Iran-Europe Dialogue on Central Asia and Caucasia (CA

1
Iran-Europe Dialogue on Central Asia and Caucasia
(CAA)

• Abbas Maleki
• Roundtable on Iran and European Union
  Cooperation in Caspian Sea, Central Asia, and
  Caucasus
• Institute for Caspian Studies
• March 11, 2007

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Sources of Instability

• -Radical approaches to Islam
• -The lack of sustainable economic development
• -Energy and its Route
• -Effort to change the lifestyle of the peoples in
  the region
• -Corruption
• -Policies of dominated powers in the region
• -Ethnic violence
• -Drug Trafficking

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Radical approaches to Islam

• Different interpretation of Islam in the CAC is
  one of instability sources. Specifically, the
  extreme perceptions of Islamic culture as
  different groups like Hizbuttahrir are proposing.
  
• A rigid, radical and unpopular version of Islam
  which is very hard for the people to obey it.

4
Lack of sustainable development

• Total population of the CAC is 73 millions
• -68 of 8 million in Azerbaijan, under
  the poverty line
• -35 15 Kazakhstan
• -51 5 Kirgizstan
  
• -GDP/Capita
• -Tajikistan 180
• -Kirgizstan 270
• -Uzbekistan 360
  
• -Armenia 520
• -Azerbaijan 600
• -Georgia 630
• -Turkmenistan 750
• -Kazakhstan 1260

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Energy export is not very high

• Armenia 0.3 US billion Dollars
• Georgia 0.3
• Kyrgyzstan 0.5
• Tajikistan 0.8
• Azerbaijan 1.8
• Turkmenistan 2.7
• Uzbekistan 3.0
• Kazakhstan 9.1
• Compare with Saudi 135 and Iran 55 US billion

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Orchestrated efforts by West to change the
lifestyle of the peoples in CAC

• Activities of rulers to weakening traditions,
  customs
• Neglected NGOs
• Example Kazakhstan advertisement in IHT, Nov.
  12, 2003 title "Kz is the outpost of struggle
  against fundamentalism". Kz is the only country
  in the region in which Islamic opposition does
  not really exist. Religion has never played an
  important role in Kz, while Muslim organizations
  have been influential in neighboring Uz and
  Td..This means that the Kazakhs are catching on
  to Western lifestyle and values.
• The question is who is living with Kazakh
  lifestyle and values in future?

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Corruption

• There is no good governance in the region
• -Most of the Governments are totalitarian regimes
• -Most of the rulers are the former Secretary
  General of local Communist Parties.
• -Corruption Index shows
• -Azerbaijan is the 4th most corrupted
  country
• -Russia is the 7th
• -Kazakhstan is the 20th

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Energy in CAC

• Energy is one of the resources that could support
  the development
• But the geopolitics of pipelines is the key
  factor for the phenomenon of new dependency to
  other countries
• Russia is trying to dominate all of energy
  infrastructure in Eurasia

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Energy Routes at a Glance
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Middle East Sub Region
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Asian Identity
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(No Transcript)
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ECO (Economic Cooperation Organization)
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Iran and CAC

• Iran has shown a rational, modest and economic
  oriented model in the CAC.
• Irans activities for
• -Establishing ceasefire in Nagorno
  Karabakh in 1994.
• -Success to end the Tajik civil war is
  among them.
• -Iran was eager to see more cooperation
  among CAC, proposed them the membership of ECO,
  establishment of CASCO in 1992.
• -An observer in Shanghai Cooperation
  Organization
• -Road and Rail networks for landlocked
  countries

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IranA look at the energy sector

• Iran has very ambitious plans in oil, gas and
  petrochemicals
• Though the strategy on oil production capacity
  increase remains a key debate topic, major
  investments in this sector are inevitable
• The legal framework remains an issue, though slow
  changes are taking shape
• Irans focus in the next decade will be on gas
  and also gas-intensive industries
• Next important event Restructuring of NIOC and
  consequent corporatization of the energy sector
  companies.

Investments needed in Irans energy sector
2005-2020
Sector Investment Volume (in billion) Investment Volume (in billion)
Oil Oil 40
Gas Gas 45
Petrochemicals Petrochemicals 25
Power Generation Power Generation 20
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KTI
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Kazakhstan-Turkmenistan-Iran Pipeline

• Study in process in accordance with the Agreement
  on Joint Studies concluded between KazMunayGas,
  Total, Japan National Oil Corporation, and Inpex
• A Long-Term Export Option for Delivering Kazakh
  Oil to Asian Markets via Persian Gulf

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Caspian Oil Terminals and Neka
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Neka-Ray Old and New Pipeline (370 000 b/d)
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Irans Free Zones in the North
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North-South Corridor
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Great Central Asia Routes
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20
13.6
11
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Iran-Europe Energy Dialogue

• The gas pipeline from CA to Iran then Europe is a
  key project in trilateral cooperation among three
  regions.
• The study of the two routes from Iran to Europe
  via Turkey and Ukraine had been done.

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Energy

• Iran is energy giant, one of its feet on the
  Persian Gulf, another on the Caspian, with
  geostrategic advantages.
• Europe is surrounded by the sea of gas, most
  important of them Russia, Iran and Qatar.
• For Europe, the importance of CAC is
  dramatically increased, because member ship of
  each central or Eastern Europe countries to EU
  means a new demand for Energy.

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Energy (2)

• -Iran can decrease isolation of central Asia
  dramatically.
• Iran now imports gas from Turkmenistan to consume
  in the Northern part of Iran, as imports oil from
  Kazakhstan.
• Iran is end-user of the produced oil and gas in
  the CAC

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Potential New Supplies to Europe with
Diversification of Supply

• Caspian Sea region Azerbaijan, Turkmenistan,
  Kazakhstan, Uzbekistan
• Middle East region Iran, Iraq
• North Africa region Egypt, Libya

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Iran-Europe Energy Dialogue Restraints

• Freidman Muller has discussed, in the past with
  political motivation, Europe preferred to follow
  the Soviet gas pipeline instead of the cheap and
  costless Iranian gas. Now again, because of US
  extraterritorial rules like 1995 ILSA, the oil
  and gas companies can not invest more than 20
  million dollars in Iran's energy industries.

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World NG Consumption
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EU NATURAL GAS DEMAND SUPPLY OUTLOOK 2003 - 2025
Source EUROGAS Report 2004
6
31
Proved natural gas reserves at end 2006
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Sources of Natural Gas Supply - European Union
2030 Indigenous Imports 80
Production 20
2003 Indigenous Net Imports 51
Production 49
2002 Indigenous Net Imports 47
Production 53
14
14
18
19
49
53
12
12
3
6
Source EU-forecast, EU Energy, Issue 86, July
2nd, 2004
Source Eurogas
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Forecast of Gas Supply OECD Europe
Source Security of Gas Supply in Open Markets -
LNG and power at a turning point, Edition 2004
(OECD/IEA)
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Nabucco

• New gas supply route to Europe from
• Turkey to Austria
• via Bulgaria, Romania and Hungary

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Project Partners

• OMV
• OMV Gas GmbH, Austria
• MOL
• MOL Natural Gas Transmission Ltd., Hungary
• Transgaz
• S.N.T.G.N. Transgaz S.A., Romania
• Bulgargaz
• Bulgargaz EAD, Bulgaria
• BOTAS
• Botas Petroleum Pipeline Corporation, Turkey

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Nabucco corporate structure
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Missing link between giant gas sources (in bcm)
and potential markets
4,000
47,570
1,770
33,530
4,520
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Supply Sources for Nabucco
Azerbaidschan 10-14 bcm
Egypt
Iran 10-20 bcm
Iraq
8-10 bcm
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Nabucco Gas Pipeline Strategic Goals of Project

• Opening a new gas supply corridor for Europe from
  Middle East and Caspian regions
• Raise transit profiles of participating project
  countries
• Contribution to security of supply for partner
  countries and for Europe as a whole
• Strengthening the turntable position of Austrian
  pipeline grid and the Hub Baumgarten within the
  European network

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Feasibility Study Phase - Findings Technical Study

• Routing corridor defined
• Border crossings fixed
• Pipeline Diameter 56
• Distance 3,300 km
• Investment 4.6 bill.

Project is technically feasible
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Project Phases
Feasibility Study
Develop- ment
Constr. 1st step
2nd step
Operating Marketing
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US military around Iran
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Final thoughts...

• Central Asia and Caucasus are neighbors of Europe
  and Iran
• Europe is surrounded by sea of gas, Iran is one
  of them
• Divergence is important in energy supply
• Instability in CAC has impacts to the both sides
• Interpretation of Islam is a key factor in these
  areas.
• Irans path to the free world is Europe via
  North, during tight situation.