THE GEOPOLITICAL DETERMINANTS OF ENERGY SECURITY

7/24/2019 THE GEOPOLITICAL DETERMINANTS OF ENERGY SECURITY

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Management and Socio-Humanities

THE GEOPOLITICAL DETERMINANTS OF ENERGY SECURITY

Pavel BUKA*, Sylwia Wanda ZECHOWSKA**

*Armed Forces Academy of gen. M. R. tefnik, Liptovsk Mikul, Slovakia, **Matej Bel University,Banska Bystrica, Slovakia

Abstract: In terms of energy security, geopolitics manifests in the dynamic and static factors of spatial

distribution of energy resources, which in reality comes down to the interplay among the regional energy

supply and demand centers and the manner in which the geographical contributors affect both state and

non-state actors in their pursuit to achieve energy security goals. On account of the fact that the centers

of supply and the centers of demand do not correlate, arises the issue of transit routes security. Yetanother geopolitical determinant of energy security is closely related to the characteristics of oil and gas

markets and this one is twofold; first, the oil market is global and the gas market has been since the mid

2000s developing towards its globalization too; second, crude oil and natural gas are fungible

commodities, which means that they are fully exchangeable or replaceable.

Keywords:emotion management, emotional rules, organizations.

1.INTRODUCTION

In its classic meaning, geopolitics can beunderstood to be a study of state as a

phenomenon analyzed within its spatialgeographic environment. From this analytical

perspective, the state was considered not as aseparate agent but rather as a component of a

broader international system. It was RudolphKjellen, a Swedish lawyer and scholar whofirst coined the term geopolitics in 1899 toillustrate and explain the geographicalendowment of a given state as having a

decisive influence on its potential of power (Tuathoil, 2006). Kjellen defined geopolitics asthe science which conceives of the states as a

geographical organism or as a phenomenon in

space (Dodds, 2005: 28). However,geopolitics as a discipline of study was fullydeveloped by a British geographer, HalfordMackinder and an American navy officer andstrategist Alfred Thayer Mahan. Those earlytheorists of this intellectual field had atendency to perceive geopolitics through the

lens of geographical reasoning which reflectedthe states power to take actions on the globalarena (Dodds, 2005).

Sir Halford Mackinder still occupies aprominent position among the scholars ofgeopolitics as a theory and policy and hisunquestionable contribution to thedevelopment of geopolitical thinking isfrequently attributed to the fact that his ideasto a greater or lesser extent influencedacademics and politicians throughout the 20thcentury. Mackinders Pivot-Heartland theoryarticulates a standpoint on international

security that transcends the challenges of a

particular period (Gray, 2004 : 9). On theother hand, his theories were also subject to

bitter criticism because of Mackindersfollower, Karl Haushofer who paved their wayinto the Lebensraumpolicy of Nazi Germany(Fettweis, 2000).

Notwithstanding the shortcomings of theearly geopolitical thought, the contribution ofthe pioneers of the method of analyzinginternational relations cannot beunderestimated. As time showed, by means ofextrapolating past events, Halford Mackinder,

Nicholas Spykman, Alfred Thayer Mahan, or

finally Edward Luttwak envisioned numerousfuture international developments like forexample the creation of NATO, the end of

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The geopolitical determinants of energy security

Cold War, or the transition of geopolitics intogeo-economics (Sempa, 2009). The popularityof geopolitical thought was again brought to arevival in the late 20th century by NationalSecurity advisor and Secretary of State, HenryKissinger with the publication of his seminalwork White House Years (1979) in which healmost equated this concept with a realistschool of thinking applied to international

politics (Gray and Sloan, 2005). In Kissingersown words geopolitics is an approach that

pays attention to the requirements of

equilibrium in international politics(Kissinger, 1979: 714). Interestingly,

Kissingers approach was to a great extentcompatible with the prevailing commonunderstanding of geopolitics. In the general

perception, geopolitics translates into theimpact of a states geographical position on itsforeign policy as well as into the relations ithas with other states; it also manifests in thestrategic value of such aspects of a statesspatial location as the access to naturalresources or sea lanes. In the often cited phrasecoined by Napolon Bonaparte: La politiquedun tat est dans sa gographie

(Mamadouh, 2009).

Fig. 1 The Graphical Representation of Halford Mackinders Pivot Area. Source: The GeographicalJournal, Vol. 170, 4 December, 2004.

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In the contemporary geopolitical thoughtmuch emphasis is put to the fact that thehitherto traditional factors such as territories or

boundaries gradually lose their relevance;instead, the economic contributors acquire

substantial critical mass. As a corollary of theabove, the international political environmenthas become subject to economization and inthe last decade of the 20th century, rivalry

shifted towards the control of naturalresources, especially energy resources, as wellas the control of international trade. Themodern economic structures and mechanismsin tandem with the growing importance of

multinational corporations as global actorstransformed the geopolitical thinking into geo-economic thinking, whereas the newlyemerged world order can be considered as pax


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oeconomicana. Citing Francis Sempa:geopolitics is about perspectives it is about

how one views theworld,after the end of theCold War the perspectives of global actorsshifted and so shifted geopolitics (Sempa,2009: 4). That is all the more reason why geo-economics has become one of the dominantinstruments describing and analyzing therelationship between economic and politicalactivities and geopolitical strategies in thecontext of the international environment.Contrasting geopolitics and geo-economics,Edward Luttwak explains that in the latter onethe conventional military potential is replacedwith investment capital accumulated and

controlled by the state, whereas foreignmarkets penetration substitutes militarypresence and diplomatic activities (Luttwak,2000). The added value of the geo-economic

perspective lies in that it better reflects the 21stcentury reality and that it offers a modernanalytical outlook on the world order in whichthe regional geo-economic powers compete fordomination and influence.

2. THE ENERGY SECURITY

In terms of energy security, geopoliticsmanifests in the dynamic and static factors ofspatial distribution of energy resources, whichin reality comes down to the interplay amongthe regional energy supply and demand centersand the manner in which the geographicalcontributors affect both state and non-stateactors in their pursuit to achieve energysecurity goals. For example,

The corollary of the fact that the oil market

is global in scope is that any event whichoccurs in one part of the market affects all theother parts. An example illustrating such aninterrelation may be a worldwide rise of oil

price in the aftermath of a disruption eventtaking place in the Persian Gulf (Joff, 2007).In light of the distribution of global oil and gasresources, energy security has both structuraland political aspects. According to the earlygeopolitical theories of Halford Mackinder, thelandmass of Eurasia and the resource self-sufficient heartland correlating with theterritories of Russia was a subject ofunrelenting interest of the maritime powers of

Great Britain and the United States. However,the history of the second half of the 20 thcentury demonstrated an opposite course ofevents. Contrary to Mackinders assumptions,it was the Soviet Union that attempted toincorporate new regions under its sphere ofinfluence and take control over the globaltrade routes in Europe and the Middle Eastduring the Cold War era. While Europe was

protected by NATO, the Middle East, with themore and more limited power of the decliningBritish Empire, was prone to become anotherarea of rivalry and conflicting interests.Finally, the complex nature of the internaltensions of the Middle East states themselves

added to the long standing political volatilityof the region and had a decisive impact on theUnites States assuming the role of a regionalguarantor of stability. It is worth noting herethat the security of supply is of lesserimportance because it is in the vested interestof the producer states, heavily dependent onoil or gas rents, to secure the continuity ofsupply. What really matters is controlling thestability of oil prices by means of moderatingthe local or regional tensions (Joff, 2007).

Therefore, the US, for decades the largest oilconsumer, backed the Middle East states,especially Saudi Arabia since the post WorldWar II era. Today the situation is differentsince the majority of its oil imports comesfrom states outside the Middle East according to 2010 data compiled by the USEnergy Information Agency the top five

sources of US crude oil imports for November

2010 were Canada (1,975 thousand barrels

per day), Mexico (1,229 thousand barrels per

day), Saudi Arabia (1,119 thousand barrelsper day), Venezuela (884 thousand barrels per

day), and Nigeria (806 thousand barrels per

day)(EIA, 2011). Nevertheless, its heavy oilimport dependence makes the US particularlyvulnerable to any adverse events influencingthe security of supply to global oil markets.Hence, the American foreign policy has beenfor decades engaged in promoting globalenergy security (Bradshaw, 2009).

The concentration of the biggest oilreserves in the Middle East has always madethis region an arena of internationalcompetition for resources and recurring shifts

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in the regional balance of power. The etiologyof the tensions in the Middle East andespecially in the Persian Gulf is deeply rootedin the British and French partitioning of theregion which took place after the First WorldWar and the collapse of the Ottoman Empire.Consequently, from 1918 on, the region

became a contestable area where differentsuper powers vied for influence. Until the endof the Second World War the dominant

presence in the region was marked by theFrench and the British super powers. Later on,the Cold War competition for spheres ofinfluence between the West and the East alsoaffected the Middle East where the Soviets

supported the post-colonial countries of theregion and recognized the governments ofEgypt, Iraq, Syria and Algeria when nationalistgroups succeeded in ousting their oldmonarchies (Sorenson, 2008). It goes beyondany question that one of the major reasons whythe competition for spheres of influenceintensified considerably was the discovery ofrich oil fields in Persia in 1908, and later in the1930s in Saudi Arabia and other Persian Gulf

countries. With the 1950s withdrawal of theBritish and French from the region and withthe new independent states in the regionforging alliances with the Soviet Union, the

presence of the US in the Middle East politicallandscape became essential and more vivid. Inthe 1950s, the US gradually became the

predominant power securing the stability ofthe region in its efforts to support the allymonarchies of Saudi Arabia, Jordan, Iran andthe Emirates (Lewis, 1997). While keeping inmind the growing importance of the petroleumindustry worldwide, a brief glance at the map

below illustrating the disproportionateendowment of world petroleum, suffices to

realize why the access to the Middle Eastresources has become a top strategic priority inthe last century. Figure 2 constitutes aninstructive illustration of the mismatch

between the regional centers of production andconsumption between of crude oil. Therelative size of the particular countries in theinfographics proportionally represents thelevel of their oil reserves.

Fig. 2 The Distribution of World Petroleum Reserves, Source: http://www.environmental-action.org/drilling-deeper, data taken from BP Statistical Review, 2004 and EIA, 2004

Considering the dynamic factor of energysecurity geopolitics, it manifests in the securityof oil and gas transit from the producing to the

consuming countries. The two modes oftransport i.e. by maritime tanker fleet and bypipelines are highly problematic because of

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http://www.environmental-action.org/drilling-deeperhttp://www.environmental-action.org/drilling-deeperhttp://www.environmental-action.org/drilling-deeperhttp://www.environmental-action.org/drilling-deeper


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physical geography constraints. In terms ofmaritime transportation, geographicconstraints are frequently associated with theso called chokepoints defined as narrowchannels along widely used global sea routes

which are a critical part of global energy

security due to the high volume of oil traded

through their narrow straits (IEA, 2008).Being locations that limit the capacity ofcirculation which cannot be easily bypassed, if

at all, the chokepoints are exposed to therisks of interruption or military interdiction(Rodrigue, 2004: 359; Joff, 2007: 3).Interestingly, chokepoints are also consideredto be vital assets so accessing them must be

secured by some established institutionalcontrol which assumes the form of multilateralagreements regulating the usage of a given

passage as well as settling potential disputes.With the expansion of international trade andmaritime circulations, a number ofchokepoints became key strategic locations inthe world as uninterrupted distribution of oil iscritical to guarantee that its supply meetsdemand. Taking into account the fact thatworlds distribution of oil is characterized by

unique geographic features, the increasingimportance of the chokepoints cannot beoverstated. In terms of figures, an approximateannual volume of oil maritime transit equals1.9 billion tons which accounts for about 62%of total petroleum production. The remaining

part is shipped by pipelines, railway or roadhaulage over smaller distances. The dailyfigures of oil tanker shipments amount to 100million tones, almost half of which departsfrom the Middle East with the point ofdestination in Japan, the US and Europe(Rodrigue, 2004). The producing andconsuming shipping lanes, chokepointsincluded, are presented in the 1stAnnex. The

major global oil transit chokepoints identifiedby the IEA, the US DOE EIA and by LehmanBrothers Global Equity Research correlate tomuch extent and comprise the Strait ofHormuz, the Strait of Malacca, the SuezCanal/SUMED Pipeline, the Strait of Bab elMandab, the Bosporus and Turkish Straightsand the Panama Canal. Table 1 belowcompiles data describing the 5 key globalchokepoints in oil transit in order of theirimportance.

Table 1 Global Chokepoints in Oil Transit, Source: Own, data taken from Lehman Brothers GlobalEquity Research, 2009 and US DOE EIA, 2010

Chokepoint

Total

global

demand

%

Capacity

M bbl/dDestination

Flows in

2009

M bbl/d

Geographical

location

the Strait ofHormuz

20 17 Europe/US/Asia 15.5

Between theGulf of Omanand the PersianGulf

the Strait ofMalacca 18 15 Asia 13.6 Between Malaysiaand Singapore

Suez CanalSUMED Pipeline

5 4.5 Europe/US2

(data for2010)

Links the Red Seawiththe Mediterranean

the Strait of Bab elMandab

4 3.3 Europe/US/Asia 3.2Links the Red Seawith the ArabianSea

the Bosporus andTurkish Straights

3 2.4Western/Southern

Europe2.9

Links the BlackSea with theMediterranean

In the last decades, the geographicalfeatures of energy supply and demand have

been subject to transformations on account of

the demographic and economic changesoccurring both in the OECD industrializednorth and non-OECD global south (Bradshaw,

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2010). But, historically, the unevendistribution of global resources of oil andnatural gas not correlating with the regionsrepresenting the biggest demand for theseenergy carriers, has always been the cause offierce competition among states for access tothe resources which in turn lead to theengagement of the US in the Persian Gulf, ofRussia in Central Asia and more recently toChinas presence in African oil producingcountries and in the South China Sea. Theinclusion of China and India to the energymarkets as new global consumers of oil andgas at the turn of the 20th and 21st centuriesfurther complicated the already challenging

patterns on the map of energy resources supplyand demand.

3. THE CHINA CASE

From the 1990s on, Chinese authoritieshave come to realize that the hitherto strategyof the countrys energy self-reliance isillusionary and that soon the increasingdependence on the imports of energy carriers

will become a stark reality. Until the 1980swhen the countrys economy was liberalized,China exercised the policy of isolating itselfand relying on domestic energy supplies but inthe last decade of the 20th century it becameclear that the exponential growth of Chineseenergy demand could no longer be satisfied byits domestic supplies (the Economist, 4thAugust 2007). Although China attemptedcertain activities aiming at the diversificationof energy supplies, the possible options turnedout to be quite limited. Frequently described asstrategic or mercantilist, Chinas approach toenergy policy partly results from thegovernments efforts to maintain control over

the whole energy sector through the ownershipof state energy companies as well as wholesaleand retail prices of oil and gas products. Indoing so the Chinese government tries tosecure employment in its strategic industriesand progressively, once Chinese energycompanies expand overseas to provide furtheremployment opportunities for its labor(Andrews-Speed, 2006).

Fig. 3 Chinese Crude Oil Imports, Source: Changing Climates: Interdependencies on Energy andClimate Security for China and Europe, Chathamhouse Report November 2007

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Considering the international dimension ofChinese energy policy, the main emphasis is

put to the diversification and security of oiland gas supplies as major Chinese concernsrelate to the possibility of physical disruptionsof oil supplies from the Middle East region.With a view to securing long-term supplies,China signed in the late 1990s exploration andsupply agreements with Saudi Arabia, Iran,Angola and Russia backed with diplomatic oreconomic measures such as military initiatives,technology transfer or construction services.Interestingly, Chinas energy importsencompass predominantly crude oil instead offinal oil products. The reasoning behind such

preference is that domestic refining allows formaintaining jobs in the Chinese oil sector, italso allows for the state regulation of oil pricesand finally for fostering foreign investments inChinas refining facilities (Andrews Speed,2006). Since 1993, Chinas National OilCompanies (NOCs) have been aggressivelyacquiring energy assets in all major oil

producing countries. In certain regions,especially in the African countries, Chineseinvestors are perceived as strategic partners

supporting the local underinvested economiesas they assumed a non-interference approachin terms of investments and foreign assistanceactivities positioning themselves aspromoters of south-to south cooperation

(Hodd, 2008: 50).On the other hand, international

governments and NGOs strive to pressure theAfrican regimes to respect human rights, toimprove the quality of life of their people andutilize the possibility of oil revenues to

diversify their economies and developessential infrastructure (Bradshaw, 2009). Theobjections of Western governments raisedagainst Chinas presence in Africa frequentlyquote the examples of Sudan and Angolawhere Chinese oil revenues fill the coffers ofcorrupted oppressive regimes violating humanrights. Another thing is that Chinese NationalOil Companies (NOCs) in their pursuit of newoil supplies do not hesitate to make deals withstates which antagonize the US, namely Iranand Venezuela.

In case of Iran, China has been steadilyincreasing its oil imports from that producer

since the second half of the 1990s to achieve adecade later the position of Teherans leadingmarket for oil exports. Apart from theeconomic rationales, the additional politicaland strategic reasons behind the close relationswith China are more than clear, in the opinionof Leverett and Bader: As Teheran comesunder increased international pressure over its

nuclear activities, the support of a permanent

member of both the UN Security Council and

the International Atomic Energy Agency

Board of Governors provides much needed

international political power. Given Chinas

history of supplying arms and sensitive

military technology to Iran, Teheran expects

Beijing to play such a role again Oil andgas deals that Iran has concluded with China

have a distinctly strategic quality to them; they

seem intended to ensure access to an

important export market and bolster a

developing political relationship. (Leverettand Bader, 2006 : 194)

With regard to the countries whichemerged after the collapse of the Soviet Union,Kazakhstan, Uzbekistan and Turkmenistan, the

presence of Chinese investors is welcomed as

a viable counterbalance against Russiancontrol over their national energy assets andthe access to the global energy market.Chinese investments into the pipelineinfrastructure offers the Central Asia states anopportunity to reduce their dependence onRussian transport routes; from the Chinese

perspective, agreements with Central Asiacountries concerning the construction of

pipelines enable Beijing to effectivelydiminish its reliance on international oil sea-

lanes from the Middle East (Chatham House,2007). Chinas growing political activity in theregion of Central Asia was conducive to theformation of the Shanghai CooperationOrganization (SCO) in 2001. With theoverarching objective of uniting China, Russiaand the Central Asian states, the core activitiesof SCO focused on the issues of terrorist andseparatist threats as well as energy policy andinfrastructure development. Some internationalcommentators, suggest that Chinas major

priority within the organization is lobbying forturning the ancient Silk Road in Central Asiainto an Energy Road (Mller-Kraenner,

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2008). Last but not least, Chinas policy inEast Asia manifests in fierce competition withJapan and South Korea for the access toenergy resources. The relations between Chinaand some of its neighboring countries have

become characterized by territorial disputesover prospective offshore oil and gas fields.On the other hand, Chinese relations with

South and South East Asia, especiallyIndonesia and Myanmar are far less tensesince China has traditionally importedsubstantial volumes of oil from that region.What is more, Beijing regional energy strategyinitiated activities leading to the coordinationof Chinese and Indian investments of energycompanies overseas (Mller-Kraenner, 2008).

Fig. 4 Chinas Crude Oil Imports by Region in 2006, Source: World Energy Outlook 2007

Chinas engagement on the Africancontinent is particularly vivid in terms of thecountrys cooperation with Sudan and Angola.The International Monetary Fund estimatedthat Chinese trade in the region might total 100

billion US dollars by 2010. Further aid in theform of preferential loans, credits or debtcancellation pushed other donors aside makingChina the most active foreign investor, traderand customer for oil and other naturalresources in the region. Although Chinas

policy of compromising on democraticprinciples or human rights to secure itseconomic interests, and in particular access toenergy resources, has aroused bitter criticismon the international arena, its developmentalaid is unprecedented and unlike otherinternational investors, the Chinese provide a

pragmatic approach based on mutual benefitsand reciprocity instead of imposing western

b, 2006).standards of governance (Trau

1

1The section on China is a revised excerpt from a paperpresented by the author at 2009 ICYS Conference,Prague

As regards the geopolitical determinants ofenergy security from the European

perspective, the dwindling EU 27 domesticproduction, able to satisfy merely less thanhalf of its energy demand, entails increasingimport dependence; Figure 5 below illustratesthese trends. On top of this, the EU energysituation is further complicated by the fact thatthe member states represent various energymixes and have to cope with their own energysector challenges. The series of complex

energy issues Europe faces originate fromeconomic and geopolitical developments.Within the EU structures, the processesinvolve the recent enlargement incorporatingCentral and Eastern European states in tandemwith the ongoing market integration. In termsof the external environment, Europe is alsoaffected by the altering balance among theleading global powers of the US, Russia, Japanand China as well as by the evolving structureof global oil market (Correlje and van derLinde, 2006). Interestingly, until the mid2000s, the EU and its member states were ableto exercise an approach characterized by the

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separation of energy issues from political andstrategic aspects relying predominantly onmarket forces regulation of energy supply anddemand. However, with the exponentialgrowth of energy demand in the emergingeconomies of China and India coupled withquintuple rise of oil prices since 2002/3,governments gradually came to realize that

new measures must be pursued andimplemented in order to safeguard againstdisruptions in the energy supply systemresulting from structural weaknesses inmarket mechanisms or from challenges that

cannot be handled by the markets alone(Umbach, 2010: 1230).

Fig. 5 EU 27 Energy Production and Import Dependency, Source: An EU Energy Security andSolidarity Action Plan, 2008, data from Eurostat

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Because the internal EU market has beentraditionally governed by the commonstandards and acceptance of the paramountsignificance of market forces, politics could beseparated from economics; however, outsideEurope the geopolitical and strategic rationalesof foreign and security policies have beenmore and more often adopted, especially in theUS, China, Russia or OPEC countries. Aturning point in the long standing reliance onmarket forces regulating the issues ofEuropean energy security was the 2006 gasdispute between Russia and Ukraine resultingin gas shortages across Europe (Umbach,2010). As Pierre Nol aptly verbalizes theissue when it comes to gas, the Iron Curtain

still seems to cut Europe in two in the

Western EU, the markets are large but

diversified, in the East the markets are smaller

but much more dependent on Russia (Nol,2008c: 9). Developed in the 1970s, the system

of pipeline infrastructure transiting theSiberian natural gas to Europe wasdramatically affected by the political andeconomic transformations which occurred

after the revolutions of 1989 and the 1991collapse of the Soviet Union. In the new

political environment, independent countriesseparate now Russia from the Europeanmarkets, whereas Russias gas exportsoperated by a stated-owned monopoly Gazprom frequently assume geopoliticaldimension, especially towards the so callednear abroad countries where gas pricing isused as a reward or punishment tool(Bradshaw, 2009). The increasinglycomplicated geopolitical developmentstriggered Europes response to the challenge ofthe dependence on Russian gas andmaterialized in the form of energydiversification strategies focused on CentralAsia, Caspian and Black Sea regions. The EUhas adopted a far more pro-active stance with aview to broadening and deepening energyoriented relations with the neighboringcountries; in parallel, the EU commenced

activities leading to the incorporation ofenergy issues into its Common Foreign andSecurity Policy (CFSP). The Central Asia andthe Caspian/Black Sea regions opened a viable


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opportunity to strengthen Europes energysupply security by gradual shifting away fromthe dependence on Russia. Therefore,numerous energy projects and initiatives wereundertaken, for example INOGATE whoseobjective was to foster the build-up of a

pipeline infrastructure system enabling theregions oil and gas flows towards Europe.Another one, the Baku Initiative which tookoff in 2004 aimed at integrating the regionsenergy markets with the EU market and atfacilitating the transport of Caspian energyresources to Europe. In both the cases, theunderlying rationale was for the Caspianregion to develop alternative routes bypassing

Russia and also to gain a better position innegotiating transit fees for shipments that gothrough the Russian infrastructure. Before theINOGATE initiative was forged, Russiandomination in the production and distributionof oil and gas in the Caspian region had beenunquestionable. For the regions landlockedcountries that situation meant that almost alltheir shipments of oil and gas were transportednorth and westwards via Russias pipelinesystem enabling the latter to dictate oil and gas

prices, transit fees and the level of volumes tobe transported (Belkin, 2008).

The efforts to divert the regions energyflows from the established North-South axis toan East-West axis towards the Europeanmarket and to decrease the dependence of theCaspian region on Russia manifested in three

pipeline projects of major importance: theCaspian Pipeline Consortium, the SouthCaucasus Gas Pipeline and the Baku-Tbilisi-Ceyhan (Belkin, 2008). The Caspian Pipeline

Consortium, the largest operating investmentproject on the territory of the former USSR

connects Western Kazakhstan oil fields withthe marine terminal of Novorossiysk fromwhere the crude oil is transported to globalmarkets by tankers (CPC, 2011). Bypassingthe Straits of Bosporus, the BTC pipeline has

been exporting crude oil from Kazakhstan andAzerbaijan since July, 2006. Running parallelto the BTC, the South Caucasus Gas Pipeline,also known as Baku-Tbilisi-Erzurum, providesgas to Europe via a Greek transit pipeline. Theimportance of the new energy corridor ismanifold but its major contribution lies in that

it constitutes an infrastructure systemproviding more than one million barrels of oilper day to Europe with the potential of theCaspian region becoming one of the leadingsources of alternative energy supplies for EU.Last but not least, the completion of the energycorridor project facilitated cooperationactivities between Azerbaijan, Georgia andTurkey and may serve as a showcase for

potential investors that the implementation ofmassive infrastructural projects involving thestates of the region is viable. This in turn

provided the foundation for the Nabucco gaspipeline project, a new energy bridge linkingthe Caspian, the Middle East and Egypt with

the European markets (Cornell, 2009).Notwithstanding the potential of theCaspian region energy resources instrengthening the EUs diversificationstrategies and security of supply, concerns areraised in terms of the political stability of itsstates. On top of the agenda are issues such asthe Azerbaijan/Armenia conflict over the

Nagorno Karabah, internal tensions in Georgiaor Ukraine as well as the increasing Iraninfluence in the South Caucasus (Belkin,

2008). The case of Georgia would deserve amuch more detailed discussion, well beyondthe scope of this dissertation. In short, onaccount of the August, 2008 Russian attack onthis country it may serve as an illustration ofthe fact that the expansion and continuedexistence of the Wests major achievement in

the region the Caucasian energy corridor

is incompatible with Moscows current

geopolitical ambitions (Cornell, 2009: 132).Although the EU has managed to enhance its

security of energy supply by executingnumerous pipeline and LNG projects, themonopolistic strategy of Moscowcharacterized by a mixture of commercial angeopolitical targets frequently interfered withthe EU policy towards the Caspian and CentralAsia states. An illustrative example maybe theRussian attempt to undermine the feasibility ofthe Nabucco project by proposing a rivalSouth Stream pipeline, or to offerTurkmenistan, Kazakhstan, Azerbaijan, Iran orQatar to buy their gas for exports to Europe(Umbach, 2010).

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4. CONCLUSIONS

To round up the discussion on thegeopolitical determinants of European energysecurity, one major conclusion might bedrawn; first and foremost, the long establishedEU stance of applying the principle of marketgovernance in terms of energy security issuesreveals significant shortcomings and seems to

be insufficient in light of the changinginternational environment in the last twodecades. One of the possible solution proposed

by the World Energy Council could bestrengthened cooperation between the publicand private sectors both domestically and

internationally. In addition, there appearcertain pragmatic postulates for the Europeangovernments and EU institutions to adopt anapproach amalgamating geo-strategic andmarket governance principles (Umbach, 2010;Youngs, 2007). This remains in line with themost recent EUs energy document, Energy2020: a Strategy for Competitive, Sustainable

and Secure Energy,which promotes inter aliaestablishing privileged partnerships with key

suppliers and transit countries while pursuing

diversification of import sources and routes(EC, 2010: 19).

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Fig. 6 Global Oil Transit Chokepoints and Shipping Lanes 2008, Source: Lehman Brothers Report, 18 thJanuary, 2008

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