy p ro b le m atic a s t h e G reat E ner gy R e v ol u tion. Russ ia, us in g t h e p o s ition an d t h e p otential of it s re s o u rce s, i s p la yin g t h e car d of an ener gy sup er p o w er an d i s a ro bus t g lo b al p la y er wh ic h h a s o v er p a ss e d t h e al m o s t t w o d eca d e s of d e p en d in g on W e s tern ai d. Black Sea – The Challenges of the Hub Position F ro m t h e p er sp ecti v e of t h e e v ol u tion s in t h e la s t t w o d eca d e s an d h a v in g in v ie w t h e p otential for f u t u re d e v elo pm ent s, t h e B lac k S ea 77

A rea can b e s een a s t h e cro ss in g of fo u r d ifferent g eo p olitical a x e s. Th e ﬁ r s t one, w it h t h e ener gy a s a p riorit y, i s t h e Ca sp ian S ea – B lac k S ea – M e d iterranean S ea. It d ra ws a line b et w een t w o area s w it h a v ariet y of re s o u rce s, tran sp ort facilitie s, p roce ss in g an d usin g of ener gy re s o u rce s wh ic h p re s ent re m ar k a b le c h allen g e s an d o pp ort u nitie s 2 . Th e area s o u t h of t h e a x i s s tretc h e s fro m A l g eria, Tu ni s ia, L i by a, Egyp t, N ear E a s t, M i dd le E a s t to Ira q, Iran, A f gh ani s tan an d P a k i s tan. Th e area nort h of t h e a x i s co mp ri s e s K a z a khs tan, Uk raine an d Russ ia, Az er b ai j an, t h e Ca u ca sus, M ol d o v a, Bu l g aria, G reece, t h e W e s tern B al k an s an d Central Eu ro p e. Esp eciall y s o u t h of t h e a x i s, s o m e co u ntrie s h ol d an e x ce ss i v e p er centa g e of oil- relate d acti v itie s in t h e GDP – o v er 50%. Th i s b rin gs a b o u t a certain c h ao s – o v er 20% u ne mp lo ym ent rate, e x ce ss i v e d e m o g ra ph ic g ro w t h – t h e y o u t h u n d er 25 for ms m ore t h an 55% of t h e total p o pu lation, corr up tion – s ee T ran sp arenc y International, I s la m i s t s tri k e s, a g eneral s tate of s ie g e. Th e us a g e of n u clear tec hnolo g ie s, c h e m ical an d b iolo g ical w ea p on s an d lon g- ran g e b alli stic m i ss ile s d iffer s fro m area to area... Th e ri sk of a NB C terrori s t attac k fro m, or in, t h e re g ion re m ain s con s i d era b le b ot h nort h an d s o u t h of t h e a x i s 3 . Th e dy na m ic of t h e re g ion s cro ss e d by t h i s g eo p olitical a x i s i s u n d er in ﬂu ence of t h e dy na m ic s of t h e intere s t s of t h ree g lo b al p la yer s: Russ ia, t h e U nite d S tate s an d t h e Eu ro p ean U nion. Russ ia e xp erience d d ra m atic c h an g e s fro m a w orl d sup er p o w er in t h e b i p olar sys te m to a lar g e co u ntr y w it h m ore p ro b le ms t h an s o l u tion s, a subj ect of concern a b o u t it s ca p acit y to reco v er w it h o u t forei g n ai d. A n d e v ent u all y, Russ ia rein v ente d it s elf an d no w, w it h an u ne xp ecte d co m e b ac k, i s s ettin g t h e r u le s in t h e ener gy s ec u rit y of n um ero us co u ntrie s. 2 L i v i u Mu re s an –„E ner g ie s i s ec u ritate” in Lum ea M a g a z in, D ece mb er 1 997; 3 L’Exp an s ion – 690/2004“ I s la m/ v o y a g e d an s u ne econo m ie a u b or d du c h ao s” p. 38- 48 78

Th e ne w Russ ia i s not e xp ectin g a“s econ d cla ss inte g ration” in NATO an d t h e EU, bu t i s no w one of t h e b enc hm ar ks for t h e c h an g e of b ot h NATO an d t h e EU. …” Th e lon g ter m v i s ion sh o u l d not b e a b o u t m e mb er sh i p p er s e b eca us e to rai s e su c h a qu e s tion on t h e b a s i s of c u rrent circ ums tance s lea ds ine v ita b l y to t h e concl us ion t h at at p re s ent m e mb er sh i p i s u nt h in k a b le. Th e EU( an d NATO) w ill c h an g e; Russ ia w ill c h an g e; an d t h e p reci s e nat u re of t h e relation sh i p – wh et h er m e mb er sh i p or s o m e ot h er arran g e m ent s- w ill nee d to b e d e ﬁ ne d a g ain s t t h e s e f u t u re circ ums tance s.” 4 Th e s econ d b i g p la y er in t h at re g ion co u l d b e con s i d ere d t h e U nit e d S tate s, wh o are jus tif y in g t h eir p re s ence by ci v il m ilitar y in s tit u tion s b a s e d on t h e a ssump tion of t h e re sp on s i b ilit y to w ar ds a n umb er of co u ntrie s a b an d one d after W orl d W ar II to t h e co mmu ni s t sys te m an d t h e nee d to m a k e t h at p art of t h e w orl d“s afe, d e m ocratic an d s ec u re a s t h e continent’s w e s tern h alf.” 5 Mu c h m ore reali s tic s ee ms to b e EU’s v i s ion:“… not e xp ectin g to su ccee d to tran s for m t h e W i d er B lac k S ea A rea li k e it su ccee d e d to d o ﬁ r s t in Central an d t h en in t h e S o u t h E a s t Eu ro p e”. Th e f u t u re G er m an P re s i d enc y to t h e EU in t h e ﬁ r s t s e m e s ter 2007 w ill b e t h e m o m ent of tr u t h in t h e d i s co v er y of t h i s ne w g eo p olitical a x i s, not onl y for G er m an y it s elf bu t al s o for t h e intere s t of t h e U nion. W e d on’ t s ee rea s on s for concern re g ar d in g a“ clonin g” of t h e G er m an-Russ ian-B altic p artner sh i p in t h i s re g ion. Th e s econ d e x a mp le i s t h e E a s t – W e s t a x i s b a s e d on t h e le g en dar y S il k R oa d an d no w for m ali z e d t h ro ugh“ a ne w v e h icle” for re g ional coo p eration: t h e Sh an gh ai Coo p eration O r g ani z ation 4 Ly ne, R o d eric, T al b ot, S tro b e, W atana b e, K o j i,“ E n g a g in g w it h Russ ia: Th e N e x t Ph a s e”, A R e p ort of t h e T rilateral Co mm i ss ion, 2006, p a g e 1 20 5 R onal d D. Asmus, K on s tantin D i m itro v an d J oer g F or b ri g – A N e w Eu ro-A tlantic S trate gy for t h e B lac k S ea R e g ion”, p a g e 11 5) 79

(S C O) 6 . It i s t h e m o s t re p re s entati v e initiati v e fro m C h ina to t h e B lac k S ea. S tartin g fro m co mm on g oal s of ﬁgh tin g to g et h er ter rori sm an d or g ani z e d cri m e, t h e s e h a v e e v ol v e d to w i d er s ec u rit y o bj ecti v e s w it h s o m e s i g nal s a g ain s t t h e US p re s ence in Central As ia. Wh at i s intere s tin g to d i s co v er i s t h at t h e p re s ence of C h ina t h ro ugh S C O at t h e B lac k S ea i s b rin g in g t h at co u ntr y at t h e t h ir d “ nei ghb o u r h oo d” w it h t h e U nite d S tate s. W e con s i d er t h at t h e ﬁ r s t nei ghb o u r h oo d US- C h ina i s in t h e P aci ﬁ c area an d t h e s econ d in t h e sp ace wh ere C h ina i s no w ne x t to USA an d Russ ia. Th e t h ir d g eo p olitical p otential a x i s co u l d b e d e s cri b e d a s t h e W e s t to E a s t corri d or of t h e Eu ro p ean U nion: t h e Rh ine – M ain – D an ub e – B lac k S ea a x i s. Th e s lo w d e v elo pm ent of t h i s a x i s, u ntil no w, co u l d b e e xp laine d by t h e lac k of intere s t of G er m an y an d Aus tria. Bu t t h e f u t u re G er m an EU P re s i d enc y in 2007 co u l d b e a ne w c h ance for t h e d e v elo pm ent of t h i s co mp le x w ater tran sp ortation sys te m 7 . Th e fo u rt h a x i s i s t h e N ort h – S o u t h connection b et w een B altic S ea an d B lac k S ea. It w a s us e d a s an e x a mp le of“ internal cor ri d or” of tran s fer of d e m ocratic e xp erience s, re g ional coo p eration a. o. Th e ne w Eu ro p ean N ei ghb o u r h oo d P olic y h a s t h e p otential of not onl y s ec u rin g t h e E a s tern b or d er of t h e Eu ro p ean U nion fro m P olan d in t h e N ort h to R o m ania an d Bu l g aria in t h e S o u t h. It co u l d b e a g enerator of ne w re g ional coo p eration initiati v e s, co mm on p ro j ect s( li k e critical infra s tr u ct u re s, a. o.) w it h not y et EU m e mb er s. It i s offerin g al s o mu lti p le o pp ort u nitie s for EU p ro g ra mm e s, initiati v e s d e d icate d to t h e co u ntrie s in t h e E a s tern p art of t h e O l d Continent. It i s d if ﬁ c u lt to u n d er s tan d t h e g a p b et w een t h e realitie s of t h e 6 S ee al s o http://www.sectsco.org/news_detail.asp?id=1118&LanguageID=2(S C O D e pu t y S ecretar y-G eneral P olitical S eri k N ar yss o v w it h t h e Ex ec u ti v e P re s i d ent of t h e Eu ri s c F o u n d ation L i v i u Mu re s an an d t h e D irector of t h e EUR I S C- R o m anian In s tit u te of International S t ud ie s Amb a ss a d or N icolae E co b e s c u 1 7 O cto b er 2006) 7 S ee al s o Mu re s an, L i v i u P artner sh i p for Fu t u re R o m anian J o u rnal of International A ffair s, I RS I 1-2/ 1 995, p. 96 80

W i d er B lac k S ea R e g ion, d ifferent re g ional initiati v e s, li k e BSE C (B lac k S ea E cono m ic Coo p eration) an d t h e EU initiati v e s in t h e E a s tern p art of t h e O l d Continent li k e t h e ENP(Eu ro p ean N ei ghb o u r h oo d P olic y). S o in t h e m o m ent of t h e b e g in of t h e G er m an P re s i d enc y of EU an d G8 t h e p otential of B lac k S ea re g ion, a s E a s tern b or d er of Euro p e i s s till in su f ﬁ cient u n d er s too d by B r uss el s. A n initiati v e on Critical Infra s tr u ct u re s inte g rate d conce p t co u l d b e in s tr um ental for t h e s trate g ic d e v elo pm ent in t h e B lac k S ea R e g ion an d can ta k e a dv anta g e by t h e p ro g re ss alrea dy m a d e. 8 A f u t u re Eu ro p ean E ner gy P olic y S trate gy mus t incl ud e t h e p ro ble m atic of critical infra s tr u ct u re s fro m p otential of coo p eration to t h e nee d of increa s e d p rotection b ot h at national an d international le v el. Russ ia alrea dy d i s co v ere d t h e p otential of t h i s critical infra s tr u c t u re t h eir us e for t h eir v al u e an d t h eir vu lnera b ilitie s. Th e ener gy tran s it co u ntrie s h a v e a role not eno ugh u n d er s too d in t h e ﬁ el d of ener gy s ec u rit y. Th e w orl d h a s c h an g e d mu c h s ince t h e conce p t of“ ener gy s ec urit y” e m er g e d in t h e 1 970’s. Bu t a g reein g on it s i mp ortance i s not t h e s a m e a s a g reein g on wh at it m ean s” accor d in g to D aniel Y er g in (W all S treet J o u rnal Ju l y 11, 2006). In t h i s conte x t, t h e NATO S ecretar y-G eneral J aa p d e H oo p S c h ef fer e xp re ss e d, in a m eetin g w it h t h e R o m anian P re s i d ent, T raian B a s e s c u, t h at h e subj ect of ener gy s ec u rit y w o u l d b e d i s c uss e d at t h e ne x t NATO Summ it on N o v e mb er 28-29 in R i g a. D e H oo p S c h effer d e s cri b e d“ t h e free ﬂ o w of ener gy” a s“ an i mp ortant ele m ent in NATO’s s trate g ic conce p t” an d s ai d“ I w o u l d li k e, v er y mu c h, to s ee t h e h ea ds of s tate an d g o v ern m ent in R i g a m a k in g a d eclaration t h at NATO i s g oin g to loo k for t h i s a dd e d v al u e[ in ener gy s ec u rit y d i s c uss ion s].” 9 8 S ee al s o Gh eor gh e, Ad rian P rof. D r., O l d D o m inion U ni v er s it y, N orfol k Mu re s an, L i v i u, E ner gy S ec u rit y- R o m anian P er sp ecti v e for t h e International E n v iron m ent, CICI R, B ei j in g, O cto b er 1 5, 2006 9 NATO C h ief S a ys A lliance Co u l d I mp ro v e E ner gy S ec u rit y N o v 1 7, 2006(R o m ania R e p ort accor d in g to RFE/RL an d N ine o’ Cloc k) 8 1

A n initiati v e w it h i mp ortant p otential i s t h e conce p t of coo p eration a m on g t h e tran s it co u ntrie s. 1 0 “Th e tran s it co u ntrie s sh o u l d e xp lore co mm on c h allen g e s w it h re g ar d to t h e tran s it of Russ ian ener gy an d al s o sh o u l d e xp lore p at hs of coo p eration an d u ni ﬁ e d action wh en ne g otiatin g w it h Russ ia. As lon g a s t h e tran s it co u ntrie s re m ain i s olate d in t h eir ne g otiation s w it h Russ ia t h e y are vu lnera b le to Russ ia re g ional h e g e m onic” Giorgi Burduli: „The Energy Policy of Georgia“ G ior g i Bu r du li i s a for m er Amb a ss a d or of G eor g ia an d no w S enior Adv i s er w it h G I O C(G eor g ian International O il Cor p oration) Th ere co u l d b e no d o ub t t h at ener gy s ec u rit y m aintain s it s p lace on t h e to p of t h e a g en d a of not onl y ne w, d e v elo p in g d e m ocracie s bu t of t h e g reat n umb er of co u ntrie s incl ud in g s o m e of t h e m a j or international p la y er s. N o d e m ocrac y i s p o ss i b le w it h o u t p ro v i d in g b a s ic econo m ical nee ds an d ener gy i s t h e core ele m ent of t h e m. C u rrent d e v elo pm ent s in t h e w orl d ener gy m ar k et p ro v i d e b a s i s an d nee d to fo s ter effort s to w ar ds g reater ener gy s ec u rit y. Th i s i s a concern not onl y for sm all an d e m er g in g s tate s li k e G eor g ia, bu t for s tron g an d p o w erf u l EU a s w ell. G o v erne d by increa s in g d e m an d an d s tron g m ar k et s tr u ct u re, Eu ro p ean s tate s can i mp ort g a s by p i p eline s fro m mu lti p le s o u rce s. It i s nota b le t h at G eor g ia, du e to it s location an d s trate g ic a sp iration s nat u rall y b len ds into t h e m a j or s c h e m e of s ec u re ener gy supp l y conce p t by p ro v i d in g f u ll arra y of tran s it ca p a b ilitie s an d at t h e s a m e ti m e b ene ﬁ tin g it s o w n ener gy s ec u rit y an d in d e p en d ence s trate gy. P ro j ect s of re g ional s i g ni ﬁ cance m a y p la y a critical role in reali z a 1 0 S ee D r. S t u r g i s S. M ilan,“Exp lorin g a T ran s it Z one Con s orti um” B l u e O cean S trate g ie s, LL C p re s ente d in t h e fra m e w or k of t h e E ner gy for um P ra gu e, 23-24 O cto b er 2006, R a d io F ree Eu ro p e, R a d io L i b ert y an d E cono m ic F or um. 82

tion of t h e s e g oal s. As y o u k no w Tu r k e y, Az er b ai j an an d G eor g ia j ointl y carr y o u t s e v eral initiati v e s an d eac h of t h e m can alrea dy b e c h aracteri z e d a s‘su cce ss s torie s’. Th e co mm ence m ent of t h e B a kuTb ili s i- Ce yh an(BT C) e xp ort oil p i p eline in t h e c u rrent y ear an d t h e s c h e du le d co mp letion of t h e con s tr u ction of t h e B a ku-Tb ili s i E r z er um g a s p i p eline are a m on g t h e m o s t i mp ortant c h an g e s in t h e a sp ect of E ner gy s ec u rit y of t h e re g ion. T r u t h b e s ai d- R ecent d e v elo pm ent s in t h e ener gy supp l y m ar k et an d s o calle d“w inter e v ent s” h a v e h i gh li gh te d lon g- ne g lecte d, bu t no w m o u ntin g i ssu e s of ener gy s ec u rit y of Eu ro p ean U nion s tate s an d t h eir p artner s. D e v elo pm ent of a co mm on ener gy-supp l y p olic y or at lea s t of a co mm on ener gy s ec u rit y s trate gy h a s b eco m e a focal concern. P ict u re i s clear for not onl y a co u ntr y li k e G eor g ia – for m erl y d e p ri v e d of m a j or ener gy re s o u rce s for it s o w n con sump tion, bu t for t h e s tate s of EU a s w ell, wh ic h are g ra du all y ac k no w le dg in g t h at t h e ener gy s ec u rit y p olic y can onl y b e bu ilt on con s tr u cti v e e xp an s ion of supp l y s o u rce s, w it h p o ss i b le d irect acce ss v ia t h e B lac k S ea re g ion to t h e ea s tern Ca sp ian a s a m a j or o bj ecti v e, an d on en su rin g international, mu ltilateral control of en er gy tran sp ort sys te ms in Eu ro p e. A fter attainin g a k e y p o s ition in interre g ional g eo p olitic s an d no w follo w in g t h e e v i d ent g ro w t h of ener gy d e m an d- t h e i mp le m enta tion of B a ku-Tb ili s i- Ce yh an an d S o u t h Ca u ca s ian p i p eline s i s of g reat i mp ortance for G eor g ia. In a dd ition to b rin g in g a b o u t subs tantial b ene ﬁ t s to t h e co u ntr y in for ms of re v en u e s to t h e budg et, a s w ell a s g eneral econo m ic b ene ﬁ t s to t h e local p o pu lation, t h e s e p i p eline p ro j ect s h a v e g reat s trate g ic s i g ni ﬁ cance. Th e i mp ortance of S C P con s tr u ction p ro g re ss for G eor g ia i s h ar d to u n d ere s ti m ate. P ro j ect i s at it s f u ll p ace an d i s s c h e du le d for co mp letion at t h e en d of t h i s y ear. B a s e d on t h e recent e xp eri ence, G eor g ia h a s a s tron g intere s t in t h e ti m el y i mp le m entation of B a ku-Tb ili s i-E r z er um g a s p i p eline. By o p eratin g t h e S C P at f u ll 83

loa d, G eor g ia not onl y g ain s s i g ni ﬁ cant in pu t in t h e p roce ss of d i v er s i ﬁ cation of it s g a s supp l y re s o u rce s, bu t al s o contri bu te s to t h e o v erall s trate g ic ener gy s ec u rit y of t h e re g ion. Th erefore, it i s of p artic u lar s i g ni ﬁ cance to s ee m a j or Ca sp ian s tate s b eco m e m ore in v ol v e d w it h t h e E a s t-W e s t E ner gy T ran sp ortation Corri d or P ro ject s. K a z a khs tan h a s lon g e xp re ss e d it s w illin g ne ss to j oin- a g ree m ent s h a v e b een p re p are d b et w een K a z a khs tan an d Az er b ai j an on tec h nicalitie s, b ar g e an d ot h er for ms of tran sp ortation of K a z a kh oil fro m Ak ta u to t h e BT C p i p eline. J oinin g t h e BT C w ill not onl y b e p ro ﬁ ta b le an d b ene ﬁ cial for p artici p atin g co u ntrie s, bu t w ill al s o s er v e t h e g oal of f u rt h er en h ance m ent of t h e f u nction of t h e e x i s tin g ener gy tran sp ortation ro u te s by lin k in g Ca sp ian an d B lac k S ea re g ion s w it h eac h ot h er. A tran s- Ca sp ian s ea b e d p i p eline“w o u l d en su re Eu ro p e’s ener gy s ec u rit y an d p rotect it fro m Russ ian m ono p oli sm,” – P re s i d ent of Az er b ai j an M r. I. A li y e v re m ar k e d.“Eu ro p e h a s u n d er s too d t h at it i s nai v e to p lace all it s h o p e s on Russ ian g a s. Th e e v ent s of re cent m ont hs, wh en Russ ia h a s in effect d e m on s trate d it s s tat us a s a m ono p oli s t, in d icate t h at p rice s w ill ri s e f u rt h er.” Thus, t h e ti m in g i s no w ri p e for s tartin g t h e ne g otiation s”(AP, Tu ran, T ren d, Ekh o [B a ku], M arc h 29). Th e tran s- Ca sp ian g a s p i p eline fro m Tu r km eni s tan an d K a z a khs tan v ia t h e S o u t h Ca u ca sus to Eu ro p ean m ar k et s i s al s o a dv anta g eo us for t h e a b o v e m entione d co u ntrie s for p ro j ect’s v al u e i s i mm en s e for d i v er s if y in g supp lie s an d re s trainin g p rice s. U r g in g Tu r km eni s tan an d K a z a khs tan to b eco m e p art of t h e p ro j ect w it h o u t w aitin g for a pp ro v al fro m ot h er Ca sp ian co u ntrie s-- an all us ion to Russ ia an d T e h ran –P re s i d ent I. A li y e v note d t h at an y i mp e d i m ent s to a s ea b e d p i p eline are p olitical, not tec h nical one s. By v ario us e s ti m ate s, t h e con s tr u ction co s t s are w it h in t h e ran g e of$4-5 b illion for a p i p eline w it h an ann u al ca p acit y of 30 b illion c ub ic m eter s t h at w o u l d r u n fro m t h e ea s tern Ca sp ian sh ore, acro ss 84

t h e s ea b e d to Az er b ai j an, an d f u rt h er v ia G eor g ia into Tu r k e y. W it h Tu r k e y a s a tran s it corri d or, t h e g a s co u l d b e p i p e d to Eu ro p ean U nion m e mb er co u ntrie s in s o u t h ern an d central Eu ro p e. G eor g ia i s ﬁ r m l y a dv ocatin g t h e ori g inall y U.S.- le d p ro j ect, wh ile Tu r k e y h a d s o m e d if ﬁ c u ltie s la u nc h in g t h e ne g otiation p roce ss an d Tu r km eni s tan feel s rel u ctant. A lt h o ugh, follo w in g t h e recent p olitical d e v elo pm ent s, Tu r km eni s tan h a s sh o w e d w illin g ne ss to supp ort t h e initiati v e. In or d er to en su re t h e ener gy s ec u rit y of t h e re g ion a s w ell a s t h e wh ole EU at lar g e, t h e re g ional ener gy tran sp ortation conce p t h a s to b e upd ate d in t h e follo w in g w a y: Th ere i s a nee d of a co mp lete re v a mp of Tu r k e y’s f u nction w it h in International tran sp ort p ro j ect s: fro m t h e f u nction of b ein g co u n tr y- con sum er it sh o u l d arri v e to t h e f u nction of p ri m ar y tran sp orta tion hub an d c h annel-w a y of ener gy supp l y re s o u rce s in t h e re g ion. A lon g w it h t h at, G eor g ia sh o u l d s te p in a s f u ll y p le dg e d p artner in t h e ener gy corri d or conce p t, wh ile m a x i m i z in g supp l y d i v er s i ﬁ ca tion m ean s for it s o w n us e. A t t h e s a m e ti m e, o pp ort u nit y sh o u l d b e e x ten d e d to it s f u ll p otential to facilitate t h e a ss ociation of K a z a khs tan w it h ener gy tran s it initiati v e s. In a dd ition, t h e m a ss i v e in pu t fro m Az er b ai j an’s Sh a h-D eni z g a s ﬁ el d into t h e p ro p o s e d p i p eline v ia Tu r k e y to Eu ro p e w ill facilitate t h e incl us ion of an tici p ate d off sh ore ﬁ el d’s y iel d of 20 b illion c ub ic m eter s ann u all y, al m o s t t w ice t h e earlier p ro j ection, an d ﬁ nall y an d h o p ef u ll y- t h e inte g ration of t h e ne w Ca sp ian g a s p i p eline w it h t h e N a bu cco p ro ject(Tu r k e y-Bu l g aria-R o m ania-Hu n g ar y-Aus tria) by connectin g t h e t w o p lanne d line s near E r zu r um in ea s tern Tu r k e y. It sh o u l d b e note d t h at t h ere w ill b e an o bv io us o bs tacle to t h e p ro p o s e d p ro j ect du e to Russ ia’s p o s ition wh o s e e x i s tin g ener gy p olic y co u nt s on p er m anent acce ss to c h ea p Central As ian g a s, e sp eciall y after loc k in g it s elf in qu ite a mb itio us ener gy d eal s w it h C h ina an d G er m an y. Th e d e v elo pm ent of a g a s e xp ort ro u te t h at 85

e v a d e s Russ ia w o u l d li k el y re qu ire Russ ia to p a y h i gh er p rice s for Central As ian ener gy. Thus, it sh o u l d w ell b e e xp ecte d t h at M o sco w ener gy g iant s w ill w or k at t h eir b e s t to p re v ent a tran s- Ca sp ian p i p eline fro m g ettin g off t h e d ra w in g b oar d. A t p re s ent, Russ ia en j o ys a controllin g intere s t o v er e xp ort ro u te s for Central As ian ener gy. Th e Ca sp ian P i p eline Con s orti um( C P C) ro u te, connect s oil ﬁ el ds in w e s tern K a z a khs tan w it h t h e Russ ian p ort of N o v oro ss i ysk. G a s fro m K a z a khs tan, Tu r km eni s tan an d Uzb e k i s tan i s s i m ilarl y c h annelle d t h ro ugh Russ ia. O ne or m ore p i p eline s s tretc h in g alon g t h e Ca sp ian s ea b e d w o u l d effecti v el y b rea k a Russ ian m ono p ol y o v er e xp ort ro u te s b et w een Central As ia’s k e y ener gy p ro du cer s – K a z a khs tan an d Tu r km eni s tan – an d W e s tern m ar k et s. K a z a khs tan’s intere s t in BT C p artici p ation h a s b een spu rre d in p art by M o s co w’s recent atte mp t s to increa s e it s g ri p on t h e Ca sp ian P i p eline Con s orti um, wh ic h in a dd ition to t h e Russ ian an d K a z a kh g o v ern m ent s incl ud e s m a j or W e s tern ener gy con g lo m erate s. Ov er 30 m illion ton s of K a z a khs tan oil w a s pump e d v ia t h e C P C p i p eline in 2005. A p lanne d e xp an s ion co u l d increa s e ca p acit y to ro ugh l y 67 m illion ton s w it h in a fe w y ear s. H o w e v er, d i spu te s a m on g t h e sh are h ol d er s o v er tran s it fee s c h ar g e d by Russ ia an d t h e con s orti um’s s tr u ct u re t h reaten to d ela y t h e p i p eline’s e xp an s ion. T o co m e b ac k to G eor g ia’s ener gy s ec u rit y it s elf, of co u r s e, one sh o u l d u n d erline it s i mm e d iate d e p en d ence on Russ ia’s a pp roac he s an d p olic y in g eneral. Th i s i s e sp eciall y rele v ant at p re s ent wh en w e are facin g t h e m o s t ac u te cri s e s in t w o co u ntrie s’ relation s. Th o ugh Russ ia ne v er refraine d fro m us in g v ario us le v era g e s of econo m ical, p olitical or m ilitar y c h aracter to“pu ni sh” G eor g ia” for e v en h er atte mp t s to con du ct in d e p en d ent p olitical co u r s e. It s ee ms ti m el y to re m in d y o u of Russ ia i mp o s in g a u nilateral v i s a re g i m e, d eli v erin g Russ ian citi z en sh i p to t h e p o pu lation of Abkh a z ian an d S o u t h Oss etian s ece ss ioni s t re g ion s of G eor g ia, c u ttin g g a s supp l y an d ne g lectin g a g ree m ent s on m ilitar y w it hd ra w al. 86

Bu t t h e s e e v ent s co u l d h ar d l y b e co mp are d w it h t h e anti-G eor g ian hys teria wh ic h w e are w itne ss in g to d a y. Th e arre s t of fo u r Russ ian GRU of ﬁ cer s p ro v o k e d an u n p rece d ente d w a v e of acc us ation s, in su lt s an d s anction s not onl y a g ain s t G eor g ian s tate an d g o v ern m ent of ﬁ cial s bu t al s o or d inar y G eor g ian citi z en s re s i d in g at p re s ent in Russ ia. A nti-G eor g ian ca mp ai g n incl ud e s total tran sp ortation b loc k a d e, d e p ortation an d p er s ec u tion of et h nic G eor g ian s, b o ycott of G eor g ian p ro du ct s an d g oo ds, e xpu l s ion of G eor g ian s t ud ent s fro m s c h ool s an d u ni v er s itie s, a gg re ss i v e an d b r u tal a pp eal s in Dum a an d m a ss-m e d ia, t h reat s to reco g ni z e t h e in d e p en d ence or incor p orate into Russ ian F e d eration t h e b rea k a w a y re g ion s of Abkh a z ia an d S o u t h Oss etia. A n d a s a re su lt an d lo g ical ﬁ nal of t h i s hys teria a n umb er of mu r d ere d G eor g ian national s. N ote w ort hy t h at p artici p ant s of t h i s ca mp ai g n incl ud in g h i gh e s t of ﬁ cial s li k e P re s i d ent, M ini s ter s of F orei g n A ffair s an d D efence are sp ea k in g in a lan gu a g e u n usu al an d not qu ite or d inar y for a ci v ili z e d w orl d. It co u l d b e ea s il y p re d icte d w it h p racticall y no c h ance to m a k e a m i s ta k e t h at a s a p art of an anti-G eor g ian ca mp ai g n t h e c u ttin g of g a s an d electricit y supp l y w ill follo w – at lea s t su c h t h reat s( alon gs i d e w it h m ore a gg re ss i v e, pu rel y m ilitari s tic d e m an ds) are qu ite often h ear d, in sp ite of t h e fact t h at f u l ﬁ l m ent of su c h s cenario s w ill ine v ita b l y pu t u n d er p re ssu re Russ ia’s frien d l y co u ntr y in S o u t h Ca u ca sus – A r m enia. S ince 1 99 1, or after t h e d i ss ol u tion of t h e S o v iet U nion an d S o ciali s t b loc k a s a wh ole, t h e ener gy le v er h a s b een us e d for pu t tin g p olitical or econo m ic p re ssu re on Es tonia, L it hu ania, L at v ia, Uk raine, B elar us, M ol d o v a, G eor g ia t h at subs e qu entl y affecte d m o s t of Eu ro p e. Th e n umb er of inci d ent s, i. e. c u t- off s, ta k e- o v er s, coerci v e p rice p olic y, b lac km ail or t h reat s, i s o v er ﬁ ft y in total( of wh ic h a b o u t fort y are c u t- off s). O n n um ero us occa s ion s du rin g t h e 1 990s an d earl y 2000s, c u t- off s coinci d e d w it h sp ecial e v ent s, su c h a s election s, b ilateral ne g otiation s or Russ ian b o mb ar dm ent of G eor g ian territor y, occa s ionall y u n d er p rete x t of non-p a ym ent s. Du rin g 2002 an d 2003, t h ere w ere al s o n um ero us c u t- off s of elec 87

tricit y. A n umb er of t h e s e w ere relate d to acci d ent s, b a d w eat h er or lac k of m aintenance, bu t on m ore occa s ion s, t h e rea s on w a s s a b o ta g e. A l s o t h e g a s p i p eline s fro m Russ ia w ere tar g ete d for s a b ota g e on t h e Russ ian s i d e of t h e b or d er. In N o v e mb er 2005 after anno u nce m ent t h at G a zp ro m w a s to rai s e g a s p rice s for G eor g ia fro m 63 to 11 0 US D ollar s du e to G a zp ro m ne w d e m an ds, Russ ia in d icate d t h at it m i gh t c u t g a s supp l y alto g et h er. Th e t h reat ca m e jus t b efore t h e m eetin g of t h e CI S E ner gy Co u ncil in Tb ili s i wh ere G eor g ia subs e qu entl y an d w it h o u t an y re s er v ation s acce p te d all of Russ ia’s con d ition s for enterin g t h e CI S u nite d ener gy m ar k et. By d oin g s o, Russ ia gu arantee d g a s supp lie s to G eor g ia. It i s s o m e wh at ironic t h at after t h e s e gu arantee s, ener gy e xp ort s to G eor g ia ca m e to a h alt in J an u ar y 2006 wh en t h e K a vk a s ioni electricit y tran sm i ss ion line s an d t h e p i p eline s tran sp ortin g g a s fro m Russ ia w ere d e s tro y e d in t h e Russ ian R e pub lic of N ort h Oss etia. It w a s u nclear wh o w a s b e h in d t h e s a b ota g e, bu t P re s i d ent S aa k a shv ili acc us e d Russ ia of d eli b eratel y tr y in g to b lac km ail G eor g ia to h an d o v er it s ener gy- relate d infra s tr u ct u re. R et u rnin g to t h e to p ic of inci d ent s it a pp ear s t h at t h e y are e qu all y d i v i d e d on t h e Y elt s in an d Pu tin era s, bu t t h e n umb er of c u t- off s h a v e d ecrea s e d by h alf du rin g Pu tin. Th i s d oe s n’ t nece ss aril y m ean t h at P re s i d ent Pu tin’s a dm ini s tration i s m ore m o d e s t an d le ss a gg re ss i v e to w ar ds s o calle d“ near a b roa d”. O n t h e contrar y, Russ ia’s p re s ent r u ler s are m ore ﬂ e x i b le in a ne g ati v e s en s e of t h i s w or d, e xp lorin g v ariet y of tool s an d m et h o ds to gu arantee t h e in ﬂu ence o v er“ na ugh t y” nei ghb o u r s( t h e m o s t fre sh e x a mp le – a co up le of d a ys a g o Russ ian Dum a rati ﬁ e d w it h a b i g m a j orit y of v ote s an a g ree m ent w it h G eor g ia concernin g w it hd ra w al of Russ ian m ili tar y b a s e s fro m G eor g ian territor y- a lon g s o ugh t d eci s ion i g nore d by Russ ian g o v ern m ent for qu ite a ti m e. A lon gs i d e w it h t h i s b ot h e x ec u ti v e an d le g i s lati v e b ranc h e s of p o w er are contin u in g to at tac k G eor g ia on all front s). “B e y on d d o ub t, Russ ia’s coerci v e ener gy p olic y sh o u l d b e u n d er 88

s too d in a lon g- ter m g eo p olitical an d s trate g ic conte x t u n d er wh ic h p olitical, econo m ic an d m ar k et d ri v er s coe x i s t. Russ ia h a s s trate g ic p rioritie s to k ee p it s in ﬂu ence o v er t h e CI S an d it s ener gy p olic y i s one of t h e m ean s us e d for t h i s rea s on. Th e s trate g ic u n d er p innin g e xp lain s why“m ar k eti s ation” e ss entiall y onl y occ u r s wh en it i s p oliticall y su ita b le an d a g ain s t p oliticall y su ita b le o bj ect s an d for p oliticall y su ita b le rea s on s. Wh en it i s not p oliticall y a pp ro v e d of, m ar k eti s ation rarel y occ u r s.” Th i s i s a qu otation fro m a re s earc h p a p er title d“Russ ia’s E ner gy P olic y”, con du cte d by a tea m of Sw e d i sh s c h olar s an d it i s d if ﬁ c u lt not to a g ree w it h t h eir a ss e ssm ent s an d concl us ion s. H o w e v er Russ ian b e h a v io u r in t h e p re s ent cri s e s g oe s b e y on d ci v i li z e d nor ms an d create s v er y d an g ero us p rece d ent. It v i v i d l y ill ustrate s t h e c h an g e s t h at too k p lace in forei g n a s w ell a s in internal p olic y of Russ ia. It s ee ms t h at p o w er o v er ener gy s ector( a s w ell a s in ot h er ﬁ el ds) i s contin u o us l y concentrate d to t h e K re m lin an d it s lo y al a pp ointee s in t h e cor p orate s ector an d w it h in s tate s tr u ct u re s. F or m al p o w er s h a v e al s o b een g i v en to t h e s ec u rit y s er v ice s, e.g. t h e FSB. L et m e once m ore t u rn to t h e re s earc h w or k of Sw e d i sh s c h olar s, wh o a dm it t h at t h e p o w er concentration an d Pu tin’s“v ertical of p o w er” h a v e create d a m ira g e of s ta b ilit y. U n p re d icta b ilit y h o we v er e x it s b ot h at a s tr u ct u ral le v el an d in p olic y wh ic h re su lt s in con ﬂ ictin g tren ds t h at u n d er m ine t h e p olitical an d econo m ic s ta b ilit y. Th i s in co mb ination w it h Russ ia’s p erce p tion s, intention s, ca p a b ilitie s, trac k recor d, lac k of d e m ocrac y, an d( lac k of) r u le of la w a gg ra v ate s t h e p ro b le ms of d e p en d ence on Russ ian ener gy. Th e ne g ati v e p olitical an d d e m ocratic tren ds in co mb ination w it h Russ ia’s s tr u ct u ral in s ta b ilit y an d u n p re d icta b ilit y in p olic y h o we v er u n d er s core t h at t h e m a g nit ud e of u ncertaintie s are mu c h h i gher t h an it ﬁ r s t a pp ear s. Th e p ict u re d ra w n by o u r collea gu e s d oe s n’ t loo k( or s o u n d) o p ti m i s tic eno ugh bu t t h i s i s realit y an d w e are learnin g to li v e w it h it. 89

It i s qu ite o bv io us t h at Russ ia’s s trate g ic a mb ition i s to u tili s e it s ener gy p olic y a s a sw or d an d a sh iel d in it s s ec u rit y p olic y. Russ ia h a s subs tantial p o w er to in ﬂu ence s it u ation d e v elo p in g in h er sph ere s of intere s t s bu t qu ite often t h i s p o w er i s us e d in an o bs tr u c tioni s t m anner, to correct or pu ni sh u n w ante d action s. In G eor g ia’s ca s e Russ ian ener gy le v er i s us e d v er y acti v el y an d s o m eti m e s qu ite c y nicall y t h o ugh it i s not t h e onl y one at Russ ia’s d i sp o s al v i s-à-v i s G eor g ia.( I d on’ t t h in k t h i s for um i s an a pp ro p ri ate p lace to d i s c uss, s a y, t h e s o calle d“ fro z en con ﬂ ict s” in wh ic h Russ ia a pp ear s to p la y a u ni qu e, tri p le role – a s a facilitator, a s a p eace k ee p er an d t h e la s t bu t not lea s t- a s i d e). F or m all y Russ ia h a s ne v er pu t u n d er d o ub t G eor g ia’s territorial inte g rit y bu t h er p ractical s te ps e sp eciall y in recent ti m e s in d icate qu ite t h e con trar y. Russ ian p olitical elite a pp ear s m ore s incere in t h e i ssu e s of cr u cial c h oice s m a d e by G eor g ian g o v ern m ent. A n d in t h i s re sp ect G eor g ia’s a sp iration to NATO m e mb er sh i p s ee ms to b e t h e m ain irritator to t h e wh ole sp ectr um of Russ ian p olitical e s ta b li shm ent. Thus it b eco m e s clear t h at t h e arre s t of Russ ian of ﬁ cer s w a s jus t an e x c us e an d d irect reaction of Russ ia on NATO Co u ncil d eci s ion to p re s ent G eor g ia an I D. G eor g ia h a s sm all re s er v e s of hyd rocar b on s, bu t it s s trate g ic le v er a g e on t h e ener gy m ar k et i s u n d er p inne d by it s g eo p olitical loca tion an d i mp ortance a s a tran s it co u ntr y, e.g. for g a s fro m Russ ia to A r m enia an d oil an d g a s fro m Ca sp ian b a s in to W e s tern m ar k et s. B e y on d an y d o ub t my co u ntr y w ill f u ll y ta k e a dv anta g e of t h e s e factor s b ein g in p er m anent s earc h for d i v er s i ﬁ e d s o u rce s of en er gy supp l y( one cannot e x cl ud e e v en p o ss i b ilit y of e xp lorin g t h e n u clear p o w er). W e h a v e eno ugh p olitical w ill an d are rea dy to i mp le m ent it in p ractical d ee ds. Th an k y o u. 90

Fasil Ahmedov: „State and Perspectives of the Development of the Azeri Energy Market“ F a s il Ahm e d o v i s C h ief Con su ltant of t h e S tate O il Co mp an y of Az er b ai j an R e pub lic(SO C AR), M ini s tr y of In dus tr y an d E ner gy of t h e R e pub lic of Az er b ai j an D ear p artici p ant s in t h e conference, L a d ie s an d G entle m en, I d ee m it nece ss ar y to p oint o u t t h e g reat intere s t an d p o s iti v e a ss e ssm ent of t h e M ini s tr y of In dus tr y an d E ner gy of t h e R e pub lic of Az er b ai j an for to d a y’s conference wh ic h i s a k e y e v ent for t h e ener gy bus i ne ss in t h e Ca sp ian an d B lac k S ea re g ion s. Su c h conference s p la y a s i g ni ﬁ cant role in t h e d e v elo pm ent an d s tren g t h enin g of bus ine ss tie s, re g ional coo p eration an d g lo b al econo m ic inte g ration. As i s k no w n, t h e s ocial – econo m ic d e v elo pm ent of a g i v en co u ntr y i s to a g reat e x tent d eter m ine d by t h e s tate of it s k e y s trate g ic in dus tr y – t h e ener gy s ector a s a wh ole an d t h e oil an d g a s in dus tr y in p artic u lar. As of t h e 20 t h cent u r y oil an d g a s h a v e b eco m e s trate g ic re s o u rce s of t h e w orl d’s econo my an d are e xp ecte d to re m ain su c h in t h e 2 1 s t cent u r y. Th e Ca sp ian re g ion by force of it s g eo g ra ph ic location an d lar g e re s er v e s of hyd rocar b on s p la ys a s i g ni ﬁ cant role in t h e w orl d econo my. Th e oil an d g a s in dus tr y i s a k e y s ector of t h e Az eri econo my. T a k in g into acco u nt t h e g ro w in g d e m an d for ener gy re s o u rce s on t h e w orl d m ar k et Az er b ai j an initiate d it s ne w lon g- ter m oil an d g a s s trate gy on S e p te mb er 20 t h , 1 994 wh en t h e“ Contract of t h e Cent u r y” w a s s i g ne d for t h e e xp loration of t h e Az eri- Cira k-Gu ne s li ﬁ el d in con ju nction w it h p ro m inent forei g n oil co mp anie s fro m lea d in g co u ntrie s. Th e s trate gy w o u l d en su re Az er b ai j an’s o w n ener gy s ec u rit y a s w ell a s to t h e e x tent p o ss i b le gu arantee ener gy supp lie s to ot h er re g ion s of t h e p lanet. Th e 9 1

p erio d s ince 1 994 h a s b een c h aracteri z e d by an i mp ro v e d ca p acit y to e x tract oil an d g a s, m ore electricit y g eneration an d b etter tran sp ortin g ca p a b ilitie s a s w ell a s increa s e d in v e s t m ent in t h e ener gy s ector. As of to d a y t h ere h a v e b een 25 oil contract s s i g ne d w it h 35 co mp a nie s re p re s entin g 1 5 co u ntrie s, incl ud in g USA, G reat B ritain, Russ ia, N or w a y, Tu r k e y, F rance, Ital y, Iran, etc., wh ic h e xp re ss e d intere s t in t h e oil an d g a s ﬁ el ds an d t h e p ro m i s in g s tr u ct u re s of Az er b ai j an. Th e v ol um e of in v e s t m ent u n d er t h e s e contract s a m o u nt s to m ore t h an 70 b illion USD. A t p re s ent m ore t h an 1 8 b illion USD in forei g n in v e s t m ent h a s b een m a d e in t h e d e v elo pm ent of t h e g a s an d oil in dus tr y of Az er b ai j an. C u rrentl y, acti v e w or k i s b ein g d one on t h e m ain g a s an d oil p ro j ect s in t h e s ector: - Co mp letion w or ks of Ph a s e 2 of t h e d e v elo pm ent of t h e Az eri Cira k-Gu ne s li ﬁ el ds. A t p re s ent t h e p latfor ms of Central Az eri an d W e s tern an d E a s tern Az eri h a v e b een d e p lo y e d, an d t h e u n d er w ater oil an d g a s p i p eline s connectin g t h e p latfor ms w it h t h e S an g acal ter m inal h a v e b een co mp lete d. Th e Az eri- Cira kGu ne s li ﬁ el ds y iel d 1 b illion ton s of oil, nat u ral g a s a m o u ntin g to 1 20 b illion c ub ic m eter s an d nat u ral g a s con d en s ate of 8 m illion ton s. Th e Sh a h-D eni z ﬁ el d h a s a p ro v en y iel d of 1 trillion c ub ic m eter s of g a s, an d m ore t h an 1 50 m illion ton s of g a s con d en s ate. Th e lar g e-s cale e xp loration of t h e Az eri- Cira k-Gu ne s li ﬁ el ds i s e xp ecte d to re su lt in a total e x traction of oil a m o u ntin g to 50 m il lion ton s p er y ear. - Th e con s tr u ction of t h e m ain e xp ort p i p eline B a ku-Tb ili s i- Ce yh an w a s co mp lete d at t h e ﬁ r s t h alf of t h i s y ear an d t h e p i p eline s tarte d o p eration. It i s 1 768 km. lon g an d h a s a ca p acit y of 1 m illion b arrel s p er d a y. O n M a y 28 t h t h e ﬁ r s t tan k er of Az eri oil s aile d off t h e M e d iterranean p ort of Ce yh an in Tu r k e y to Eu ro p e. C u rrentl y, t h e B a ku-Tb ili s i- Ce yh an p i p eline tran sp ort s a pp ro x i m atel y 70 t h o us an d ton s of oil p er d a y. - Th e p re p aration of t h e d oc um entation b et w een t h e Az eri an d 92

K a z a kh p artie s re g ar d in g t h e inter g o v ern m ental a g ree m ent s an d treatie s on t h e k e y p rinci p le s an d con d ition s for tran sp ortin g of up to 25 m illion ton s of K a z a kh oil on t h e Ak ta u-B a ju ro u te an d f u rt h er on alon g t h e B a ku-Tb ili s i- Ce yh an p i p eline i s no w b ein g co mp lete d. In t h i s w a y t h e supp l y of K a z a kh oil to t h e p i p eline sys te m w ill b eco m e a realit y wh ic h i s an i mp ortant s te p to w ar ds t h e increa s e d ef ﬁ cienc y of t h e p ro j ect. - Inten s i v e w or k i s al s o b ein g d one on t h e d e v elo pm ent of t h e g a s con d en s ate ﬁ el d of Sh a h-D eni z. A s tate- of- t h e- art TPG-500 p lat for m w a s d e p lo y e d in t h e ﬁ el d co mb inin g d rillin g an d pump in g ca p a b ilitie s. F o u r initial w ell s h a v e b een d rille d us in g an I ST I GLAL ﬂ oatin g d rillin g in s tallation. Th e con s tr u ction of a 26 inc h s ea b e d g a s p i p eline an d 1 2 inc h s ea b e d g a s con d en s ate p i p eline connectin g t h e p latfor m to t h e S an g acal g a s ter m inal h a s b een ﬁ ni sh e d. - Th e e xp loitation of t h e TPG-500 p latfor m u n d er t h i s p ro j ect i s e xp ecte d to re su lt in 9.8 b illion c ub ic m eter s of g a s an d 2 m illion ton s of g a s con d en s ate du rin g t h e ﬁ r s t s ta g e u ntil 2009. Subs e qu entl y, t h e s econ d ph a s e of t h e p ro j ect for t h e d e v elo pm ent of t h e Sh a h-D eni z ﬁ el d w ill s tart. Th e co mp letion w or ks of t h e 2 n d s ta g e are e xp ecte d to ta k e p lace by t h e en d of 20 11 an d t h e g a s y iel ds are e xp ecte d to g ro w to 9- 1 2 b illion c ub ic m eter s p er y ear. - Th e g a s w ill b e e xp orte d v ia t h e S o u t h Ca u ca sus P i p eline alon g t h e B a ku-Tb ili s i-E r zu r um ro u te r u nnin g s o m e 9 1 5 km. an d h a vin g a ca p acit y of up to 20 b illion c ub ic m eter s. A t t h i s p oint, p re p aration w or ks are b ein g carrie d o u t for t h e s tart of t h e o p era tion of t h e p i p eline. - Ap art fro m t h e a b o v e-m entione d p i p eline s, Az er b ai j an i s e xp loit in g alternati v e tran sp ort o p tion s to supp l y oil to ot h er co u ntrie s, for in s tance t h e N ort h ro u te of B a ku-N o v oro s ii sk w it h ca p acit y of m ore t h an 6 m illion ton s p er y ear, t h e W e s t ro u te of B a kuSups a w it h ca p acit y of m ore t h an 6 m illion ton s p er y ear a s w ell a s t h e B a ku-B at um i railroa d. - A n d ﬁ nall y, fro m t h e p oint of v ie w of s ec u rin g it s o w n ener gy supp lie s an d m eetin g it s co mm it m ent s to ot h er re g ion s, Az er b ai j an i s con s i d erin g t h e i ssu e of e xp an d in g an d m o d erni z in g t h e co u ntr y’s 93

e x i s tin g u n d er g ro u n d g a s s tora g e facilitie s by increa s in g t h eir ca p acit y to 3 b illion c ub ic m eter s an d bu il d in g ne w facilitie s w it h s tora g e v ol um e of up to 1 0 b illion c ub ic m eter s. - B earin g in m in d t h e g ro w in g d e m an d for oil in t h e w orl d, on F e b r u ar y 1 5 t h 2005 t h e P re s i d ent of Az er b ai j an a pp ro v e d a G o v ern m ent P ro g ra m on D e v elo p in g t h e H eat an d P o w er G en eration S ector in t h e R e pub lic in t h e p erio d 2005 – 20 1 5 wh ic h m a k e s it i mp erati v e to s earc h for a dd itional o pp ort u nitie s to increa s e t h e oil y iel d. - A n e xp lorator y s t udy an d p re p aration w or ks of t h e G ara b a g an d Ash ra ﬁ ﬁ el ds are e xp ecte d to ta k e p lace in t h e p erio d of 20062008 in accor d ance w it h t h i s P ro g ra m. Initial e xp lorator y p ro b e s are p lanne d for 2007-2008. - Th e ﬁ el ds of Um i d an d B a b e k w ill al s o contin u e to b e e xp lore d in 2007-2008. P re p aration w or ks are u n d er w a y for t h e s tart of d rillin g in t h e N a kh c h i v an ﬁ el d. A l s o b et w een 2005-20 1 5 SOC AR p lan s to increa s e t h e v ol um e of d rillin g an d t h e n umb er of g a s an d oil p ro b e s in ot h er ﬁ el ds. - In t h i s w a y, by i mp le m entin g all t h e s e p ro j ect s in Az er b ai j an t h e oil an d g a s y iel ds are e xp ecte d to g ro w re sp ecti v el y to 60 m illion ton s an d 20 b illion c ub ic m eter s by 20 1 0. Th e electricit y p ro du ction sys te m in Az er b ai j an i s a m on g t h e ol d e s t an d m o s t d e v elo p e d in t h e S o u t h ern Ca u ca sus. Th e total p otential ca p acit y of t h e electricit y g eneration facilitie s i s 5750 MW/h incl udin g 4780 MW of t h er m al p o w er s tation s an d 970 MW of hyd roelec tric s tation s. Th e act u al g eneration a m o u nt s to 4040 MW. Th e p o w er line s are w it h a v olta g e of 0.4 to 500 kV an d a total len g t h of 11 0 000 km. incl ud in g t h e m ain g ri d w it h a v olta g e of 11 0 to 500 kV an d len g t h of 6.8 t h o us an d k ilo m etre s. Th e Az eri ener gy sys te m i s lin k e d w it h t h e electricit y tran sm i ss ion line s of t h e nei ghb o u rin g sys te ms. In 2005 electricit y g eneration a m o u nte d to 22.35 b illion kV/h of wh ic h 1 9.34kV/h electricit y w ere p ro du ce d by t h er m al p o w er s tation s. I mp ort of electricit y a m o u nte d to 2. 1 b illion of kV/h an d e xp ort – 0.9 kV/h. 94

In 2006 electricit y g eneration i s e xp ecte d to a m o u nt to 23.9 b illion kV/h of wh ic h 2 1.9 fro m t h er m al p o w er p lant s. I mp ort of electricit y w ill b e 2.45 b illion kV/h an d e xp ort – 1.45 kV/h. N at u ral g a s i s a k e y co mp onent in t h e ener gy m i x of Az eri p o w er g eneration. It con s tit u te s 67% of t h e re s o u rce s wh ic h i s al m o s t t w ice a s mu c h a s t h e sh are of b lac k oil. C u rrentl y, t h e d e v elo pm ent of en er gy p ro du ction g oe s alon g t h e follo w in g line s: - e s ta b li shm ent of ne w facilitie s - recon s tr u ction, e xp an s ion an d m o d erni z ation of e x i s tin g facilitie s - creation of a fa v o u ra b le en v iron m ent for e xp ort of electricit y to nei ghb o u rin g co u ntrie s an d en su rin g t h e p arallel o p eration of t h e ener gy sys te ms of forei g n co u ntrie s - re du cin g t h e ne g ati v e i mp act on t h e en v iron m ent - d e v elo pm ent an d e xp loitation of alternati v e s o u rce s of ener gy A M e m oran dum on t h e reali z ation of a p ro j ect for alternati v e s o u rc e s of ener gy w a s s i g ne d b et w een t h e As ian D e v elo pm ent B an k an d t h e M ini s tr y of In dus tr y an d E ner gy of Az er b ai j an a s an ele m ent of t h e i mp le m entation of t h e N ational P ro g ra m on R ene w a b le E ner gy S o u rce s. N e g otiation s are u n d er w a y w it h t h e W orl d B an k an d ot h er ﬁ nancial in s tit u tion s an d in v e s tor s for t h e i mp le m entation of p ilot p ro j ect s for w in d p o w er, an d sm all hyd roelectric p lant s. Th e foreca s t s re g ar d in g t h e g ro w t h of Az eri econo my an d t h e subs e qu ent ri s e in electricit y con sump tion sh o w t h at in co mp ari s on to 2000 t h e d e m an d of electricit y i s e xp ecte d to increa s e by 1.5 ti m e s in 20 1 0 an d d o ub le in 20 1 5 wh ile at t h e s a m e ti m e t h e e x i s tin g facili tie s w ill b eco m e o bs olete. Th e p ro b le m w it h t h e d e ﬁ cit of e x i s tin g facilitie s w ill b e s ol v e d by w a y of increa s in g p ro du ction ca p acit y t h ro ugh m o d erni z ation of e x i s tin g facilitie s an d e s ta b li shm ent of ne w one s. Su c h ne w facili tie s w ill b e t h e m o du lar t h er m al p lant s w it h a ca p acit y of 460MW wh ic h w ill s tart o p eration in 2006; t h e Sumg ait, N ort h an d S an g acal t h er m al p lant s w it h total ca p acit y of 1 240 MW to s tart o p eration in 2007-2009; t h e A li-B aira m lin t h er m al p lant w it h ca p acit y of 800900MW to s tart o p eration in 2007-20 11; t h e G o bus tan w in d p o w er 95

s tation w it h a ca p acit y of 50 MW, etc. Th e p rinci p le of s e p aration of nat u rall y m ono p oli s tic an d p otentiall y co mp etiti v e s ector s u n d er p in s t h e refor ms t h at are c u rrentl y b ein g carrie d o u t in t h e ener gy b ranc h. Th e m ono p ol y s ector s li k e electric it y p ro du ction, tran sm i ss ion an d d i s tri bu tion w ill re m ain u n d er g o vern m ent control, wh erea s co mp etiti v e s ector s li k e p o w er p ro du ction in sm all v olta g e p lant s an d t h e pu rc h a s e an d s ale of electricit y w ill g ra du all y b e li b erali z e d an d re gu late d by m ar k et m ec h ani sms. A ll of t h e d e s cri b e d p ro j ect s co m e a s a re su lt of Az er b ai j an’s p olic y of coo p eration in t h e area s of ener gy an d tran sp ort of Ca sp ian hyd ro car b on s to t h e w orl d m ar k et s b ot h a s p art of t h e B lac k S ea E cono m ic D e v elo pm ent O r g ani z ation, an d in t h e fra m e w or k of ot h er interna tional econo m ic or g ani z ation s. I s tron g l y b elie v e t h at t h e p i p eline s an d ot h er p ro j ect s wh ic h are c u rrentl y b ein g i mp le m ente d in Az er b ai j an w o u l d contri bu te to t h e e v en b etter coo p eration a m on g o u r co u ntrie s in t h e ener gy area. In concl us ion, w e p a y sp ecial attention to: - t h e p rotection of en v iron m ent; - tec h nical s afet y; - e s ta b li shm ent of alternati v e supp l y ro u te s to ot h er co u ntrie s. T a k in g into con s i d eration t h e a b o v e, w e are con ﬁd ent t h at w e h a v e en su re d o u r ener gy s ec u rit y an d w e are o p ti m i s tic w it h re g ar ds to m eetin g o u r co mm it m ent s to supp l y hyd rocar b on re s o u rce s to ot h er re g ion s an d co u ntrie s. I w o u l d li k e to once a g ain con g rat u late t h e p artici p ant s in t h i s con ference an d w i sh y o u su cce ss in y o u r f u t u re w or k. Th an k y o u for y o u r attention. 96

Simeon Nikolov: „Bulgaria’s Contribution to Security in the Black Sea Region as a Prerequisite for Energy Supply and Energy Security“ S i m eon N i k olo v, D e pu t y M ini s ter of D efence of t h e R e pub lic of Bu l g aria Es tee m e d C h air of t h e conference, L a d ie s an d g entle m en, It i s a p lea su re for m e to b e in v ite d an d to ta k e p art in t h i s e s tee m e d conference. A llo w m e to e x ten d my g ratit ud e to t h e or g ani z er s fro m t h e re g ional of ﬁ ce of t h e F rie d ric h Eb ert F o u n d ation an d to sh are my s tron g b elief in t h e ti m eline ss of su c h for ums, wh ic h p ro v i d e an o pp ort u nit y to d i s c uss to p ical i ssu e s li k e t h e B lac k S ea coo p eration an d re g ional s ec u rit y. I a m con ﬁd ent t h at t h i s for um w ill not onl y react to t h e e v ent s, bu t w ill p roacti v el y la u nc h ne w i d ea s. I d ea s wh ic h w ill sugg e s t k e y a pp roac h e s for t h e d e v elo pm ent of m o d ern an d w or k in g m ec h ani sms for t u rnin g t h e re g ion fro m a b arrier – p ercei v e d li k e t h i s for it s nat u re of a s ea b o u n d ar y- into a b ri dg e to reali z in g t h e hug e p otential of coo p eration. Th e w or d“hug e” in t h i s ca s e i s not e x actl y a r h etorical d e v ice s ince b ot h g eo g ra ph icall y, an d econo m icall y t h e B lac k S ea re g ion alon g w it h t h e Ca u c us e s, Central As ia an d t h e M i dd le E a s t d oe s in fact p ro v i d e hug e o pp ort u nitie s wh ic h re m ain to b e s ei z e d. I b elie v e t h at by sh arin g o u r o p inion s w e w ill b e a b le to ﬁ n d co mm on i d ea s an d ac h ie v e co mm on g ro u n d for o u r p o s ition s an d a pp roac h e s to w ar ds t h e m o s t s i g ni ﬁ cant i ssu e s relatin g to coo p eration in t h e area of s ec u rit y in t h e re g ion. I w o u l d li k e to m ainl y foc us on t h e i ssu e s of coo p eration in t h e area of p olitical an d e sp eciall y m ilitar y s ec u rit y a s nece ss ar y p rere qu i s ite s for ener gy supp l y an d ener gy s ec u rit y. O f co u r s e, t h i s a pp roac h d oe s not m ean t h at w e co u l d u n d ere s ti m ate t h e ot h er co mp onent s of s ec u rit y in t h e B lac k S ea re g ion – econo m ic, ener gy, infra s tr u ct u re, en v iron m ental, etc. Sp ea k in g a b o u t s ec u rit y a s a p recon d ition an d a 97

b a s i s, I w o u l d u nfort u natel y nee d to p oint o u t t h at accor d in g to t h e e xp ert s’ foreca s t s s ec u rit y i s not li k el y to i mp ro v e in t h e ne x t 1 0- 1 5 y ear s. O n t h e contrar y it i s e xp ecte d to d eteriorate. Th i s i s of i mp or tance for ener gy supp l y a s w ell. I al s o nee d to clarif y t h at in g eo p olitical ter ms o u r u n d er s tan d in g of t h e B lac k S ea re g ion incl ud e s t h e a dj acent z one s of t h e M e d iterra nean an d t h e Ca u ca sus, a s w ell a s non littoral co u ntrie s(Th e W e s tern B al k an s, M ol d o v a, A r m enia, an d Az er b ai j an) or t h e s o calle d b roa der B lac k S ea re g ion. R ecentl y a s cienti ﬁ c pub lication by t h e D irector of t h e R e s earc h B ranc h of t h e NATO D efence Colle g e J ean Du fo u rc en d or s e d t h e i d ea to a dd t h e B lac k S ea re g ion to t h e fo u r m ain sub re g ion s of t h e M e d iterranean b a s e d on it s g ro w in g g eo s trate g ic s i gni ﬁ cance an d interrelation w it h nei ghb o u rin g re g ion s. It i s of k e y i mp ortance to e mb race a w i d er d e ﬁ nition of s ec u rit y wh ic h to incl ud e t h e entire arra y of i ssu e s – fro m e s ta b li shm ent of d e m ocrac y an d i mp le m entation of refor ms to ille g al traf ﬁ c k in g, ter rori sm, an d p roliferation of w ea p on s of m a ss d e s tr u ction. Th e co mm on d e ﬁ nition of ri sks an d t h reat s sh are d by t h e s i x B lac k S ea co u ntrie s w it h in BLA C KSEAFOR referrin g to a symm etric t h reat s, or g ani z e d cri m e an d ri sks for t h e en v iron m ent sh o u l d no w b e follo w e d by sp eci ﬁ c j oint m ea su re s – p olitical, m ilitar y, b or d er control, c us to ms an d ot h er – in or d er to re du ce t h e ri sks an d gu aran tee a h i gh er le v el of s ec u rit y. It i s t h i s b roa d er an d m ore sys te m ic a pp roac h to w ar ds all s ec u rit y co mp onent s t h at can en su re t h e a d e qu ac y of a ss e ssm ent an d t h e ef ﬁ cienc y of t h e p olic y to b e pu r su e d. In t h i s conte x t, la d ie s an d g entle m en, accor d in g to t h e e xp ert o p in ion t h e B lac k S ea re g ion ac qu ire s it s s trate g ic c h aracter for b ot h t h e Eu ra s ian z one, an d t h e w orl d. As a re su lt of t h e conte mp orar y g lo b ali z ation p roce ss e s t h e re g ion b eco m e s increa s in g l y i mp ortant. Th e cro ss roa d g eo g ra ph ic location, t h e s trate g ic tran sp ort corri d or s, t h e intercontinental ener gy ﬂ o ws, t h e d i v er g in g intere s t s an d le v el of d e m ocrati z ation of t h e p artici p atin g co u ntrie s, an d la s t bu t not lea s t 98

t h e con s i d era b le n umb er of“ fro z en con ﬂ ict s” re p re s ent t h e m ain d e ter m inin g factor s for t h e p lace t h at t h e re g ion h ol ds in t h e w orl d p olitic s an d econo my. In a s en s e t h e B lac k S ea re g ion i s b ein g p ercei v e d a s a b or d er z one, bu t t h e c h an g e s c u rrentl y u n d er w a y are t u rnin g it fro m a b or d er an d a b arrier into a h i ghw a y, a z one for coo p eration. Th i s coo p eration re qu ire s collecti v e effort s for m aintainin g an d increa s in g s ec u rit y an d s ta b ilit y. G i v en Bu l g aria‘s s trate g ic p rioritie s, it s fort h co m in g EU m e mb er sh i p an d it s m e mb er sh i p in NATO w e b elie v e t h at t h e acti v e in v ol v e m ent of t h e t w o alliance s in m aintainin g s ec u rit y in t h e re g ion i s nece ss ar y. It i s in t h e intere s t of b ot h or g ani z ation s, wh o s e m e mb er Bu l g aria i s, to act in con ju nction, w it h a clear ai m an d a lon g- ter m s trate gy. Th e y h a v e a ne w role d eter m ine d by t h e nee d to acti v el y a dd re ss t h e t h reat s to g lo b al s ec u rit y. R e g ar d le ss of t h e e m er g in g d ifferent intere s t g ro ups acro ss t h e re g ion, t h ree of t h e s i x B lac k S ea co u ntrie s are NATO m e mb er s. Russ ia an d Uk raine h a v e e s ta b li sh e d coo p eration m ec h ani sms w it h t h e A lliance an d are k e y p artner s in t h e B lac k S ea p roce ss, an d G eor g ia h a s a clear p o s ition wh ic h u nfort u natel y i s ups ta g e d by t h e Russ ian-Am erican intere s t s. In t h i s re sp ect w e supp ort all action s ai m e d at en su rin g a b roa d re p re s entation an d p artici p ation of t h e Eu ro p ean an d Eu ro-A tlantic s tr u c t u re s in t h e B lac k S ea re g ion. W e d ee m it rea s ona b le t h at NATO an d t h e EU sh o u l d w or k o u t a coor d inate d or j oint a pp roac h to w ar ds t h e s ta b ilit y an d d e v elo pm ent of t h e co u ntrie s in t h at re g ion. Th e lac k of su c h an a pp roac h i s a con s tant i ssu e wh ic h w ill b eco m e e v en m ore s en s iti v e in t h e co m in g y ear s. Th e effort s of Bu l g aria in t h e B lac k S ea re g ion are foc us e d on t h e creation of a ri sk- free en v iron m ent or controlle d ri sk en v iron m ent b a s e d on t h e b roa d an d acti v e in v ol v e m ent of all s ta k e h ol d er co u n trie s, supp ort for t h e p roce ss e s of d e m ocrati z ation an d s tren g t h enin g s ec u rit y an d s ta b ilit y a s w ell a s p artici p ation in t h e p re p aration an d i mp le m entation in infra s tr u ct u ral p ro j ect s o bs er v in g t h e p rinci p le s of e qu alit y. 99

Th e concrete s te ps ta k en by Bu l g aria in t h i s re sp ect con s tit u te o u r effort s to m a k e a m ore co mp re h en s i v e an d sys te m atic e xp ert a ss e ssm ent of t h e s ec u rit y i ssu e s in t h e B lac k S ea re g ion in m o d ern ti m e s, to d e ﬁ ne clearl y an d in m ore sp eci ﬁ c ter ms Bu l g aria‘s national in tere s t an d to o u tline a s erie s of m ea su re s an d o bj ecti v e s ai m e d at p rotectin g it. W e nee d to b e a w are of t h e nece ss it y to d raft a B lac k S ea R e g ion S trate gy a dd re ss in g all t h e k e y p ara m eter s: econo my, p olitic s, s ec u rit y an d ener gy s ec u rit y. H ere I nee d to p oint pu t t h at Bu l g aria‘s a sp iration i s to ﬁ n d a b alance b et w een t h e g lo b al an d re g ional a pp roac h in it s forei g n p olic y. It i s tr u e t h at in t h e p a s t y ear s, t h e s trate g ic national intere s t of Bu l g aria m a d e it nece ss ar y to foc us o u r m ain forei g n p olic y effort s on t h e in te g ration in NATO an d t h e EU. NATO m e mb er sh i p i s alrea dy a fact, an d t h e m e mb er sh i p in t h e EU w ill b eco m e a realit y a s of J an u ar y 1 s t , 2007. In ot h er w or ds Bu l g aria h a s b eco m e a f u ll-ﬂ e dg e d m e mb er an d an o u ter b or d er of t w o of t h e m o s t i mp ortant p olitical, m ilitar y an d econo m ic factor s in t h e w orl d. L oo k in g for it s p lace, w ei gh t an d role in t h e m Bu l g aria w o u l d nat urall y nee d to inten s if y it s effort s a s a factor for t h e re g ional s ec u rit y, s ta b ilit y an d coo p eration in t h e B lac k S ea re g ion an d t h e SEE a s a wh ole. Th i s i s why w e b elie v e t h at t h i s i s t h e ri gh t ti m e to ﬁ n d ne w qu alit y an d i mp act of Bu l g aria’s p artici p ation in s tren g t h enin g re g ional s ec u rit y w it h in t h e fra m e w or k of t h e co mm on Eu ro p ean an d Eu ro-A tlantic s ec u rit y. In t h i s s en s e t h e acce ss ion of Bu l g aria an d R o m ania into NATO an d t h e EU m a d e t h e B lac k S ea re g ion p art of t h e NATO z one of re sp on s i b ilit y w it h all en su in g con s e qu ence s. Th e increa s e d s i g ni ﬁ cance of t h e B lac k S ea for t h e Eu ro-A tlantic s ec u rit y b rin gs a b o u t t h e nee d for j oint initiati v e s b et w een p artner s an d allie s a s p ointe d o u t in t h e I s tan bu l Co mmu ni qué of t h e NATO summ it in 2004. Bu l g aria h a s t h e p olitical w ill, intellect u al ca p acit y, an d ala s li m ite d ﬁ nancial re s o u rce s an d w e h o p e t h e supp ort of B r uss el s an d W a sh in g ton, an d why not t h e supp ort of t h e d ri v in g force s of EU s ec u rit y an d d efence 1 00

G er m an y an d F rance, for f u t u re initiati v e s wh ic h alon g w it h t h e co o p eration w it h Russ ia co u l d re su lt in an effecti v e p olic y w it h re g ar ds to t h e B lac k S ea re g ion a s w ell. In d i v i du all y o u r co u ntrie s h a v e m a d e a co mm it m ent to m aintain m o d ern an d effecti v e na v al force s. Th i s i s wh ere t h e real d an g er lie s: in a s it u ation of li m ite d ﬁ nancial re s o u rce s for m o d erni z ation an d u n d ere s ti m ation of t h e fact t h at Bu l g aria i s a s ea co u ntr y, a fact wh ic h p ro v i d e s o pp ort u nitie s, bu t re qu ire s a s erio us en g a g e m ent, w e m a y s oon en d up w it h a symb olic na v al force wh ic h d oe s not re ﬂ ect t h e national intere s t. W e h a v e to a dm it t h at R o m ania i s to a certain e x tent a h ea d of us in t h e m o d erni z ation of t h e na v al force s an d in anot h er i mp ortant area – control an d d efence of t h e B lac k S ea area. Bu l g aria i s, h o w e v er, a b o u t to la u nc h a p ro j ect u n d er t h e na m e of “S creen” for s ettin g up a coa s tal ra d ar sys te m. F or t h i s p ro j ect w e rel y on forei g n ﬁ nancial a ss i s tance. Th e e xp erience of lea d in g Euro p ean co u ntrie s w a s us e d wh en e s ta b li sh in g t h e m arine u nit s of t h e N ational S er v ice for B or d er Control. Th e b e s t p ractice s of p atrollin g an d control of t h e coa s tal b or d er h a v e b een a pp lie d, incl ud in g na v al force s, coa s tal p atrol an d tec h nical su r v eillance s tation s. Th e B lac k S ea Coor d ination an d Infor m ation Centre s er v e s a s a lin k a m on g t h e coa s tal p atrol s of t h e B lac k S ea co u ntrie s at o p erati v e, tec h ni cal, infor m ation an d co mm an d le v el s. A ll of t h i s, s tartin g fro m t h e e s ta b li shm ent of d e m ocratic r u le an d en d in g w it h m ilitar y e x erci s e s, control an d su r v eillance in t h e B lac k S ea h a s an ine v ita b le i mp act on t h e s ec u rit y of ener gy supp l y an d acce ss to ener gy re s o u rce s. T a k in g t h e ri sk of re p eatin g a w ell-k no w n tr u t h I w ill s tre ss once a g ain t h at t h e g lo b al t h reat s an d c h allen g e s to s ec u rit y re qu ire a g lo b al s ol u tion. Th e s ec u rit y an d s ta b ilit y s ol u tion s for t h e B lac k S ea re g ion sh o u l d not b e“ ca psu late d” onl y w it h in t h e effort s of t h e B lac k S ea co u ntrie s an d t h e e x i s tin g re g ional m ilitar y an d tec h ni cal o p tion s li k e t h e w ell- f u nctionin g Op erati v e G ro up for N a v al Co o p eration in t h e B lac k S ea(BLA C KSEAFOR). W e nee d to a dm it t h at e v en w it h in t h e fra m e w or k of t h e e x i s tin g s tr u ct u re s t h ere i s no or g ani z ation for e x c h an g e of infor m ation, an d t h e one a m on g t h e 1 0 1

a b o v e Centre s i s in su f ﬁ cient. P o s ition s on t h e B lac k S ea H ar m on y initiati v e re m ain to b e w or k e d o u t in t h i s re sp ect. It i s i mp ortant to ac h ie v e b etter coor d ination b et w een t h e N a v al F orce s wh ile o bs er v in g t h e k e y p rinci p le of international m ariti m e la w re g ar d in g t h e re sp on s i b ilitie s of e v er y littoral co u ntr y o v er t h e w ater territorie s u n d er it s control. In or d er to attain sus taina b le s ta b ilit y in t h e re g ion an d in or d er for t h e re g ion to g enerate s ec u rit y e sp eciall y in t h e nort h ern an d ea s tern d irection, t h ere are t h ree cr u cial con d ition s in o u r o p inion: - F ir s tl y, for mu lation of a b roa d a pp roac h to s ec u rit y in t h e re g ion b a s e d on coo p eration on all k e y i ssu e s – fro m t h e d e v elo pm ent of d e m ocratic p roce ss e s an d i mp le m entation of refor ms in t h e p artner co u ntrie s to co mb at a g ain s t ille g al traf ﬁ c k in g, terrori sm an d WMD p roliferation; - S econ d l y, co mm it m ent on t h e p art of t h e k e y international p la yer s wh ic h m a y h a v e a real contri bu tion to s ol v in g t h e e x i s tin g p ro b le ms. It i s in t h e intere s t not onl y of t h e co u ntrie s in t h e re g ion, bu t t h e entire Eu ro-A tlantic co mmu nit y, for t h e interna tional co mmu nit y a s re p re s ente d by NATO, t h e EU an d OS C E to for mu late a co mm on v i s ion an d a co mp le x s trate g ic a pp roac h to t h e i ssu e s of re g ional s ec u rit y. In t h i s re sp ect, I w o u l d li k e to p oint o u t t h at w e p ercei v e t h e Eu ro-A tlantic inte g ration of t h e co u ntrie s in t h e re g ion a s a s trate g ic o pp ort u nit y for ac h ie v in g m ore s ta b ilit y, b etter s ec u rit y an d p ro sp erit y. As a NATO m e mb er w e are d eter m ine d to contin u e to p la y an acti v e role in p ro m otin g t h e inte g ration p roce ss; - Th ir d l y, inten s if y in g t h e national effort s for p riorit y s tren g t h en in g of t h e s ec u rit y s ector s a s w ell a s a pp l y in g ne w for ms of b i lateral coo p eration w it h t h e B lac k S ea co u ntrie s for t h e fa s ter, m ore ef ﬁ cient an d m ore ﬁ nanciall y s o u n d i mp le m entation of j oint p ro j ect s. 1 02

In concl us ion, I w o u l d li k e to e mph a s i z e once a g ain, a s I h a v e d one on ot h er occa s ion s a s w ell, t h at to d a y t h e B lac k S ea re g ion h ol ds p ro m i s in g p otential for d e v elo pm ent of to u ri sm, tran sp ort, co mmunication s, ener gy connection s of all t yp e s an d ot h er tran s national p ro j ect s. It i s t h ro ugh e xp an d in g an d s tren g t h enin g B lac k S ea co o p eration t h at w e can e xp an d t h e o pp ort u nitie s for t h e re g ion an d tran s for m it into a k e y lin k, a b ri dg e b et w een t h e E a s t an d t h e W e s t, a nat u ral w ater“h i ghw a y” b et w een Eu ro p e an d As ia. Increa s in g t h e le v el of m ilitar y s ec u rit y in t h e re g ion, wh ic h w e w or k h ar d to ac h ie v e, w ill ine v ita b l y h a v e a p o s iti v e effect on t h e econo m ic p ro sp erit y of t h e co u ntrie s in t h e re g ion. E cono m ic p ro sp erit y i s lar g el y d e p en d ent on ener gy s ec u rit y – t h e to p ic t h at w e d i s c uss to d a y. Th an k y o u for y o u r attention. 1 03

F rie d ric h-Eb ert-S tift u n g R e g ional O f ﬁ ce S o ﬁ a International Conference BLACK SEA COOPERATION – ENERGY SUPPLY AND ENERGY SECURITY Soﬁa, October 13, 2006 D e s i g n an d p rint Graﬁmax Ltd. 1 04