A regional energy transit framework agreement needs to be formed between Caspian energy producers and exporters on the one hand and China and Turkey as the biggest energy consumers on the other, Volkan Ozdemir, head of the Institute for Energy Markets and Policies (EPPEN) told Anadolu Agency.
Speaking exclusively to Anadolu Agency (AA), Ozdemir said that an undisrupted, reliable and steady energy transit comes essentially under the responsibility of all countries concerned.
Although a very general and legally binding agreement for energy among nearly 60 countries including Turkey exists, the Energy Charter Treaty (ECT), Ozdemir affirmed the need for an agreement, which specifically regulates safe energy transit between countries.
'Energy transit provisions of the general agreement between those nearly 60 countries is the expanded version of the fifth article of the World Trade Organization (WTO), which is not specifically for energy transit,' Ozdemir explained.
The Energy Charter Treaty (ECT) entered into force in 1994; and several WTO members engage in energy cooperation under this treaty, however, ratification by some members is still pending.
The ECT covers various issues related to investments and investor relations. The main elements of the ECT include investment protection, trade in energy, energy products and energy related equipment based on the WTO rules, freedom of energy transit, international dispute settlement, including investor-state arbitration and interstate arbitration, promotion of energy efficiency, and attempts to minimize the environmental impact of energy production and use.
'However, this is a very general and short provision. Therefore, in 1994, negotiations started between the sides in the ECT to create a new multinational energy transit framework agreement. At that time, those countries included Russia, EU countries, Turkey and Central Asia countries,' Ozdemir explained.
He added that due to disagreements between Russia and the EU in particular, these negotiations could not be finalized and in the end Russia stepped back from the ECT and from negotiations with the EU.
'In 2013, Turkmenistan submitted a proposal to the United Nations (UN) and recommended the need for restarting the negotiations for the creation of a new transit agreement. This could be a parallel work with the Energy Charter Secretariat,' Ozdemir said, noting that he prepared a document about a conceptual multilateral energy transit agreement.
'In that document, I suggested that energy transit is a very general area where there is no multilateral framework agreement on transit of energy resources. Under the auspices of the International Energy Charter, a transit framework agreement needs to be created,' he said, adding that this agreement should also take into account the economic, political and legal conditions that have changed in the last 20 years.
'Now, the Caspian countries are energy producers and exporters and China's leadership as a consumer is on the front. The EU, with the Third Energy Package, created its own energy market and regulations,' he explained.
The latest round of EU energy market legislation, known as the third package, has been enacted to improve the functioning of the internal energy market and to resolve structural problems.
He stressed that the EU endeavors to impose these regulations to countries in the EU pre-accession process, but Ozdemir declared that Turkey did not accept these regulations.
'One of the biggest changes that happened in the last 20 years is the new Silk Road project of China and one of the most important pillars of that project is energy infrastructure investments along with transportation,' Ozdemir asserted.
He expressed his belief that China, as an energy importer country from Turkmenistan and Kazakhstan, needs to transport from the Caspian region.
'Likewise, Turkey also imports oil and gas from Caspian countries. Therefore, my suggestion is to create a regional or interregional framework agreement as a first step for the transit of energy resources rather than an international one under the umbrella of International Energy Charter. This is so the transit of energy resources between these countries can become more reliable and undisrupted. This would also help Turkey to more easily attract energy investments, which are developed as part of the Silk Road project,' he concluded.
By Ebru Sengul
Anadolu Agency
energy@aa.com.tr