Timing of forum ideal, says Hasen expert

Caspian Strategy Institute Expert Doç. Dr. Fatih Macit

“This year sees the third edition of the Caspian Forum. The first was organized last year in Istanbul and the second in New York. For the region, it is a unique and highly important forum. It is meaningful that it comes at a time when a progress has been made in nuclear negotiations with Iran, energy projects with Iraq are on the agenda and the anticipated groundbreaking Trans Anatolia Gas Pipeline (TANAP). The energy balances in the region are recreated. With the TANAP, a project comes to effect that would diversify Europe’s energy routes. From now on, the European Union will use the Caspian region more actively as a gas supplier. Iran owns a large amount of natural gas and oil reserves, but has failed to seize upon these reserves due to international sanctions. Now, the recently declared relief of these sanctions will be on the agenda. The re-integration of Iran to the international system will be on the agenda. Therefore, these developments would alter the prices of oil and gas, as well as energy equations. The timing of the Caspian Forum, therefore, is ideal as the current environment is conducive to a healthy and productive discussion of these issues.

‘Energy distribution change’

“The latest developments in the Caspian region are strong enough to change the distribution of energy resources among key stakeholders. Iran owns around 10 percent of total oil reserves of the world with 157 billion barrels of verified oil reserves. Iran’s re-entrance into the oil market may shatter the balances. However, it would be too optimistic to expect the Brent oil price, which is currently around at $110, to drop to $60 because Iran is an OPEC country. In this regard, Iran’s possible large oil export that may deflate prices wouldn’t be something that the OPEC would approve.

The second crucial point to underline is that the natural gas resources in the Caspian region will be channeled to Europe. The main issue here is the amount of European demand. Due to economic reasons, coal usage showed an increase in Europe within the past 10 years. However International Energy Agency has displayed sensitivity about environmental issues in its latest meeting and drew a roadmap towards leaning on natural gas consumption. Considering the indicators, we could predict that the demand in upcoming years will be incomparably more vibrant than the past 10 years.

On the other hand, we know that natural gas generation in Europe is currently on the decline. Europe’s top three gas producers have lessened operations. We can expect the EU’s natural gas demand to soar remarkably until 2030, when considering these two pictures of supply and demand side by side. Well then how would the EU cater for this demand at a reasonable price while maintaining security in supply and diversity at the same time? Right at this point, the Caspian region, particularly countries like Azerbaijan, Turkmenistan and Iraq, will play a great role. The region’s current process of stabilization is paving the way to further development of these infrastructure projects.

The region’s countries that are sitting on rich oil and natural gas reserves have entered into a great enrichment process within past 10 years.However, improvement of non-oil sectors in these countries holds great importance. Establishment of trade bridges, reinforcement of transportation infrastructure, revitalization of the Silk Road between Beijing to London and growth in trade within these regions will introduce great advantages in this regard.

From this perspective, the Caspian Strategy Institute and the Caspian Forum is of critical importance for the region. The Caspian Forum stands as a platform in which infrastructure projects and agreements that will benefit the region and link the Caspian with Europe could be shaped.”