Three pipelines and energy security

Six years ago work started on three pipelines that would carry oil from the Caspian Sea to the Mediterranean coast of Turkey. The route was designed to bypass Russia and Iran, which were thought to be potentially unfriendly to western oil and national energy interests. BP led the consortium of pipe line builders and the three pipelines were designed to carry more than a million barrels of oil every day of the year.

 

The project was politically supported by the USA and at the opening ceremony there was a US representative, the Energy Secretary as well as leaders of Georgia, Azerbaijan and Turkey when the first part of the thousand mile pipeline was laid.

 

The US Energy Secretary was then Mr Spencer Abraham who hailed the project as providing ”greater energy security with a diversified supply” of oil that depends less on the Middle East. He read a letter from President Bush, who called the project ”an essential component of an East-West energy corridor.” The politicians described the project as a guarantor of peace stability and security in the region.

 

At the time the pipeline depended on oil prices being more than $20 a barrel, and those prices have been exceed by a factor of six or seven, making the pipeline not only highly profitable but also critically important in Western European and US energy supplies. The hope was the Caspian oil fields and the means of oil delivery would weaken OPEC’s dominant role in oil pricing as well as reliance on Russian energy.

 

Georgia has no significant oil resources but the pipelines made Georgia highly significant to Western interests both in the possibility of reducing dependence on OPEC and in by passing Russia, which has large oil and gas reserves which it would be selling to the West.

 

Recent fighting between Georgia and Russia (rather a one sided affair) has crystallised the importance of the pipelines. Georgia has claimed that Russian bombers targeted the pipelines, which Russia denies. The West is concerned about pipeline damage as a result of the fighting. The price and scarcity of oil is much higher today than when the pipeline was conceived and as I write there are fears that OPEC will shortly reduce production as part of a strategy to keep oil prices high – precisely the opposite of what Mr Bush and Mr Brown wants them to do.

 

The best laid plans of mice and men often go astray and so it has proved with the plan to divert oil around Russia. One of the three pipelines has already been closed as a result of terrorist action.

Russia is a large and powerful country. In comparison Georgia is small. Whatever the merits of the dispute between these nations if it comes to armed conflict Russia will prevail. The realpolitik is that you cannot rely on supplying energy by diverting supplies around a large and powerful nation. Similarly you cannot rely on energy sourced from unstable nations or from places that own the energy source which wish to exploit their energy for their own benefit.

That covers virtually every oil and gas producing nation in the world. Not all of them are politically unstable but all of them want to exploit their energy reserves for their own people. In today’s world energy rules.

Although the oil price has recently fallen it is still 60% higher than it was a year ago and the present price cannot be wholly blamed on speculation. Oil may marginally fall in price before it continues its upwards spiral, but for European consumers whatever the present price of raw energy fuel, the processed price of electricity and gas will continue to rise because domestic consumers have largely been shielded from the very rapid price increases and that shield was only temporary. For domestic consumers energy prices have not yet risen 60% in the past twelve months.

There is a limit to what quantity of fuel we can secure in a free market in the world. That limit is created by demand and supply. We can marginally reduce demand but reducing demand in the west must take time.  Part of the solution, almost invariably overlooked, lies in generating more energy in our own countries.

The only way to do that is to increase deployment of every form of renewable energy by micro local generation on homes and factories and in villages and farms and creating microgeneration as central to our strategy for energy, not as an afterthought or a fashion statement.

Pipelines in Georgia can be blown up, closed or starved of fuel. The solar panels on your homes and schools and factories cannot. They will not provide 100% of our energy but properly structured they may provide half, and that would give us a degree of energy security that would be essential in our dangerous energy greedy world.

5 Responses

  1. Hi Robert

    I’m no expert, but if “properly structured” solar panels can provide 50%, it is not possible to increase the number of panels to provide 100% (cause logically that just makes sense to me)?

    Also, you know the way that you can burn paper with sunlight and a magnifying glass, can the same process not be applied somehow (if it is not already) to creating (or focusing) solar energy?

  2. Hi

    Mark

    It’s a topic that deserves its own post and I will be doing that tomoorow.

    Robert

  3. Robert, you make a very good point here. As if the environmental arguments were not enough, then national security ought to add further weight to the argument for why the UK should be encouraging MicroGeneration as urgently as possible.

  4. yes
    It does not depend on Russia or georgia – we can do it ourselves

  5. […] demonstrated the fragility of international relations and Robert Kyriakides made the point on his blog that MicroGeneration could have an important role to play in reducing our dependence on external […]

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