Ashgabat, 1 June 2017 (nCa) — The positions came close mainly because the positions were declared. As if they could touch each other if they just extended their hands.
The Energy Charter Forum concluded on Wednesday (31 May 2017) in Ashgabat after taking several important steps toward shaping up a legally binding mechanism for the transit of energy resources.
In order to appreciate the significance of the Forum outcome, let’s keep in view the theme of the forum – Towards a Multilateral Framework Agreement on Transit of Energy Resources.
The countries, in their various capacities as producers, consumers and transit territories of energy resources deposited their positions for the creation of a mutually acceptable mechanism for transit that would be legally binding.
Turkmenistan, like all other participants, underlined that all the interested parties in a transit scenario generally have different objects and it would be an enormous challenge to find a universally acceptable transit mechanism.
The oft-recurring point on the second day of the forum was the need to grant third-party access to the oil and gas transportation infrastructure.
For example, Kazakhstan pointed out that it was impossible to access the gas pipeline system of Russia and that was why Kazakhstan sells its gas at Orenburg, the border of Kazakhstan with Russia. The head of Kazakh delegation further pointed out that the CAC (Central Asia-Centre, a massive pipeline network connecting Central Asia with Russia) was utilized far below its actual capacity.
Turkmenistan, as a producer country, added that the energy policy of Turkmenistan was based on the principles of diversification and integration. Conceding that a legally binding transit mechanism would be a difficult objective, Turkmenistan stressed the need to balance the interests of all the parties. As a successful example of unifying the wills of all participants, Turkmenistan cited the example of TAPI.
The position of Turkey was that any transit mechanism should be binding to the existing infrastructure but not the planned projects.
Rusnak, the secretary general of Energy Charter, in his summing up remarks, said that there was certainly the need for liberalization and third party access.
He called for clear relationship between the project management and revenue model.
Rusnak said that it makes sense to insist on semi-liberal or liberal third party access to the energy transportation infrastructure (such as pipelines).
The Energy Charter secretariat will keep collecting the positions of the participating countries and the matter will come up for discussion in September 2017 in the meeting in Brussels.
The consensus is definitely taking shape because the Forum concluded with the joint understanding that there was the need for a legally binding transit mechanism.
Within this, the realization of the need for third party access to the transportation infrastructure was perhaps a kind of breakthrough.
If the member countries manage to build a mechanism which makes it mandatory the liberal access to the pipelines, it will soften to some extent the limitations of Central Asia as a landlocked region.
If we believe that the access to energy resources is a basic human right, we must also create the means to transport such resources from the producers to the consumers. The third party access will actually be a right step toward implementation of the right to access to energy resources.
The Forum, with full awareness of the challenges ahead, pondered whether the transit mechanism should be regional or global in nature.
They also considered the issue whether only those countries who have ratified the Charter Treaty should be allowed to introduce their opinion in shaping up the mechanism or whether all the signatories should have the right to voice their positions for inclusion in the official outcome.
Romania (Charter chair in 2018) and Albania (Charter chair in 2019) said that they will stay focused on the transit challenges.
It is difficult to say as to when a legally binding transit mechanism will become available for use but the important thing for now is that there is the movement in the right direction.
The important thing is that the creation of a viable transit mechanism has transformed from a static to a dynamic state. /// nCa
Here is the outcome document of the Forum:
The two-day Energy Charter Forum in Ashgabat (30-31 May 2017) wrapped up with the issuance of a concluding document. Here is the complete text:
CONCLUDING DOCUMENT of Ashgabat International Energy Charter Forum “Towards a Multilateral Framework Agreement on Transit of Energy Resources” under the Chairmanship of Turkmenistan
On 30-31 May 2017, within the framework of its Chairmanship at the International Energy Charter Conference, the Government of Turkmenistan jointly with the Secretariat of the International Energy Charter held Ashgabat International Energy Charter Forum «Towards a Multilateral Framework Agreement on Transit of Energy Resources». More than 80 participants, including Ministers, high-level officials and leading experts from member-states and observers of the International Energy Charter, international energy and financial organizations, energy companies and research institutions, attended the Forum.
The subsidiary bodies of the Energy Charter Conference (chaired by Turkmenistan this year) are currently working towards developing the conditions for starting negotiations on a Multilateral Framework Agreement on Transit of Energy Resources. In particular, the main task this year is to identify specific issues and challenges relating to transit and to develop possible alternative solutions reflecting the needs of the Energy Charter’s member countries.
This Forum, like the previous meetings of experts on reliable and stable energy transit held in Ashgabat (December 2014), Brussels (April 2015), Beijing (November 2015), and Tirana (July 2016) allowed discussions on the issues of transportation and transit in a broad geographical context, and took into account the positions of different countries, both producers and consumers, and transit countries.
During the Forum, the issues of transit and cross-border transportation of energy resources, including natural gas, oil products and electricity were discussed. The representatives of countries and international organisations noted the importance of international energy cooperation for achieving global energy security and implementing the Sustainable Development Goals. It was also pointed out that the transit of energy carriers, which necessarily includes the issues of transportation and conditions for infrastructure access, is one of the most important elements of the entire interconnected chain of energy supplies to international markets.
The Forum had separate sessions addressing the issues of trade, transportation and transit of natural and liquefied gas, oil and electricity. These sessions highlighted the complexity of ensuring the security of energy transit, and emphasized the need for clear and consistent principles of multilateral cooperation among the participants, as it is often observed that the participants in the process tend to pursue their own particular interests.
Energy-importing countries depend on foreign resources for proper functioning of their national economies. Hence, they are highly interested in the continuity of energy products flows to their borders. On the other hand, energy-exporting countries and their enterprises place great emphasis on the issue of market stability, as foreign trade is vital source of their income. Ultimately, all countries are interested in minimizing transit risks to ensure their own security.
The importance of transit in the context of global energy security has already been addressed in the UN General Assembly Resolution 67/263 “Reliable and stable transit of energy and its role in ensuring sustainable development and international cooperation” developed at the initiative of Turkmenistan and adopted by 72 states on May 17, 2013. However, there remains the need to develop multilateral legal instruments providing uniform principles and rules and regulating the relations among energy producers, consumers and transit countries. The current work within the Energy Charter Process under the Chairmanship Turkmenistan on the development of a Multilateral Framework Agreement on the Transit of Energy Resources is one of the possible instruments for developing international trade in energy resources.
The participants of the Forum noted that there are issues related to the practical feasibility of investments, non-discriminatory access to the infrastructure, and general pricing principles using existing infrastructure. The creation of an international legally binding transit regime for cross-border transportation of natural gas, electricity and oil is a complex task. It was emphasized that the development of a single legally binding instrument on transit depends on the political will of the International Energy Charter member countries.
For its part, the Government of Turkmenistan will submit a report to the UN General Assembly on the work in the field of energy transit accomplished jointly with the International Energy Charter in pursuance of the UN General Assembly Resolution 67/263. Moreover, Turkmenistan as the chair of the Energy Charter calls on the co-sponsors of this Resolution to join the Energy Charter Process by signing a political declaration – the International Energy Charter – with a view to fully participate in the development of uniform energy transit principles and rules.
As of today, the Energy Charter Treaty is a unique legally binding instrument regulating the issues of energy transit, as reflected in the report of the UN Secretary-General “On Reliable and Stable Energy Transit and Its Role in Ensuring Sustainable Development and International Cooperation”, published in 2014. Signing the International Energy Charter that currently unites over 80 countries worldwide is the first step towards acceding to the Treaty, which aims to strengthen legal norms in the energy sector by applying uniform rules binding for all participants and minimizing the risks associated with investment and energy trade.
The geographical expansion of the Charter vector in a rapidly changing energy landscape will allow the existing and new members to define the principles of global interaction in the energy sector, including the transit issues on the agenda. Therefore, we call for active participation of UN regional commissions, international energy and financial organisations, taking into account the accumulated experience, in the practical work on drafting a Multilateral Framework Agreement on Energy Transit, thus continuing the wide global dialogue initiated by the UN General Assembly Resolutions adopted in 2008 and 2013 on reliable and stable transit of energy resources.
Considering the leading role of the International Energy Charter in energy transit issues, we deem it expedient to hold such meetings on a regular basis in the regional context with a view to subsequently summarize the results of activities in this area.
The participants of the event highly appreciated the efforts of the Government of Turkmenistan and the International Energy Charter to promote a multilateral instrument on energy transit with a view to achieve a balance of interests of exporting countries, consumers and transit countries, and expressed gratitude to the Government and the President of Turkmenistan Gurbanguly Berdimuhamedov personally for the support provided for Ashgabat International Energy Charter Forum. In addition, it was noted that the participants hope that these conclusions will be taken into account and reflected in the political declaration to be adopted on the results of the 28th session of the Energy Charter Conference in Ashgabat on 28-29 November of the current year. /// Energy Charter