Natural Gas and the ‘Lesser’ Caspians: How New Players Might be Good for Everyone

Energy: what was once a largely single-resource/two-state controlled industry has given way to other resources of significance. In turn, this has also given rise to other states as major players in the arena. Given the increased need for energy among states, there has been greater collaboration and cooperation among states with regards to energy resources.

This is well exemplified by the US’ early and continued energy relationship with Saudi Arabia following World War II. Saudi Arabia may have drastically different security and human rights priorities than the US, and yet they both have been longtime energy partners that rely on one another heavily. Relationships of this nature have grown in frequency since then and as a result the Caspian region has emerged as a major player in energy security geopolitics.

By and large oil has been, and for the most part still is, associated with energy security. So long as a nation has access to an amount of oil commensurate with its needs, it is energy secure. However, a new player in the energy resource arena has begun to emerge: natural gas. Though natural gas has been around forever, it has taken on a position of importance in the struggle for energy security only recently. Natural gas can be used for everything from heating, cooking, and electricity generation. In fact it has many of the same applications as oil. The Caspian region is starting to exploit this resource. The region is one of the oldest oil-producing areas in the world and, though it continues to play a significant role in oil production, the control of energy in the region has begun to shift largely as a result of natural gas. Oil production and export from the region has primarily gone through Russia (or the USSR) throughout history. Caspian states, however, have discovered that they are home to some of the largest natural gas reserves in the world and now are looking to bypass Russia entirely to export it to the European Union (EU). This is significant for two reasons: first, it would shrink Russia’s impact as a controller of energy resources worldwide, especially in the EU. Second, it would drastically raise Kazakhstan, Azerbaijan and Turkmenistan’s profiles over energy resources and security.

Russia’s historical dominance over the Caspian region gave it significant control over the global energy market. It is estimated that 17 percent of the world’s oil comes from the Caspian (primarily Iran and Russia) and it is largely responsible for providing the EU with energy security. The shift away from Russia by other Caspian states, however, erodes Russia’s stranglehold on energy resources in the region and gives way to exciting new players and geopolitics. Caspian states have already begun to break away from Russia in their bid to export natural gas to the EU. The process has been underway since the dissolution of the USSR, with concrete realization in the late 1990’s. But ultimately it was always hindered due to strong opposition, largely from Russia and Iran, which vehemently opposed the any independent Caspian projects from the other littorals. In the mid-2000s, once the Russia-Ukraine gas dispute began in earnest, the project began to gain more traction. There was a shift in allegiance between the littoral nations and renewed interest in the project sprang back to life. Since then, massive headway has continued to be made, largely to the dismay of Russia and Iran.

The Russia-Ukraine dispute can truly be seen as the point when the lesser Caspian littorals decided to separate themselves from Russia as far as energy resource export is concerned. This is not to say they have separated themselves completely, as there is still collaboration on energy resources in the area. However, the dispute has led to Russia and Iran being excluded from the southern gas corridor project, which is expected to become fully operational by 2020 and supply much of the EU with natural gas. This is a boon financially for the nations involved, but perhaps more importantly, it creates a major geopolitical shift for those lesser littorals in the Caspian. States such as Turkmenistan, Azerbaijan and Kazakhstan, who have historically had decidedly smaller stakes in the energy sector, stand to gain significant traction by building and remaining in control of this corridor without major Iranian or Russian influence/interference. This can only serve to strengthen their diplomatic ties with the EU while simultaneously weakening Russia’s and elevating their status as legitimate players in energy geopolitics. Russia and Iran have opposed the pipeline repeatedly, with Russia playing a far more active and vocal role in the opposition than Iran. Throughout the last decade and a half, Russia has thrown virtually every piece of oppositional ammunition at the construction of the pipeline. Its two primary tactics have been to oppose it environmentally and by way of old treaties.

The treaty option has been the strongest oppositional tool used. Specifically, Russia has been using the treaties signed by Iran and the Soviet Union in 1921 and 1940 to threaten the other Caspian states. They have pointed out that the treaties are still in effect and that without support for the pipeline from all littoral states, any construction in the Caspian Sea would be illegal. There is some disagreement over whether these treaties still hold any legal bearing today. Next, Russia leveraged the environment in an attempt to oppose the project. According to Russia’s Natural Resources Ministry, pipelines along the Caspian Sea floor would be environmentally unacceptable. Aside from the fact that anytime a pipeline is placed in a body of water it has some environmental risk, this was clearly an attempt by Russia to try and generate international opposition to the pipeline. This is of course somewhat ironic given Russia uses similar environmentally-concerning pipeline routes. Evidently none of these attempts have had much of an impact on the project overall as it is still well underway. There is no doubt that Russia and Iran spent such a considerable amount of time opposing the pipeline due to the fact they knew its construction set a bad precedent for their continued dominance in the local energy sector. If former Soviet states can break away from Russia economically, then perhaps they can break away in yet other ways in the future. The more these lesser littoral Caspian states strengthen diplomatic bonds with Western-leaning nations, the less reliant they are on Russia. The further Russia is from controlling larger amounts of energy, the weaker its position in terms of geopolitics, something it considers anathema to its international security profile and agenda.

Moving forward, the lesser Caspians will gain significant respect and authority in their development and control over future energy. This alters the geopolitical arena enough that other states around the globe need to take notice, though this awareness so far has been slow. It allows the Caspian, minus Russia and Iran, to be yet another option when it comes to building diplomatic ties and securing access to energy now and in the future. Despite the fact that the amount of natural gas they plan on moving may not radically alter the geopolitical arena overnight, there is opportunity to move enough in the future that could make a major impact. More importantly, this gives the EU a second option for energy procurement, which increases its energy security and also gives it the option to slowly cut ties with other ‘problematic’ providers like Russia. Perhaps the most interesting point of this entire development is Russia’s complete lack of desire to do anything but threaten verbally and act diplomatically. To date the nation has not taken any physical action to impede the pipeline and it has also continued to maintain trade and economic ties with the lesser Caspian nations it is protesting against. Despite having divergent views on the pipeline and actively attempting to impede it diplomatically, Russia seems unwilling to militarize the situation, something that deserves at least begrudging respect and acknowledgement. Perhaps this is a potential sign of building diplomacy over military solutions, which would be a global plus for the entire international community. If Iran and Russia realize they must recognize challenges to their energy dominance with only a need to work with other Caspian nations, even though they do not completely agree with them, then a critical future region of the globe has a chance to remain stable and at peace. In this case, maybe the entrance of new players into the arena doesn’t have to signal the start of a new bloodbath or new geopolitical tension.

Troy Baxter

Troy Baxter is currently a Master’s Student in Bellevue University’s International Security and Intelligence Studies Program in Omaha, Nebraska. He received his Honours Degree in Criminal Justice and Public Policy from the University of Guelph in Ontario, Canada in 2013.

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