Eurasian Energy Market Still a Long Way Off
Eurasian Energy Market Still a Long Way Off
Plans to create a common market for oil and gas within the Eurasian Economic Community, Eurasec, will be held back by disagreements between member states and fears that Russia would dominate such a market, say NBCentralAsia observers.
During a meeting between prime ministers of the Eurasec member-states last week, Kazak prime minister Karim Masimov announced that the organisation was drafting a common market agreement to allow the free movement of oil, gas and petroleum products based on an export-import policy agreed by all countries in the regional economic grouping, which includes Russia, Belarus, Kazakstan, Kyrgyzstan, Tajikistan and Uzbekistan.
The idea of a common market for oil and gas was first discussed in 2003, and since then the Eurasec members have signed a preliminary agreement on the foundations for a common energy policy.
The next stage should be to implement a full agreement, but the initiative has ground to a halt due to arguments over tariff policy. In 2006, Belarus refused to sign the agreement because it wanted oil and gas prices to rise in proportion to the costs of extracting and transporting fuel.
According to Kazakstan political scientist Maksim Kaznacheev, a common market would strengthen integration among the post-Soviet countries that make up Eurasec and create stable, profitable conditions for trading in oil and gas.
Kyrgyz analyst Bazarbai Mambetov says the common oil and gas market agreement has the potential to make Eurasec one of the biggest energy suppliers in the world, while within the region it will create advantageous, predictable and stable trading conditions. It will also benefit Eurasec members which are not rich in oil and gas through lower prices and better supplies.
But other observers say the common market may not get off the ground. Kaznacheev sees two major obstacles – the need to create a supranational coordinating agency, and the strong probability that Russia would dominate the market.
Analyst Eduard Poletaev took a similar line, saying Russia was likely to take the lead as Eurasec’s major energy exporter and transit route. Another reason why a common market is unlikely to be set up any time soon is, he said, that Eurasec’s record is poor when it comes to agreements that have proved successful.
“Judging by the insignificant number of decisions which have amounted to anything, it is difficult to say that Eurasec has been effective. It can be assumed that the member countries won’t take a final decision on the project any time soon,” he said.
Eurasec governments are unlikely to agree on issues like this with foreign policy implications, according to Rovshan Ibrahimov, head of the international relations department at Qafqaz University in Azerbaijan.
“I very much doubt this agreement will come into force soon, since it would mean that transit countries would lose out on direct and indirect revenue from [oil and gas] transportation," he said. "Besides, it is unclear how Kazakstan and Russia will act – it is unlikely either country would want to let the other have the markets they have fought for.”
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
During a meeting between prime ministers of the Eurasec member-states last week, Kazak prime minister Karim Masimov announced that the organisation was drafting a common market agreement to allow the free movement of oil, gas and petroleum products based on an export-import policy agreed by all countries in the regional economic grouping, which includes Russia, Belarus, Kazakstan, Kyrgyzstan, Tajikistan and Uzbekistan.
The idea of a common market for oil and gas was first discussed in 2003, and since then the Eurasec members have signed a preliminary agreement on the foundations for a common energy policy.
The next stage should be to implement a full agreement, but the initiative has ground to a halt due to arguments over tariff policy. In 2006, Belarus refused to sign the agreement because it wanted oil and gas prices to rise in proportion to the costs of extracting and transporting fuel.
According to Kazakstan political scientist Maksim Kaznacheev, a common market would strengthen integration among the post-Soviet countries that make up Eurasec and create stable, profitable conditions for trading in oil and gas.
Kyrgyz analyst Bazarbai Mambetov says the common oil and gas market agreement has the potential to make Eurasec one of the biggest energy suppliers in the world, while within the region it will create advantageous, predictable and stable trading conditions. It will also benefit Eurasec members which are not rich in oil and gas through lower prices and better supplies.
But other observers say the common market may not get off the ground. Kaznacheev sees two major obstacles – the need to create a supranational coordinating agency, and the strong probability that Russia would dominate the market.
Analyst Eduard Poletaev took a similar line, saying Russia was likely to take the lead as Eurasec’s major energy exporter and transit route. Another reason why a common market is unlikely to be set up any time soon is, he said, that Eurasec’s record is poor when it comes to agreements that have proved successful.
“Judging by the insignificant number of decisions which have amounted to anything, it is difficult to say that Eurasec has been effective. It can be assumed that the member countries won’t take a final decision on the project any time soon,” he said.
Eurasec governments are unlikely to agree on issues like this with foreign policy implications, according to Rovshan Ibrahimov, head of the international relations department at Qafqaz University in Azerbaijan.
“I very much doubt this agreement will come into force soon, since it would mean that transit countries would lose out on direct and indirect revenue from [oil and gas] transportation," he said. "Besides, it is unclear how Kazakstan and Russia will act – it is unlikely either country would want to let the other have the markets they have fought for.”
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
