THE SUMMIT OF THREE SEAS

Cooperation in the energy sphere is becoming an integral and important part of European policy. This was proved once again by the international energy security conference that was held in Vilnius on 10-11 October. The conference was attended by the leaders of Azerbaijan, Georgia, Latvia, Lithuania, Poland, Romania and Ukraine, as well as by representatives from 12 countries and leading energy companies of the world. The participants in the Vilnius forum focused on global challenges in the energy sphere, mutual cooperation between the main manufacturers, consumers and transporters of energy reserves, European energy policy and its "eastern dimension", prospects of energy dialogue between the EU and Russia, and cooperation between the EU, Caspian and Central Asian countries.

On the first day of the energy summit, representatives of relevant ministries from Azerbaijan, Georgia, Lithuania, Poland and Ukraine (the so-called "Krakow Five" - the first energy summit of these states was held in Krakow in May this year) signed an agreement on cooperation in the energy sector. 

The sides agreed to create and develop a commercially attractive corridor to transport hydrocarbon reserves from the Caspian Sea to the international market through Azerbaijan, Georgia, Ukraine and Poland, and to study ways of boosting the security of the transit network, including maritime freight transportation and pipelines to export hydrocarbon reserves from the Caspian Sea. We would like to draw your attention to the phrase in italics. Although Baku expressed its political support for the project, it links its real participation in it to its commercial profitability. Moreover, the sides also agreed to determine additional sources and develop routes of supplies and hydrocarbon transit.

One of these routes is a 250 km pipeline from Brody (Ukraine) to Adamowa Zastawa (Poland) which will connect the existing pipelines Odessa-Brody (from the southern branch of the Druzhba pipeline) and Poland's Adamowa Zastawa to another branch of Druzhba. From there the pipeline goes to the Plotsk and Gdansk oil refineries (the Gdansk oil refinery is on the Baltic Sea coast). If the connecting pipeline is built, it will connect the Caspian and Black Sea regions to the Baltic Sea and become a new route for the transportation of Caspian oil to Europe, which fits into the strategic task of ensuring the energy security of the European Union. 

EU funding for the project, which will cost about 400 million dollars, is being discussed at the moment. The planned date for commissioning the pipeline from the Black to Baltic Sea is 2012.

The important strategic significance of this project is explained by the fact that it might become a source of guaranteed supplies of Azerbaijani and probably, Central Asian oil not only to the countries through the territory of which the main route will pass (Georgia, Ukraine and Poland), but also to neighbouring Lithuania, Latvia and Belarus which can connect to the main pipeline as well. For example, Poland will be able to supply oil to the Mazeikiai oil refinery in Lithuania run by the Polish company PKN Orlen. The oil refinery has encountered difficulties since the accident on the Druzhba pipeline and the loss of Russian oil which they have to deliver by tankers, which is a lot more expensive.

It must be noted as well that the Odessa-Brody pipeline with a capacity of 9 million tons of oil per year, which was built in 2001, was laid as part of the system of Kazakh oil supplies to Europe through the Black Sea. But no-one wishes to use the pipeline. Since 2004, the pipeline has been used in the reverse mode - oil delivered from Russia by Druzhba is transported from Brody to the Black Sea. Kazakh President Nursultan Nazarbayev failed to attend the Krakow summit of the five heads of state - potential participants in the project. He was planning to attend the summit, but cancelled his trip due to Russian President Vladimir Putin's visit to Kazakhstan. Nazarbayev also said that "Kazakhstan is loyal to the idea that most of its oil, if not all of it, should go through Russian territory". In this regard, some Russian experts believe that there are no resources to fill the pipeline and point not just to Astana's position, but also to Russia's plans to increase the capacity of the KTK pipeline (an oil pipeline from Kazakhstan to Novorossiysk) from 31 million tons per year to 67 million tons, as well as to its determination to build a pipeline for 35-50 million tons of oil from Bulgarian Burgas to Greek Alexandroupolis, which will also make it possible to transport Kazakh oil to the Mediterranean Sea bypassing overloaded Turkish straits.

In other words, the political motives behind the Baku-Gdansk route are ahead of its economic expediency, these experts think. However, the implementation of the BTC project, which national leader Heydar Aliyev launched in much more unfavourable geopolitical conditions, shows that interested countries are quite capable of "getting this project off the ground" provided that it is commercially attractive to all its participants.

On the whole, the Vilnius agreement symbolizes the support of the "Krakow Five" for the Caspian-Baltic transport energy corridor, which is meant to become a strong alternative for energy supplies and boost the energy security of Eastern European countries. As far as Azerbaijan is concerned, the summit in the Lithuanian capital confirmed its steady reputation as a reliable partner in ensuring energy stability and cooperation in the European Union. Moreover, the "GUAM+" meetings held in Vilnius to mark the 10th anniversary of this organization gave a strong impetus to the strengthening of its international authority and positions, which is especially important in terms of implementing the promising initiatives of GUAM member states.