EU interests in the Caspian Sea EU interests in the Caspian Sea Region including FDI and TradeRegion including FDI and Trade

Yelena KalyuzhnovaYelena Kalyuzhnova Director, TheDirector, The Centre for Euro-Asian Studies, Centre for Euro-Asian Studies,

The University of Reading, UK The University of Reading, UK

ECE/UNECE/UN Workshop Workshop “Trade, business and investment“Trade, business and investment

in a wider Europe”in a wider Europe”

7 April 20037 April 2003, , GenevaGeneva

ContentsContents

European Union: Dependence on Imports

Physical Infrastructure of the Caspian hysical Infrastructure of the Caspian

Region Region

EEuropean Investment in the Caspian uropean Investment in the Caspian

Energy Energy

EEU-Caspian Trade: The Example of GasTrade: The Example of GasEEU Energy Charter TreatyU Energy Charter Treaty

UPSTREAM PRESENCE

European energy companies involved in E&P in the Caspian

Source: Centre for Global Energy Studies, London

Transit RoutesTransit Routes

FragileFragile

Security remains a substantial problem Security remains a substantial problem

Finding alternate land-sea routes is a Finding alternate land-sea routes is a

difficult venturedifficult venture

CCaspian Regionaspian Region – Oil Pipelines – Oil Pipelines

Inflows of FDI in Caspian Region Inflows of FDI in Caspian Region Economies,1993-2001, mln. US $Economies,1993-2001, mln. US $

Source: UN/ECE Common Database, derived from national and CIS statistics.

-1000

0

1000

2000

3000

4000

5000

6000

1993 1994 1995 1996 1997 1998 1999 2000 2001

mln

. U

S$

Russia Azerbaijan Turkmenistan

Uzbekistan Kazakhstan

Structure of FDI in 2001, %Structure of FDI in 2001, %

0.22.6

40

7.15.3 6.8

1.70.8

11.68.7

4.4

10.8

0

5

10

15

20

25

30

35

40Ag

ricult

ureFo

od pr

ocess

ingOi

l & G

asex

tracti

onPip

eline

sTe

chnic

al ac

tivitie

sM

etallu

rgyTe

lecom

munic

ation

Cons

tructi

onM

oneta

ryint

ermed

iation Tr

ade

Healt

h, Ed

ucati

onan

d Pub

licOt

her

Kazakhstan

Source: Azerbaijan in XX Century, State Statistical Committee of Azerbaijan Republic. Baku, Statistical Yearbook of Kazakhstan, 2002 ; The Centre for Euro-Asian Studies.

0.87.4

66.1

8.0

14.6

2.5 0.4

0

10

20

30

40

50

60

70

Agric

ultur

e

Food

Pro

cess

ing

Oil &

Gas

Extr

actio

n

Manu

factur

ing

P&D

of Ele

ctrici

ty

Wate

r Pur

ificati

on &

Distr

ibutio

n

Cons

tructi

on

Azerbaijan

EBRDEBRD has interests in 13 energy-sector has interests in 13 energy-sector projects and an exposure of €650 mnprojects and an exposure of €650 mn

Source: EBRD database.

0

1

2

3

4

5

6

Azerbaijan Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan

0

50

100

150

200

250

300

Number of projects

Value of projects (€ mn)

€ mn

Principal Exports in Caspian Region Principal Exports in Caspian Region

EconomiesEconomies, , 20012001Kazakhstan

Chemicals5%

Other13%

Mineral products

58%

Ferrous metals24%

Tajikistan

Electricity12%

Cotton fibre11%

Other18%

Aluminium59%

Uzbekistan

Energy products

23%

Gold10%

Cotton41%

Other26%

Kyrgyzstan

Electricity16%

Other27%

Machinery11% Non-

ferrous metallurgy

46%

Turkmenistan

Textiles2%

Other15%

Oil&Gas80%

Cotton3%

AzerbaijanFood

Industry2%

Oil products

92%

Other6%

EUROPE’S GAS IMPORTSEUROPE’S GAS IMPORTS

Source: Centre for Global Energy Studies, London

EU ENERGY CHARTEREU ENERGY CHARTER

• Investment Provisions

• Transit Protocol

EUROPE IS THE NATURAL MARKET EUROPE IS THE NATURAL MARKET FOR CASPIAN OIL AND GASFOR CASPIAN OIL AND GAS

Source: Centre for Global Energy Studies, London

ConclusionConclusion The forthcoming EU enlargement will change the

energy landscape of the European continent and will have a significant implications for EU energy markets.

The opening of new EU gas and power markets to the east will produce main challenges as well as wide opportunities for investment and trade.

European energy interests in the Caspian region include: the involvement of European energy companies in the region and a growing interest in the Caspian region as a current and future source of energy for use in Europe itself.