VP Biden, PM Davutoğlu on Energy Security Issues

US Vice-President Joe Biden claimed Russia is using energy as 'a weapon' and urged European countries to diversify sources for the purposes of energy security.

At the Atlantic Council Energy & Economic Summit, Mr. Biden said that Russia must not continue to use its vast energy resources as a weapon. "From now on, Russia must come to terms in the energy game," Mr. Biden said at the event which took place in Istanbul on November 20-21st.

He also asserted that "Europe relies heavily on its energy imports. This dependence has created problems since the early 2000's. Russia must be a player in this energy environment with its large resources, but must play with the rules, not its 'own' rules."

Mr. Biden said: "Now, now, now is the time to act. What's happening in Ukraine only underscores the urgency."  Last month, Russia agreed to terms for restoring natural gas exports to Ukraine.

According to agreements between Russia, Ukraine and European Union, Ukraine is to pay $4.6 billion for Russian gas shipments to the country. The government of Ukraine may make a pre-payment to Russia for gas before December 1, said Ukraine's Energy Minister Yuri Prodan last week.

Europe has relied heavily on Russia for 33% of its total gas demand and 36% of its total net crude oil imports. Russia, on the other hand, relied on Europe for two thirds of its total crude exports and one third of its exports of refined products. Europe imported 167.2 bcm of natural gas from Russia in 2013, which generated export revenues of $57 billion for Russia's state owned gas exporter company OAO Gazprom.

Russia had cut off gas supplies to Ukraine in June over unpaid debts after Ukraine's Russia-friendly leader Viktor Yanukovych was ousted in February this year and Moscow's annexation of Crimea in March.

Ukraine represented about 8% in Gazprom's 2014 total sales and about 17% in its gas sales to Europe. The country was the second-largest market for Russian gas exports in 2013 in value terms, having consumed an estimated worth of $13 billion. Naftogaz of Ukraine was Gazprom's single-largest customer.

"We have been aware that this single source of energy has been a problem for a long time. But my message is not that Europe can or should do away with Russian imports," said Vice-President Biden.

He also said that the energy security is the precondition of a country's stability and prosperity, and also praised European countries for possessing a strong diplomacy of energy policies and conducting close cooperation with especially Baltic countries in creating alternative sources of energy.

Mr. Biden also highlighted that diversified energy resources need infrastructure projects. "We should admit that these projects require a long time to be realized and they are expensive. In that case the international cooperation and strong leadership is needed. European countries shouldn't take bilateral actions and must cooperate to secure their energy demands."

In early September, the International Monetary Fund published a document before its semi-annual World Economic Outlook, which highlighted the need for a $100 billion infrastructure push to jumpstart economies worldwide. The report also urged governments to examine where infrastructure investments could benefit longer term growth.

SOUTHERN GAS CORRIDOR 

Vice-President Biden said that Caspian natural gas will ship to Europe across Turkey via the Southern Energy Corridor Project, which will give Europe a strong hand to diversify its natural gas resources. "Currently, Turkey became a regional hub for oil exports; also in the near future the country will also become a natural gas hub. The deal between Baghdad and Irbil about oil revenue sharing gave hope to stabilize the markets," said Mr. Biden. He followed with: "Turkey's strategic position is more valuable than ever for energy supply security. Turkey is the only natural gas market which may grow rapidly in Europe. And also, we're ready to assist Turkey and Turkish companies wherever they need." 

Also discussed were Mr. Biden's discussions with Greek Cypriot leaders last month. "I was in Cyprus, where I became the highest ranking US officer visit to this country in last 50 years. I was there because I want to give them courage and hope to overcome difficulties in explore/invest in the energy sector in the divided island." He also said that cooperation between Israel, Turkey, Egypt, Greece, Cyprus and Lebanon may expand energy resources for the whole of Europe.

DAVUTOĞLU'S MESSAGE

Meanwhile, Turkey's Prime Minister Ahmet Davutoğlu called on Greek Cypriots not to engage in energy investments if it's owned by one side of the divided island. "If they try to invest and sell Cyprus's energy resources whether it’s wholly owned by one side of the island, we'll explore and invest in the same spot for the Turkish side of Cyprus," he said. "Energy should not be used as a weapon. Energy is a tool for peace. We should continue to talks with Greek Cypriots," Davutoglu said.

"Energy must be a catalyst for negotiations between Greek Cypriots and Turkish Cypriots. If negotiations continue at a slower pace, than Turkish Republic of Northern Cyprus (TRNC) and Greek Cypriots may set-up a committee to oversee investments in the region, which may result long standing peace between these countries. I'll talk about this new perspective next month with Mr. Samaras of Greece, when I go for a state visit to Athens, Greece," Davutoğlu said.

In late September, an energy consortium which led by Italy’s ENI and South Korea’s Kogas has begun exploratory deep-sea drilling off Cyprus for gas deposits. It’s the second block to exploratory drilling after discovery in 2011. US firm Noble Energy made the first find off the southeast coast in 2011 in the Aphrodite field (block 12), which is estimated to contain between 3.6 trillion and 6 trillion cubic feet of gas.

Nicosia plans to build a liquefied natural gas (LNG) plant at Vassiliko near the port city of Limassol, which would allow exports by ship to Asia and Europe. Cyprus needs to find more gas reserves to make a planned onshore terminal financially viable as it seeks to become a regional energy player. Cyprus has commissioned Noble, with its Israeli partners Delek and Avner, as well as France's Total, to carry out feasibility studies for a plant. Total, which is also looking for oil, will exploit two blocks from 2015. Cyprus is hoping to begin exporting gas, and maybe oil, by 2022.

Prime Minister Davutoğlu also said that Turkey would take all the necessary preconditions during Ankara's G20 presidency in order to secure the fair distribution of energy resources in the world. "Turkey is aware that energy security is the foundation of democratic societies."

Murat Tinas