Boyko Nitzov, director of programs at the Council’s Patriciu Eurasia Center, was interviewed by Leyla Tagiyeva of Azerbaijan’s News.Az on energy security in Europe.

Does the West see Azerbaijan as a country that could help settle the problem of energy security of Europe?

It is true that Azerbaijan is often seen as a country that could help improve energy security in Europe, particularly as a gas producing and supplying country and as a country that could transit gas produced to the east of the Caspian, even though most of the hydrocarbons produced in Azerbaijan are liquids – oil and natural gas condensate. There are a few considerations that one should keep in mind when assessing Azerbaijan’s role from the point of view of Europe’s energy security. The market for oil (including condensate) is a global one, and while supply from Azerbaijan is important for European markets, Europe can obtain supplies from almost any other source around the world. Azerbaijan’s oil exports do not necessarily have to end in Europe as well, but could reach any importing country. So from this point of view, Europe’s energy security and Azerbaijan’s export markets are not as closely related as in the case of natural gas.

For natural gas, however, there is no single global market. Europe is a regional market that depends to a large extent on imports, and imports are supplied by relatively few actors, many of them government-controlled companies. Besides, a number of European countries, particularly in the Balkans and Central Europe, not only import almost all of the natural gas that they consume, but on top of that have only one supplier and only one import route. To make it even worse, many of these countries are not connected to their neighbors by pipelines that could supply gas in case of cut-offs of the main supply lines, and do not have sufficient gas storage capacity. As evidenced by the so-called “gas crisis” in early 2009, gas supplies can be completely cut off to at least half a dozen countries that very soon, within 3-7 days, completely run out of gas supply. It is precisely in such cases that Azerbaijan can play an important role for enhancing Europe’s energy security – by providing an opportunity for diversification of gas supply to these most exposed countries, both by source and by route. While volumes of gas exports to these countries may not be very large in the context of the European market, they could make a decisive contribution where the exposure is the greatest.

In physical terms, there are various possibilities for such gas exports –  via Georgia and Turkey and then onwards by pipeline, or by pipeline to a port in Georgia and then as either liquefied natural gas (LNG) or compressed gas (CNG) by tankers to the west shore of the Black Sea, or via swaps with other suppliers to Turkey, and so on. These options, including supplying gas from Azerbaijan to Nabucco, are being evaluated and promoted by many developers right now. Furthermore, if a modality of transiting gas produced to the east of the Caspian via Azerbaijan could be achieved, the options will increase in number and quality.

In the meantime, Europe has taken a strong stance regarding improving its energy security in the gas sector by enhancing the interconnectivity between national pipeline systems, diversifying its gas supply by source and by route, and improving its gas storage capability. Thus, there is a significant convergence of interests between Azerbaijan and Europe when energy security is at stake, especially as far as natural gas is at stake. Even though Azerbaijan’s gas resources are relatively modest, they could make a real difference in many European countries that are now strongly exposed to various risks because of their dependence on a single supplier and a single supply route. However, time is of the essence. Other sources of gas supply to Europe are vigorously being developed, for example LNG from the Gulf, piped gas and LNG from North Africa, domestic resources of “tight gas” in Europe that technology has now made accessible, and so on. So both Azerbaijan and its partners in Europe must realistically assess their positions and act accordingly, if they wish to really partner in the gas sector.

Do you think the energy interest in Azerbaijan can raise the interest and the role of the West in the settlement of the problems of this country’s security, in particular the resolution of the Armenian-Azerbaijani conflict over Nagorno Karabakh?

I can only comment on this question as far as it is related to energy, since I am not an expert on security in the sense of security at large and conflict resolution. But it is my feeling that tying energy issues and overall security issues in a bundle is generally counterproductive for resolving any of these issues – regretfully, each one of them is difficult on its own merit, as it were. I can only point out that, as far as I can see there is a strong interest in the West to make sure that Azerbaijan’s integrity, security, and prosperity are not violated, that a resolution to the existing conflict is found, and that this resolution is of such nature as to assure security and prosperity in both Azerbaijan and the region. As far as energy is concerned, any large market, including Europe, usually has many ways and means to ensure that it is well supplied and properly functioning on competitive terms. Europe has all the technological, financial, political resources, all the know-how in energy – not just oil and gas – to make sure it has secure energy supply on a global scale.

Do you believe in the soonest possible implementation of the Nabucco project?

The project cycle in the oil and gas industry is often a long one – for example, it is not unusual for 8-10 years to pass between the discovery of an oil or gas field and its full-scale development. Large, transcontinental pipelines have a project cycle of similar length. In its cycle, Nabucco is not beyond the usual timeframe for such projects. What is most encouraging in the instance is that an agreement was reached in 2009 in Ankara between all key parties on the overall terms and conditions applicable to the project, and thus an important milestone was passed. Work on the project is continuing and I would not be surprised to see the start of Nabucco’s construction within a couple of years. One has to watch now for the next steps, particularly gas supply contracts.

Do you consider last year’s war in Georgia to have undermined the reliability and security of energy routes passing via that country. which is a large seat of conflicts?

I think neither producers, nor consumers – no one who actually uses routes for oil, gas, and electricity that cross Georgia is interested in degrading the security or reliability of the routes. In this sense, if there is any risk, its source is not in the business of energy at all. Again, it would be best to approach energy issues and issues related to overall security separately if one wants to facilitate finding reasonable solutions for both.

Is it possible to deploy European, U..S or NATO forces to provide security for the pipelines extending from the Caspian Sea to Europe?

It seems to me, there are at least two speculative assumptions that are “buried” in this question – first, that pipelines from the Caspian to Europe are so insecure that they need the armed forces to protect them, and second – if such protection is needed at all – that those who live in the countries of the region are so incapable of providing any security for themselves that they have to rely on outsiders to do it for them. In addition, it is not clear to me what formats for deployment of “European, U.S. or NATO forces” could exist at all for the protection of private commercial assets in foreign countries. On all of these accounts, I would be skeptical, even though I am not an expert on armed forces.

As someone who deals with energy, I can point out that pipelines are fairly robust, can be easily repaired, and there is simply no need to “protect” them in this manner, because regular pipeline integrity maintenance systems and teams and usual security (police, guards) are all that is needed. It is more important to have systems installed on the pipelines that detect leaks in real time and teams with equipment and material in place ready to be deployed on a short notice, so that the integrity of the pipeline could be restored and maintained, rather than have an army along the line – what would the army do anyway if the pipeline leaks? In short, the oil and gas business has been dealing with pipeline system integrity problems for over a century now and knows how to tackle such problems well without any armed forces intervening. There are many examples of such experience from around the globe.