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The Energy Charter Challenges & perspectives for Eurasian Energy Transit
Posted: 27 October 2004
The Energy Charter's Transit Protocol is an important 'missing link' in the legal framework necessary to support an open and integrated Eurasian energy market. This was the conclusion of a Conference on "Energy Transit in Eurasia : Challenges and Perspectives" held in Brussels on 19-20 October 2004.
The Conference brought together over 150 participants from governments, energy companies, financial institutions and international organisations, with the aim of discussing the role of transit in promoting energy security. The question of energy transit is growing in importance with the increased interdependency and integration of energy markets, and senior representatives of major producing countries (the Russian Federation, Kazakhstan, Iran, Qatar), and from key existing and potential energy transit countries (Ukraine, Turkey) provided their perspectives on this issue, alongside those of speakers from the energy industry, international financial institutions and the International Energy Agency.
Among the key issues addressed by the Conference was the need for a stable and predictable framework governing cross-border energy flows across Eurasia , based on a consensus among the countries and interests concerned. This is the objective of the Energy Charter's draft Transit Protocol, on which a large degree of consensus has been reached among the fifty-one member states of the Energy Charter. In its present form, the Protocol would address critical issues for energy transportation networks, in particular the conditions for access to networks and the stipulation that tariffs charged for energy transit must be objective, non-discriminatory and cost-reflective.
Speaking after the conclusion of the Conference, the Secretary General of the Energy Charter Secretariat, Dr Ria Kemper, noted that huge investments are needed in order for Eurasia to meet its projected energy needs, and emphasised that a reliable framework for energy transit is essential if these investments are to be realised. "The aim of the Energy Charter process is to provide a foundation of common rules, facilitating investment in those projects offering the most advantageous combination of high economic efficiency and low environmental impact. A completed Transit Protocol would provide a strong additional impetus to these investments by clarifying - on a multilateral basis - how energy resources can be brought across different national borders and jurisdictions to consumer markets. I strongly hope that the three remaining issues in the text of the Protocol - all of which are the subject of continuing consultations between the European Union and the Russian Federation - can be resolved as soon as possible."
The Energy Charter Treaty, concluded in 1994, has fifty-one signatory states across Eurasia , including all the member states of the European Union, countries of Eastern Europe , the Caspian region and Central Asia , and Japan . Seventeen observer states include China , Iran , South Korea and countries of the Middle East and North Africa . The Treaty provides a legal basis for energy cooperation in four main areas: energy investment, trade, transit and energy efficiency. Presentations from the Conference will be available from the web site of the Energy Charter, www.encharter.org.
Posted by Alexander Lindsay, Editor Pipeline Magazine
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