Energy Security

Stefan Wolff is a professor of political science and the director of the Center for International Crisis Management and Conflict Resolution at the University of Nottingham's School of Politics and International Relations. He is also an author and media commentator on international affairs.

DW-WORLD.DE: What is the strategic importance of the region in terms of energy security?

Stefan Wolff :The region is an important transit area of oil and gas from the Caspian Sea region, particularly for the EU, which, as a whole, imports around 50 percent of its energy, and imports are predicted to rise to 70 percent over the next two decades. Half of these imports come from Russia, which has been viewed with some unease in the light of Russia using energy as a foreign and security policy instrument. Even if this may not, yet, be directed directly against the EU, the Union would be affected by events similar to the crisis between Russia and Ukraine at the end of 2005 when Russia cut off supplies to enforce a new pricing policy on Ukraine

In this context the south Caucasus acquires importance for the EU energy market as an alternative supplier and a transit area. However, even this needs to be put into perspective: Caspian Sea oil reserves make up around 3 percent to 4 percent and gas reserves 4 percent to 6 percent of proven world reserves. Nonetheless, European and US investors have become heavily engaged in exploration, extraction and pipeline infrastructure, notably the Baku-Tbilisi-Ceyhan pipeline, which has a current volume of 1 million barrels a day, and the Baku-Tbilisi-Erzurum gas pipeline, which runs alongside the Baku-Tbilisi-Ceyhan pipeline to the Turkish city of Erzurum. From there, the Nabucco gas pipeline project is supposed to extend supplies to the EU, especially Bulgaria, Romania, Hungary and Austria. Construction on the Nabucco line is to begin in 2010, and would further benefit from a planned trans-Caspian pipeline integrating at least part Turkmenistan's reserves. Another, relatively low-capacity, pipeline is the Baku-Supsa/Batumi pipeline with a daily capacity of around 250,000 barrels.

Is there any great risk that this localized skirmish may turn into the next Oil War or Cold War?

The current violence in Georgia has potentially longer-term implications on the sustainability of some of these projects and may yet again raise the chances of alternative transport routes either through Russia or through China or Iran. None of these are particularly attractive to the EU.

Going through Russia would simply increase Russian leverage by consolidating the Kremlin's hold on post-Soviet energy resources in terms of both exporting and importing countries. China, in all likelihood would be a major consumer rather than a mere transit area, and the logistics of oil and gas imports via China would be prohibitively expensive for European consumers. While Iran would not be a consumer in the same way that China would be, there is the issue of tensions between Iran and the West and the fact that exports through Iran would add to the dependency on stability in the Persian Gulf and the Middle East.

However, the relatively limited reserves in the Caspian Sea make it seem relatively unlikely that violence in Georgia will cause a new oil war. It does, however, put a spotlight on the role of Russia and is quite likely to lead to a worsening of relations between Russia and the West in the short term. But I don't think that we are on the brink of a new Cold War.

As much as Europe may depend on Russia as a supplier and transit country for much of its energy needs, as much does Russia depend on Europe as a market and supplier of the very technology upon which its current oil and gas revenues are built. So the dependency is mutual, and this creates conditions for a cold peace rather than a cold war.

Finally, the violence in Georgia at the moment is really not about oil. It does, however, highlight the interdependence between local conflicts and global energy security. Moreover, the possible threats to a transit route through Georgia have been well known since the planning stages of any of the current pipelines and pipeline projects, so the potential for disruption, and the costs associated with it, had to be calculated at the time of making a decision about these projects.

Would the US ever consider intervening militarily to secure the South Caucasus oil pipelines?

At the moment, this is extremely unlikely. Militarily, the US is overstretched as it is and unlikely to risk a major military confrontation with Russia. There is a chance, though, that as part of a cease-fire agreement between Russia and Georgia, an EU peacekeeping force will be dispatched to Georgia. Part of its mandate -- formally or informally -- could be protecting Western investments and interests in the region, including the security of pipelines.

How likely is it that Russia could take over the south Caucasus region through which the oil pipelines to the West run; and what effect would this have on the power balance in Europe and Central Asia?

First of all, I don't think that Russia intends to take over the South Caucasus region. This would be a very expensive military adventure, and a long-term mistake. Russia has found it impossible to maintain control in Afghanistan in the 1980s and had extreme difficulty asserting itself in Chechnya. This is not to say that Russia will easily relinquish the control that it now has gained in Georgia, but it will do so most likely through proxy forces and symbolic troop deployments.

The balance of power in the post-Soviet region has not shifted either, what has changed is that anyone who doubted Russia's resolve to establish and defend its role as the regional hegemon has had these doubts removed in an unequivocal way. The same goes for Europe: the EU dependency on oil and gas from the Caspian Sea suppliers stands at around 5 percent, not insignificant, but at the moment not decisive either. The question is more about the long-term viability of the south Caucasus as supply source and transit area, but even this has to be seen in the context of the relatively low total proven reserves of the Caspian Sea region.

Europe depends heavily on the oil coming through the region as it bypasses Russia, which has shown it has no qualms about shutting off the oil in the past. How should the EU respond to any threat to its energy supply brought on by Russian aggression?

We have to consider different scenarios here. At the one end of the spectrum, Russia could threaten a total cut-off of energy supplies to the EU, but this would damage Russia as much as the EU as it would lose one of its main sources of revenue. At the other end of the spectrum, Russia would prove to be an absolute reliable supplier with trade and political relations totally separate. This is equally unlikely given that the Russian state controls both energy sources and pipeline infrastructure.

Most likely Russia will use its pricing policy as an instrument of political pressure, and the EU and Russia will prevent each other from gaining a foothold in each other's energy markets. Western companies will be prevented from acquiring any significant stake in Russia's oil and gas companies while Russian companies will be prevented from investing into the EU energy market. In the long term, however, the EU is better placed than Russia: it can continue to explore alternative oil and gas supply sources, especially from North Africa and the eastern Mediterranean, as well as alternative energy sources, including renewables and traditional sources such as coal and nuclear energy. We must not overstate the danger of a Russian "aggression" or assume worst-case scenarios of an energy war between the EU and Russia.