1. Iran-Europe Dialogue on Central Asia and Caucasia (CA&A)
Abbas Maleki
Roundtable on “Iran and European Union Cooperation in Caspian Sea, Central Asia, and Caucasus
Institute for Caspian Studies
March 11, 2007

2. Sources of Instability
-Radical approaches to Islam
-The lack of sustainable economic development
-Energy and its Route
-Effort to change the lifestyle of the peoples in the region
-Corruption
-Policies of dominated powers in the region
-Ethnic violence
-Drug Trafficking

3. Radical approaches to Islam
Different interpretation of Islam in the CA&C is one of instability sources. Specifically, the extreme perceptions of Islamic culture as different groups like Hizbuttahrir are proposing.
A rigid, radical and unpopular version of Islam which is very hard for the people to obey it.

4. Lack of sustainable development
Total population of the CA&C is 73 millions:
-68% of 8 million in Azerbaijan, under the poverty line
-35% Kazakhstan
-51% Kirgizstan
-GDP/Capita:
-Tajikistan $180
-Kirgizstan
-Uzbekistan
-Armenia
-Azerbaijan
-Georgia
-Turkmenistan
-Kazakhstan

5. Energy export is not very high
Armenia US billion Dollars
Georgia
Kyrgyzstan
Tajikistan
Azerbaijan
Turkmenistan 2.7
Uzbekistan
Kazakhstan
Compare with Saudi $135 and Iran $55 US billion

6. Orchestrated efforts by West to change the lifestyle of the peoples in CA&C
Activities of rulers to weakening traditions, customs
Neglected NGOs
Example: Kazakhstan advertisement in IHT, Nov. 12, 2003 title: "Kz is the outpost of struggle against fundamentalism". Kz is the only country in the region in which Islamic opposition does not really exist. Religion has never played an important role in Kz, while Muslim organizations have been influential in neighboring Uz and Td…..This means that the Kazakhs are catching on to Western lifestyle and values.
The question is who is living with Kazakh lifestyle and values in future?

7. Corruption There is no good governance in the region
-Most of the Governments are totalitarian regimes
-Most of the rulers are the former Secretary General of local Communist Parties.
-Corruption Index shows
-Azerbaijan is the 4th most corrupted country
-Russia is the 7th
-Kazakhstan is the 20th

8. Energy in CA&C
Energy is one of the resources that could support the development
But the geopolitics of pipelines is the key factor for the phenomenon of new dependency to other countries
Russia is trying to dominate all of energy infrastructure in Eurasia

9. Energy Routes at a Glance

10. Middle East Sub Region

11. Asian Identity

13. ECO (Economic Cooperation Organization)

14. Iran and CA&C
Iran has shown a rational, modest and economic oriented model in the CA&C.
Iran’s activities for
-Establishing ceasefire in Nagorno Karabakh in 1994.
-Success to end the Tajik civil war is among them.
-Iran was eager to see more cooperation among CA&C, proposed them the membership of ECO, establishment of CASCO in 1992.
-An observer in Shanghai Cooperation Organization
-Road and Rail networks for landlocked countries

15. Iran: A look at the energy sector
Iran has very ambitious plans in oil, gas and petrochemicals;
Though the strategy on oil production capacity increase remains a key debate topic, major investments in this sector are inevitable;
The legal framework remains an issue, though slow changes are taking shape;
Iran’s focus in the next decade will be on gas and also gas-intensive industries;
Next important event: Restructuring of NIOC and consequent corporatization of the energy sector companies.
Investments needed in Iran’s energy sector
Sector
Investment Volume (in $ billion)
Oil 40
Gas 45
Petrochemicals 25
Power Generation 20

16. KTI 1 – Atyrau-Samara 1.1 – BPS 1.2 – Druzhba-Adria 2 – CPC
Odessa
Novorossiysk
Makhachkala
Atyrau
Actual
Baku
Neka 1
Samara 2 3 4
Ceyhan
Supsa 5
1.1
2.1
1.2
2.2
2.3
Omsk
Pavlodar
Shymkent
Chardzhou
1 – Atyrau-Samara
1.1 – BPS
1.2 – Druzhba-Adria
2 – CPC
2.1 – Odessa-Brody-Gdansk
2.2 – Constanta-Trieste
2.3 – Burgas-Alexandroupolis
3 – Aktau-Baku-Tbilisi-Ceyhan
4 – Kazakhstan-China
5 – Kazakhstan-Turkmenistan-Iran

17. Kazakhstan-Turkmenistan-Iran Pipeline
Study in process in accordance with the Agreement on Joint Studies concluded between KazMunayGas, Total, Japan National Oil Corporation, and Inpex
A Long-Term Export Option for Delivering Kazakh Oil to Asian Markets via Persian Gulf

18. Caspian Oil Terminals and Neka

19. Neka-Ray Old and New Pipeline (370 000 b/d)

20. Iran’s Free Zones in the North

21. North-South Corridor

22. Great Central Asia Routes

23. 20%
13.6%
11%

24. Iran-Europe Energy Dialogue
The gas pipeline from CA to Iran then Europe is a key project in trilateral cooperation among three regions.
The study of the two routes from Iran to Europe via Turkey and Ukraine had been done.

25. Energy
Iran is energy giant, one of its feet on the Persian Gulf, another on the Caspian, with geostrategic advantages.
Europe is surrounded by the sea of gas, most important of them: Russia, Iran and Qatar.
For Europe, the importance of CA&C is dramatically increased, because member ship of each central or Eastern Europe countries to EU means a new demand for Energy.

26. Energy (2) -Iran can decrease isolation of central Asia dramatically.
Iran now imports gas from Turkmenistan to consume in the Northern part of Iran, as imports oil from Kazakhstan.
Iran is end-user of the produced oil and gas in the CA&C

27. Potential New Supplies to Europe with Diversification of Supply
Caspian Sea region: Azerbaijan, Turkmenistan, Kazakhstan, Uzbekistan
Middle East region: Iran, Iraq
North Africa region: Egypt, Libya

28. Iran-Europe Energy Dialogue Restraints
Freidman Muller has discussed, in the past with political motivation, Europe preferred to follow the Soviet gas pipeline instead of the cheap and costless Iranian gas. Now again, because of US extraterritorial rules like 1995 ILSA, the oil and gas companies can not invest more than 20 million dollars in Iran's energy industries.

29. World NG Consumption

30. EU NATURAL GAS DEMAND & SUPPLY OUTLOOK 2003 - 2025
Source: EUROGAS Report 2004 6

31. Proved natural gas reserves at end 2006

32. Sources of Natural Gas Supply - European Union
2002
Indigenous Net Imports 47% Production 53 %
2003
Indigenous Net Imports 51% Production 49 %
2030
Indigenous Imports 80% Production 20 %
14%
14%
80%
20%
18%
19%
49%
53%
12%
12% 3% 6%
Import Norway
Import Russia
Import Algeria
Import Others
Indigenous Production
Indigenous Production
Imports
Source: EU-forecast, EU Energy, Issue 86, July 2nd, 2004
Source: Eurogas

33. Forecast of Gas Supply – OECD Europe
Source: „Security of Gas Supply in Open Markets - LNG and power at a turning point“, Edition 2004 (OECD/IEA)

34. New gas supply route to Europe from Turkey to Austria
Nabucco
New gas supply route to Europe from
Turkey to Austria
via Bulgaria, Romania and Hungary

35. Project Partners OMV OMV Gas GmbH, Austria MOL
MOL Natural Gas Transmission Ltd., Hungary
Transgaz
S.N.T.G.N. Transgaz S.A., Romania
Bulgargaz
Bulgargaz EAD, Bulgaria
BOTAS
Botas Petroleum Pipeline Corporation, Turkey

36. Nabucco corporate structure
International
Company
Nabucco International
FINCO
OGG
MOL TG BG
Botas NN
Austria
Hungary
Romania
Bulgaria
Turkey 1 2

37. Missing link between giant gas sources (in bcm) and potential markets
4,000
47,570
1,770
33,530
4,520

38. Supply Sources for Nabucco
Azerbaidschan
10-14 bcm
Egypt
8-10 bcm
Iraq
Iran
10-20 bcm

39. Nabucco Gas Pipeline Strategic Goals of Project
Opening a new gas supply corridor for Europe from Middle East and Caspian regions
Raise transit profiles of participating project countries
Contribution to security of supply for partner countries and for Europe as a whole
Strengthening the turntable position of Austrian pipeline grid and the Hub Baumgarten within the European network

40. Feasibility Study Phase - Findings Technical Study
Routing corridor defined
Border crossings fixed
Pipeline Diameter: 56“
Distance: 3,300 km
Investment: 4.6 bill. €
Project is
technically feasible

41. Project Phases Feasibility Study Develop- ment Constr. 1st step 2nd
Operating
& Marketing

42. US military around Iran

43. Final thoughts...
Central Asia and Caucasus are neighbors of Europe and Iran
Europe is surrounded by sea of gas, Iran is one of them
Divergence is important in energy supply
Instability in CA&C has impacts to the both sides
Interpretation of Islam is a key factor in these areas.
Iran’s path to the free world is Europe via North, during tight situation.