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ENERGY CO-OPERATION IN THE MEDITERRANEAN: ASSESSMENT AND OUTLOOK
Rapporteur: Vahit ERDEM (Turkey)

TABLE OF CONTENTS

I.  INTRODUCTION 

II.  EUROPEAN DEMAND, PERCEPTIONS AND VULNERABILITIES 

III.  MEDITERRANEAN SUPPLIERS: POTENTIAL AND PREFERENCES 

IV.  EURO-MEDITERRANEAN ENERGY CO-OPERATION: STATE OF PLAY 
A.  POTENTIAL FOR RENEWABLE ENERGY?

V.  CONCLUSION:  FUTURE PROSPECTS - ANY ROLE FOR NATO? 

VI.  APPENDIX: GAS ROUTES TO EUROPE 

I.   INTRODUCTION

1. The global energy panorama has changed drastically over the last decade. The (conventional) driving forces that shape the world of energy, namely supply and demand, technological change, policies of the Organisation of Petroleum Exporting Countries (OPEC), the effectiveness of non-OPEC producers to compete for markets with OPEC and the power of consuming nations to undertake individual or collective actions, have, by and large and in a profoundly structural manner, shifted course in recent years. The worrisome impact on policy-makers, in consumer countries, of these recent global energy market trends has brought the concept of “energy security” to the fore of the International Relations and global security debates.

2. As growing demand, driven largely by booming Asian economies led by China and India, continues to put pressure on an already tight global energy supply chain, rising prices have increased global anxieties over the world’s ability to meet energy needs reliably and affordably. Indeed, current projections indicate that the world’s energy demand will grow by 55% between now and 2030, with the soaring economies of developing countries accounting for 74% of this global increase. Furthermore, the International Energy Agency (IEA) estimates that China and India alone will contribute 45% of this projected growth. Simultaneously, dependence on supplies from OPEC producers will increase and the ability (resources) of the cartel to meet global demand is deemed sufficient, subject to adequate investment (OECD/IEA, 2007).

3. The accentuation of resource nationalist reflexes by this tense situation for both consumers and producers has exacerbated the former’s anxieties over the latter’s potential capitalisation on consumers’ sense of vulnerability for geopolitical ends. Together with the perceived terrorist threat over critical energy infrastructure, this state of play has led to a far-reaching politicisation of energy security to the extent that it is now considered an issue of priority not only for energy operators but also for security organisations such as NATO.

4. Nowhere is this state of affairs more apparent than on the European energy scene. Today, the European Union (EU) is the largest energy importer in the world and its dependence on imported fossil fuels, particularly oil and gas, is set to grow steadily. According to its own estimates, the proportion of imported energy in the EU’s consumption mix will rise from 50% today to more than two-thirds by 2030. Of those imports, natural gas is likely to grow significantly in the European energy mix, as it is becoming the Union’s fuel of choice for power generation. Environmental awareness and efficiency are the two main factors informing this preference. With depleting indigenous reserves, European gas imports are expected to reach over 80% of total consumption within the next 25 years.  If current trends continue, moreover, only a handful of major suppliers will satisfy the EU’s future gas requirements. More specifically, Russia, which presently supplies a little over 25% of the bloc’s gas consumption, is likely to remain the major gas supplier to the EU.

5. It is against this backdrop that Russia’s recent behaviour vis-à-vis its former satellite republics – now part of the EU or its immediate vicinity – spurred concerns in European and transatlantic policy circles over Moscow’s reliability as a leading source of energy. Indeed, the impact of the two episodes of the Ukrainian-Russian dispute in 2006 and 2007 on the EU’s gas supplies brought home two startling realities for European decision-makers. First, it became clear that depending for vital energy supplies on one single source exposes energy security vulnerability even to unintended supply disruptions. More importantly, these incidents raised the dual question of whether Russia was a reliable energy partner and whether energy was now becoming Russia’s new foreign policy tool.

6. The sense of urgency for action on a common European energy policy, set in motion by these developments, led the EU to, inter alia, consider consolidating its energy relations with producers on the North African and Middle Eastern shores of the Mediterranean, by notably seeking to establish “strategic energy partnerships” with these suppliers.

7. This report aims to provide an assessment of the state of Euro-Mediterranean energy cooperation in light of the changing dynamics of the region’s energy scene. It will do so with view to highlighting the potential of key “southern” suppliers, such as Algeria, Egypt, Libya and Qatar, whose potential as alternative sources of gas for the EU is undisputable. The focus on gas and gas suppliers is informed by the assumption that the future of this fossil fuel is brighter than that of oil and coal because of its growing attractiveness for consumers and producers alike. Moreover, the report, in evaluating the prospects for energy co-operation in the Mediterranean, will also address the issue of political instability in most of these producers, by way of recommending its integration in the European energy policy initiatives in the region.

8. Your Rapporteur would like to stress the fact that this GSM report comes as part of a series of publications in which recent NATO PA interest in the complex issue of energy security culminated.  Starting in 2006 with the report of Jos van Gennip, General Rapporteur of the Economics and Security Committee, followed in the same year by Resolution 354 on “Improving Global Energy Security”, two further reports were prepared this year by the Rapporteurs of the Sub-Committee on Energy and Environmental Security (Science and Technology Committee) and of the Committee on the Civil Dimension of Security, Mario Tagarinski (Bulgaria) and Lord Jopling (UK) respectively. Your Rapporteur believes that the topic of this year’s GSM report reflects the importance attached by the NATO PA to the Mediterranean dimension of energy security for Europe and the transatlantic community at large.


II. EUROPEAN DEMAND, PERCEPTIONS AND VULNERABILITIES

9. Energy security is a multi-dimensional concept whose meaning changes according to the position of countries in the value chain (producers, transit, consumers) and to prevailing dynamics, internal and external to energy markets (Baumann, 2008; CIEP, 2008). As such, defining energy security is complicated by the variety of views of what is at stake. To some it means protecting against politically induced supply disruptions or technically induced supply problems, to others it is facing the challenges of terrorism, and to yet others, it means addressing the issue of global warming by changing consumption patterns (Monaghan, 2005: 2). Thus, even if energy security is conventionally understood to refer to sustainable and reliable supplies at reasonable prices, the following important distinctions and caveats ought to be considered in any comprehensive definitional effort:

* Any definition of energy security must distinguish between geological and (geo-)political dimensions. Even though there tends to be a consensus on the fact that there are sufficient physical reserves underground to meet current demand, there are increasingly diverging views on the longevity and sustainability of these resources, particularly oil. Divided between the “peak camp” (mostly geologists and scientists) on the one hand and a group of mostly economists on the other, experts disagree on just how much oil is left on the ground and the economic viability of its exploration. As regards the political dimension of energy security, issues of instability, reliability and predictability surrounding the upstream and downstream of the energy market predominate.
* Price stability is of interest to both consumers and producers in the long-term. Therefore, limiting severe price fluctuation is an important aspect of energy security.
* From the producers’ perspective, demand security also merits attention. Major resourceholders have voiced their concern regarding long-term security of demand for their hydrocarbon resources. This concern is informed by two considerations: first, the cyclical growth patterns and policies that damp the demand for fossil fuels and favour other sources of energy; second, the failure of most OPEC states to diversify their economies and their consequent continued heavy dependence on hydrocarbon revenues. Thus, they are anxious to secure markets for their major source of income. Rather than focusing solely on the dependence of consumers on producers, then, it is more instructive to talk about mutual dependence and to recognise that the degree of interdependence between energy producers and consumers will further increase in the future (Bahgat, 2006: 966).

10. European concerns regarding the security of its energy supply was first prompted by the Arab oil embargo of the early 1970s. Specifically, the embargo highlighted three main issues. First, it exposed a need for increased energy policy collaboration among European countries and between Europe and the energy producing world. Second, it became clear that institutional mechanisms for increased coordination in the event of future supply disruptions were essential. Third, consensus emerged that Europe should prepare strategies to prevent it from becoming the victim of future attempts by exporting nations to use energy as a political or economic weapon. The 1974 creation of the IEA, which has become Europe’s primary instrument for monitoring and analysing world energy markets, was one response to the embargo (Belkin, 2008: 3).

11. Subsequently, European countries began to identify Russia and other Eurasian countries as potential energy suppliers. At the same time, Soviet Russia was beginning to realise its energy producing potential but required major investments in its energy sector. The prospect of future cooperation in the energy field began to play a key role in European perspectives on developing relations with the Soviet Union (ibid.).

12. In 1991, the European Union launched the Energy Charter Declaration, an initiative intended to promote energy co-operation and diversify Europe’s energy supply. The Declaration gave way to the 1994 Energy Charter Treaty that entered into legal force in 1998 and established a framework of rules and agreements to promote international energy co-operation. To date, 51 countries and the EU have signed or acceded to the Treaty. The Treaty seeks to create a level playing field of rules regarding the promotion of foreign energy investments; free trade in energy materials, products and equipment; freedom of energy transit through pipelines and grids; promoting energy efficiency; and providing mechanisms with which to address disputes (ibid.).

13. Since the signing of the Energy Charter Treaty, the European Commission has used its existing competency in competition and environment and consumer protection policy to attempt to shape a European energy policy in a variety of ways. These include promoting an internal gas and electricity market, encouraging the development of alternative energy supplies, and, in cooperation with the office of the High Representative for Common Foreign and Security Policy, pursuing a more co-operative approach to external relations with current and future energy suppliers (ibid.).

14. Throughout the history of the EU, there have been a number of attempts to develop a common energy policy. The original European Coal and Steel Community and Euratom treaties were designed, amongst other things, to foster a co-operative approach to the handling of the traditional backbone of energy supply (coal) and the “fuel of the future” (nuclear energy). As it transpired, neither was particularly effective and attempts within the European Economic Community to co-ordinate a common energy policy were largely inconclusive. While the 1970s energy crisis led to a number of attempts to re-launch such a policy, debates amongst Member States tended to expose their differences rather than rationalise their co-operation and for many years the common energy policy amounted to very little. This is not to deny achievements in the area of energy policy; numerous Council meetings secured agreement on such issues as financial programmes to foster new energy technologies, restrictions on the use of oil and gas in power generation, requirements on the storage of emergency oil stocks, dialogues with third countries on energy matters and a regular set of indicative objectives for energy policy. However, it could not be argued that these measures superseded or constrained national energy policies to any meaningful extent.

15. Energy security lends itself very well to a feeling of vulnerability in the west – an immediate shortage of energy would pose major problems for Western economies and serious domestic political questions. An immediate shortage of gas, particularly in cold northern areas, would pose serious problems for heating costs; one of oil for transport costs. Such fears are justifiable in that they require serious planning, but are also vulnerable to hyperbole in the public press and political statements and problems can become unrealistically magnified.

16. A cause of this is the uncertainty surrounding energy, the lack of hard numbers and evidence and the shifting sands in state-private sector relations in many producing states. As many in the peak and optimist camps note, we simply do not know how much oil is in the ground, or how much of this uncertain amount is economically viable. There are proved, possible and probable reserves. Numbers are at best informed estimations. Moreover, statistics are variously measured. There are differing systems of quantification. This is compounded by high levels of business and state secrecy surrounding the energy sector. Although publications such as the BP Annual Statistical Review provide good information, it is also true that accurate knowledge is a highly profitable business asset and guarded as such. This is not only the case in business. Moscow recently announced that Russian reserves are a state secret. Much planning and negotiation goes on behind closed doors. Finally, it should be noted that figures are often seriously manipulated or ignored completely in texts highlighting soaring demand and falling production. Manipulation and vague, but dramatic, scenario portrayal serve only to maximise sensitivity (Monaghan, 2005: 4).

17. In this vein, Europe’s mounting sense of vulnerability, which derives from its dependent position (described above), as an energy consumer, on a limited number of key suppliers, was exacerbated by the rapprochement between its two biggest gas suppliers, namely Russia and Algeria. Coming shortly after the “gas row” with Ukraine in January 2006, which tarnished Russia’s reputation in Western Europe as an energy supplier, the proclaimed co-operation between Gazprom and Sonatrach (Algeria’s state-owned hydrocarbon company) raised alarm bells in European and transatlantic policy circles. The concern of European consumers, chiefly, was that the two memoranda of understanding (MoU) concluded in August 2006 and January 2007 between these two energy operators could lead to a form of collusion over gas prices. More specifically, it was the discretion and opacity characterising the conclusion of the first Memorandum of Understanding (MoU) in particular which spurred anxious reactions to the putative prospect of cartelisation of the gas market, under the strategic impetus of Russia and Algeria. Subsequently, the warming to the idea of a “gas OPEC”, expressed in sequence during the first three months of 2007 by the political leaders of Iran, Russia and Algeria, drew excessive attention to the 6th ministerial meeting of the Gas Exporting Countries Forum (GECF) that took place in Doha, on 9 April 2007.

18. Established in 2001, the GECF has been a loose structure, bringing together some fifteen of the world’s largest gas producing countries, whose vocation is unlikely to be turned into that of a gas cartel simply under political impetus. In fact, many commentators have advised that, given the nature of the gas market(s) on the one hand and the triadic relationship Russia-EU-Algeria on the other, a gas OPEC was an unlikely short- to medium-term evolution of the GECF and more so under Russian-Algerian collusion. The expiry in August 2008 of the first MoU between Gazprom and Sonatrach and the apparent explicit decision of Algerian officials not to renew it corroborated the view that Russian and Algerian interests were far from the level of convergence necessary for any collusion on their part to result in a gas cartel.

19. This gas saga aside, the momentum that sprung in 2006 among European government and Commission (EC) officials for a firmer collective energy policy commitment culminated in 2007 in a series of strategy documents stressing, inter alia, the establishment of strategic energy partnerships with neighbouring producers, based on “shared rules or principles derived from the EU energy policy”. In this vein, the high-profile September “unbundling” proposal (separation of gas and electricity production and distribution networks) is seen in Brussels as conducive, not only to better internal competitiveness and efficiency, but crucially as a means of influencing the normative frameworks of third producer countries.

20. However, the Commission’s inability so far to surpass enduring divisions within member states over the liberalisation of the internal market has botched its efforts “to speak with one voice” with third-supplier interlocutors. Member states like France, Spain and Germany, to cite but a few, still prefer bilateral approaches to negotiating access and reciprocity. Besides sending confusing “normative” signals to producers, this attitude precludes the very predictability of interdependence that the EC’s 2007 Strategy Review aims to attain and which, from a supply standpoint, is of equal importance. As a result, the partnerships proposed by the EU to its energy suppliers are missing an explicit geopolitical element that takes account of the nature of the energy market, the preoccupations of its suppliers and the properties of their energy relations with the EU.


III. MEDITERRANEAN SUPPLIERS: POTENTIAL AND PREFERENCES

21. The Mediterranean segments in the policy documents of the EU’s recent energy strategy reviews identify the strategic need for more comprehensive partnerships with countries like Algeria, Egypt, Libya and Qatar as a priority. Indeed, these countries sit at the forefront of the regional gas supply scene. While their export capacities and structures vary, these producers share an undisputable potential in meeting growing European gas demand. As such, the EU’s heterogeneous prioritisation of strategic energy partnerships in its relations with these countries reflects not only their export potentials, but also the type of the existing contractual frameworks governing their broader relations with the EU.

22. Accordingly, Algeria tops the EU’s priority list as indicated notably by declarations in 2007 of Commission officials, such as Andris Piebalgs and Benita Ferrero-Waldner and the European Parliament’s president Hans-Gert Pöttering. Indeed, helped by geographical proximity, Algeria has traditionally been one of the major supplies of gas to Europe. About 90% of its 68 billion cubic meters (bcm) of gas exports is destined to the European market. Decisions taken in 2007, furthermore, regarding the realisation of strategic pipeline infrastructure (see Appendix), notably Medgaz (linking Algeria directly to Spain), Galsi (a direct submarine connection to Italy) and the Trans-Saharan Gas Pipeline (transporting Nigerian gas to be exported via the Algerian network), can only consolidate this position. Indeed, this infrastructure will come to complement two existing pipelines, namely the Trans-Mediterranean pipeline (also know as the Enrico Mattei pipeline), connecting Algeria to Italy via Tunisia, and the Europe-Maghreb pipeline transporting Algerian gas to Spain via Morocco.

23. Egypt comes second in this European pecking order. The recent expansion of natural gas production has endowed Egypt not only with a vital economic growth engine, but also with an additional factor for deepened co-operation in its relationship with the EU, already governed by a Euro-Med association agreement and a Neighbourhood Policy Action Plan. Through its support for the Arab Gas Pipeline, which will transport Egyptian gas, through Jordan and Syria, to Turkey and potentially to Eastern Europe via the planned Nabucco pipeline, the EU is hoping to dip further into the country’s 17 bcm of gas exports.

24. Qatar, for its part, has since 2006 surpassed Indonesia as the world’s largest liquefied natural gas (LNG) exporter and is predicted to supply as much as 30% of the world LNG market by 2010. As such, Qatar offers a viable alternative for the EU in its efforts to reduce its heavy reliance on pipeline deliveries. However, both the EU’s preference for a regional approach towards the Gulf Co-operation Council (GCC) in relation to energy (and other) matters and the absence of a European LNG policy that allows it to compete with the Asian and American markets – both Qatar’s traditional consumers – have so far trumped Community aspirations for a more strategic partnership with the latter.

25. As to Libya, despite its recent attempts to normalise its relations with the West, especially after the resolution of the Bulgarian nurses’ crisis in July 2007, no framework has been established yet to streamline its relationship with the EU. With its 1,500 bcm of gas reserves, Libya exports a little over 7 bcm of gas to Europe via the Greenstream pipeline, which joins it with Italy via Sicily. The scope for an enhanced role for Libya in satisfying the EU’s increasing demand is evident, but until the country adopts a clear energy export policy the prospects for a comprehensive strategic partnership remain rather meagre.

Table 1: Gas data (2007) in billion cubic meters (bcm)

 

Reserves

Total exports

Exports to the EU

Algeria

4,520

68 (P/L)*

63 (P/L)

Egypt

2,000

17 (P/L)

5 (L)

Qatar

25,600

38 (L)

7 (L)

Libya

1,500

9 (P)

9 (P)

  Source:   Rapporteur’s calculations based on BP Statistical Review
      of World Energy (2008)

  * “P” denotes pipeline transport; “L” denotes liquefied natural gas

26. At the macro level, besides the EU market’s lack of competitiveness, relative to the growing and liberalised North Asian and American markets, the energy interdependence in the Mediterranean space that the EU’s proposed partnerships purportedly aim to reflect and consolidate is challenged by the fact that the extant energy-markets governing principle of “buyer brings market, seller brings supply” is withering under the effect of new and intertwined economic and political realities. Firstly, recent economic growth in most producer countries, fuelled by record-high energy export revenues, is in turn driving domestic energy demand upwards, leading to a situation of pressure on these countries’ abilities to simultaneously meet their growing gas export commitments. Indeed, with this situation and their eager efforts to diversify their economic activities and create employment opportunities for their often-disillusioned youths, producer countries in the Mediterranean are increasingly faced with a difficult choice: to divert resources away from hydrocarbon investments in favour of other economic sectors at the expense of rentierism; or, to expand energy production and exports, even through foreign direct investment (FDI), at the expense of real economic growth and rationalisation of exploration of reserves. In the present conjuncture, most Mediterranean producers, especially those with sizeable populations and heavy economic reliance on hydrocarbons, such as Algeria, appear to have opted for the former course of action.

27. Secondly, and relative to the properties of the current juncture, namely high energy prices and the race to access reserves, gas sellers are growing in sophistication and are as a result seeking to integrate vertically along the value chain, such as through the downstream of the European market. However, such policy orientations, witnessed in particular in the case of Algeria’s Sonatrach, are almost antipodal to the EU’s proposal for a strategic energy partnership with the country, which appears limited to attempting to export the EU’s acquis in this area to Algeria. Notwithstanding the confusing normative signals of the EU’s “unbundling” proposal, these EU strategic partnership proposals not only reinforce the asymmetrical interdependence characterising Euro-Mediterranean relations, by failing to take account of the economic and political preoccupations of producers, but they also seem duplicate the regional multilateral work of the EU in this policy area.

IV. EURO-MEDITERRANEAN ENERGY CO-OPERATION: STATE OF PLAY

28. Euro-Mediterranean energy co-operation is developed in the framework of the Barcelona Process, established in 1995, which set out as a mid-term objective the creation of a EuroMediterranean Free Trade Area by 2010. Energy co-operation was developed in this framework aiming to promote regional integration of energy markets, enhance energy security, including diversification of energy sources and supply routes and ensure environmental sustainability of the energy sector in the Mediterranean region.

29. The main instruments of this energy co-operation are the Euro-Med Energy Ministerial Conferences and the Euro-Med Energy Forum (EMEF) which meets at the level of general directors. Sub-regional energy dialogues and co-operation initiatives have also been promoted with the objective of progressively creating an integrated Euro-Mediterranean energy market. Over €55 million has been allocated to projects in the region under the EC MEDA programme over the past 8 years to support the gradual integration of the Euro-Med energy markets. In addition, loans for nearly €2 million have been given by the European Investment Bank to support energy infrastructure priority projects, notably to complete the electricity and gas links in the region.

30. The idea of a Euro-Mediterranean Energy Forum emerged during the first meeting of the Euro-Med energy ministers in Trieste in June 1996. The EMEF’s first working meeting took place in Brussels in May 1997. Departing from the recognition of the centrality of energy issues in EuroMediterranean co-operation and for the potential of energy co-operation as a catalyst for the construction of a Mediterranean region, the EMEF initiative set out to pave the way for a true EuroMed Energy Partnership (EMEP). The first medium-term action plan of the EMEF adopted in 1998 identified as its priorities for the period 1998-2002: a/ Security of supply; b/ competitiveness of the energy industry; and c/ the protection of the environment. Agreed in 2000, during the Forum’s Grenada meeting, the long-term objectives of the EMEP included:

- reform of the legislative and regulatory framework for the energy sector of the Mediterranean partners;
- restructuring of the energy industry of the Mediterranean partners;
- convergence of the energy policies of the European Union and the Mediterranean partners;
- integration of the Mediterranean energy markets;
- development of interconnections, in particular South-South when appropriate; and
- the promotion of renewable energy sources in the framework of sustainable development.

31. Acknowledging their failure to achieve the priorities of the earlier action plans, Euro-Med energy ministers gathered for their fifth conference and set out a third action plan for the period 2008-2013, prioritising the harmonisation and integration of energy markets and legislative frameworks and the development of mutually-beneficial energy infrastructure.

32. Despite a weak institutional structure and a few erratic meetings over the years, most probably due to contamination by the “Barcelona syndrome”, the EMEP contains the ingredients for a regional strategic energy co-operation par excellence. It defines the contours of a regional approach to energy security predicated on mutual interests and reciprocity. Given the nature of energy challenges in the region, such a comprehensive approach offers the appropriate tools to address the Mediterranean dimension of the EU’s energy challenge and the establishment of a Euro-Mediterranean energy community.
 
 
  A. POTENTIAL FOR RENEWABLE ENERGY?

33. The pivotal role of energy in fostering regional co-operation and integration in the EuroMediterranean Partnership was laid out in the Barcelona Declaration. In contrast to trading sectors like agriculture, where both sides of the Mediterranean tend to compete, the energy matrix of the Euro-Mediterranean space is – in net terms – complementary. Geographical proximity for energy production and transit, as well as the significant oil and gas reserves of southern Mediterranean producers and their potential in renewable energies, makes co-operation a crucial step for guaranteeing energy supply to the European Union.

34. Southern Mediterranean countries need to meet growing energy requirements of their own, closely linked to their socio-economic development. While conventional energy resource endowments differ a great deal between countries, they all face increasing local and global environmental constraints such as desertification, land degradation, growing coastal urbanisation and increasing waste problems. Additionally, some well-endowed countries are facing a declining hydrocarbon production, particularly for oil, notwithstanding the fact that hydrocarbon exports are the backbone of their economies. As such their preservation and valorisation are essential to the sustainable development of the region. In this context, renewable energy can play an important role.

35. The Mediterranean region is indeed endowed with a high potential for renewable energy sources. Renewable energy is defined as “energy that is derived from natural processes that replenished constantly. In its various forms, it derives directly or indirectly from the sun, or from heat generated within the earth…from solar, wind, biomass, geothermal, hydropower, and ocean energy and bio-fuels and hydrogen…” (Observatoire méditerranéen de l’énergie, 2007: 16). According to the European Commission, a small area of the Sahara Desert’s surface, if used for thermal energy production, would provide enough electricity to supply the whole European Union. Therefore, most European states are supporting the use of renewable energy by regulating its integration into the electrical grid. The Euro-Med region can enhance security of energy supply by allowing energy source diversification, mitigate risks in the current energy portfolio, creating a framework for investment enhancing industrial competitiveness, creating new jobs and promoting economic development.

- Solar: Southern Mediterranean countries are located in the world’s solar belt and have an abundant solar availability. The annual average global solar radiation over the region ranges from about 1,300 KWh/m²/year on the Mediterranean coast to more than 3,200 KWh/m²/year in the South and desert areas. The total of sunshine hours ranges between 2,650 and 3,600 hr/year.
- Wind: Mediterranean countries are also endowed with high wind resources in some locations, leading most of the countries to consider wind energy as one of the most promising source of renewable energy in addition to solar. Several measurement programmes have been undertaken in the region with view to evaluating wind potential. Some sites identified in Morocco and Egypt, in particular, are qualified as being the best locations in the world. National wind Atlases are being prepared in most of the countries.
- Biomass: Total waste resources potential is very high in the region. Some tentative estimation for their energy valorisation potential has been carried out in Algeria, Egypt, Morocco, Tunisia and Turkey indicating significant results. The potential for waste resources in Egypt is estimated at 47 million tons per year. In Morocco, urban waste is estimated at 3 Mt/year.
- Hydropower: The most important technical potential of hydropower is available in Turkey (433 GWatt), Egypt (2.8 GW) and Morocco (2.5 GW). Existing generating power capacity in Turkey is 12.9 GW and 4.2GW hydroelectric capacity is under construction.
- Geothermal energy: Geothermal potential is still not explored in the region, except in Turkey. According to information gathered, important potential is available in Turkey and also in Algeria and Morocco. Some potentially exploitable sites have already been located in these countries.

36. Despite their considerable potential and advantages, renewable energies remain underexplored in the region (as is the case in most parts of the world) due to the existence of a number of barriers, chief amongst which are: the paucity of adequate institutional and regulatory frameworks, limited technical know-how and experience with modern renewables, lack of financial resources because of the profitability of more traditional fuels, the competitiveness of subsidised and less costly conventional energy sources, lack of information and awareness, as well as competent human resources.

37. For renewable energies to achieve their market potential, policy frameworks and financial instruments are necessary to give investors the necessary assurance and incentives to shift investment away from carbon-emitting conventional technologies to large-scale investment in clean energy systems. In general, the use of renewables would benefit from bilateral and regional co-operation. Regional co-operation in the field of renewable energy in the Mediterranean region is necessary and significantly benefit sustainable development in the region while playing an important role in meeting the environmental targets of the countries on the northern shores of the Mediterranean.


V. CONCLUSION:  FUTURE PROSPECTS - ANY ROLE FOR NATO?

38. What is noticeable from the stated objectives of the latest EMEP action plan and the series of policy papers and strategies that have been put forward by European officials by way of a remedy for the EU’s energy predicament is that the EU’s energy strategy is about extending the EU’s energy norms and infrastructure as the main solution to security concerns. The overarching aim of the EU’s new energy policy is said to be the development of inter-connecting energy systems between different geographical area, based on EU regulatory norms and the acquis, as a means of transcending the so far partial co-operation pursued separately with individual partner states.
 
39. The commitment to a market-based approach energy policy appears to be particularly strong within the European Union. The European Commission, and for the most part, EU Member States maintain the stance that open energy markets are a precondition for the pursuit of other energy policy objectives. EU officials argue that rule-based governance offers the most promising way to deal with the rise of new energy consumers, such as China and India. The intention behind this European energy strategy is to seek to entice these states into an international energy regime based on common regulatory and governance norms, to undermine the ability of such rising powers to resort to untrammelled political deal-making (Youngs, 2007: 5). Whether or not that is the case, it appears that market liberalisation has been important in developing EU level policies for the energy sector.

40. With growing dependence on external sources of energy supply, it is clear that it has become impossible for the EU to separate its internal energy policy development from its external energy relations. As a result, the growing influence of market liberalisation is easily detectable in the EU’s energy diplomacy efforts. However, its attempts to develop a “common front”, vis-à-vis external energy suppliers, has been mixed. One of the reasons for the failure of these efforts to materialise is the diversity of national interests regarding relations with supplier countries and the determination of Member States to defend those interests. Additionally, it appears increasingly evident that EU energy policy-makers still consider energy security as being a matter of reducing external dependencies, rather than strengthening international market interdependencies (ibid.).

41. A further question relates to the attractiveness of the EU’s approach for producer states. It is assumed that it is in the spread of its own regulatory norms that the EU’s own most successful influence and comparative advantage lie. However, in energy policy this is not perceptibly the case. In fact, resistance has strengthened in many, if not most, of the EU’s main energy suppliers to the import of the EU energy-pertinent norms. In many places, the market-governance approach proved to have little traction. This is most conspicuously the case in the Mediterranean, where, despite the existence of allencompassing normative frameworks such as the Euro-Mediterranean Partnership and the European Neighbourhood Policy, key producers are resisting EU-style market and governance norms (ibid.: 8).

42. There is also a connected parallel to this limited reach of market-governance norms, which represents the most serious shortcoming of European policy, namely the almost apolitical flavour of EU energy security strategy. The EU needs to move beyond its dichotomised debate over “market versus geopolitics” (ibid.: 15). It is recognised that the results of the array of EU energy dialogues with producer states have been meagre and progress limited to narrow technical issues. The EU needs to extend its work on technocratic norms to embrace a more holistic focus on the broader political governance of producer state regimes. The need across different regions is to appreciate how the broader politics of energy rebounds on European interests in complex ways. This not only involves realising that backing “friendly autocrats” rarely optimises energy security in its broadest concept. It also requires policy-makers to question their tendency to consider only a narrow range of governance issues directly within the energy sphere.

43. It is, therefore, your Rapporteur’s view that, in rethinking its approach towards the Mediterranean dimension of energy security, the EU needs to adopt a more comprehensive attitude reflecting not only its preferences but also taking account of the preoccupations of producer and transit countries alike. In doing so, moving beyond a purely market-based approach towards an energy strategy that combines norms and politics as mutually-conditioned segments is the optimal way for systematically incorporating energy security into European foreign and security policy.

44. Before drifting towards a rule-based framework, the initial action plans adopted by the EuroMediterranean energy officials were closer to this recommended approach than what they are today. It is your Rapporteur’s view that the EMEP provides an ideal forum for fostering energy co-operation in the Mediterranean. The attachment expressed by producer countries for the principles underlying the type of co-operation initially envisaged by this structure, as opposed to their more recent successors, is testimony to the potential for developing this framework further.

45. One way of doing that could be to integrate the EMEP and the EMEF in the Union for the Mediterranean (UMed) project as an integral part of this new Euro-Mediterranean policy initiative. Energy has already been flagged up as a priority sector for the projects that will constitute this Union. However, from what can be seen in the official UMed documents (French and Commission), much focus has been put on renewable, especially solar, energy sources. Despite the importance of developing alternatives to finite fossil fuels, the caveat of financial resources needs to be addressed before such projects can materialise. However, in view of the scepticism that has already been expressed as regards the idea of relying on private funds, as well as the new-found “oil cash” of some southern Mediterranean countries from actors of both categories, it appears more reasonable to gear UMed energy projects more towards commonly beneficial infrastructures and more economically-viable energies such as LNG.

46. As to the role of NATO in the energy security debate, it has been an open question. Some claim that energy is not a primary theme for the Alliance and that other organisations, such as the EU and the IEA, are better equipped to deal with this challenge. However, the new awareness connected to the evolution of the energy market and the new threat perception has prompted a reassessment of NATO's possible contribution in this area. Existing initiatives have been rebranded under the heading of NATO's role in energy security, and new potential areas of intervention have been considered. At the Riga Summit in 2006, Heads of State and Government called for a "co-ordinated, international effort to assess risks to energy infrastructures and promote energy infrastructure security" and tasked the North Atlantic Council (NAC) to define "those areas where NATO may add value to safeguard the security interests of the Allies". This renewed focus on energy security was also integrated in the Comprehensive Political Guidance adopted in Riga, which cites "instability due to (...) the disruption of the flow of vital resources" as one of the main likely risks or challenges for the Alliance in the next 10 to 15 years.

47. As a result of the Riga tasking, the NAC prepared a report on "NATO's Role in Energy Security", suggesting principles and fields for NATO involvement. Heads of States and Government took note of this report at the Bucharest Summit in April 2008 and adopted a list of areas in which NATO should engage. These include: information and intelligence fusion and sharing; projecting stability; advancing international and regional co-operation; supporting consequence management; and supporting the protection of critical energy infrastructure. They further tasked the North Atlantic Council to prepare a consolidated report on the progress made in the area of energy security for consideration at NATO's 60th Anniversary Summit in 2009.

48. Based on these developments and taking into account the recognition at the Bucharest Summit of NATO's role in supporting critical energy infrastructure, one can expect to see NATO play a greater role in a number of related areas. As my colleagues mentioned in the introduction, your Rapporteur is of the view that one such area is promoting a convergence of views among Allies as to the nature and seriousness of the threat to critical energy infrastructures worldwide. This will be done through consultations, as well as exchanges of information and intelligence, among NATO Allies, but also with partner countries. NATO is developing partnerships with an ever-greater number of countries all over the world, including in crucial areas in terms of energy flows - the Middle East, the former Soviet Union. Promoting a closer dialogue on threats to global energy infrastructures would certainly benefit both sides.

49. Related to this is NATO's potential role in enhancing the surveillance of energy flows, particularly at sea. As a matter of fact, NATO, through its Headquarters in Northwood and Naples, already has a structure in place which can assist it to develop greater "situational awareness", that is to have a clear picture of where important shipments are at any given time. NATO's Operation Active Endeavour already serves a similar purpose in monitoring the movement of ships in the Mediterranean to deter terrorist activities. NATO is also considering plans to make a greater use of its Standing Maritime Group 1, which forms the naval component of the NATO Response Force.  Keeping the Mediterranean’s busy trade routes open and safe is critical to NATO’s security. In terms of energy alone, some 65 per cent of the oil and natural gas consumed in Western Europe pass through the Mediterranean each year, with major pipelines connecting Libya to Italy and Algeria to both Italy and Spain.

50. Another more direct role would be in providing technical assistance and training to third countries to enhance the protection of critical energy infrastructures on their territory, as well as promote regional and multilateral initiatives to this effect. Here again, NATO can expand on the existing menu of partnership activities that it has developed with a large number of countries.

51. Your Rapporteur is convinced that NATO should play an increasing role in the domain of energy security. The Alliance can provide an added value both due to its capacity in the area of physical protection of energy infrastructure and because it is a unique vehicle for co-operation and coordination among members of the transatlantic community. NATO brings on board non-EU countries that are extremely important in terms of energy security: the United States, Canada, Norway and Turkey. In the framework of the Istanbul Cooperation Initiative (ICI) of 2004, NATO has established intensive co-operation with energy rich countries in the Gulf; Bahrain, Qatar, Kuwait, and the United Arab Emirates (UAE). NATO co-ordination mechanisms can and should contribute to enhancing solidarity among the Allies in the event of major supply disruption and other outstanding energy security challenges.

 

REFERENCES

Bahgat, G. (2006) ‘Europe’s Energy Security: Challenges and Opportunities’, International Affairs, 82 (5), pp. 961-975.

Baumann, F. (2008) ‘Energy Security as Multidimensional Concept’, Policy Analysis, No. 1, Munich: Centre for Applied Policy Research.

Belkin, P. (2008) ‘The European Union’s Energy Security Challenges’, Congressional Research Service Report, No. RL 33636, Washington.

Clingendael International Energy Programme (CIEP) (2008). The Gas Supply Outlook for Europe: The Roles of Pipeline Gas and LNG, The Hague: CIEP.

International Energy Agency (IEA) (2007). World Energy Outlook 2007: China and India Insights, Paris: OECD/IEA.

Monaghan, A. (2005) ‘Russian Oil and EU Energy Security’, Russian Series, No. 05/65, Swindon: CSRC.

Obeservatoire méditerranéen de l’Energie (2007). Renewable Energy in the Southern and Eastern Mediterranean Countries: Current Situation, France: OME.

Youngs, R. (2007) Europe’s External Energy Policy: Between Geopolitics and the Market, CEPS Woking Document No. 278, Brussels.

 

VI. APPENDIX: GAS ROUTES TO EUROPE

Source: European Commission

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