Caspian Policy Center Discusses Impact of COVID-19 on Energy Sector

The Caspian Policy Center (CPC) brought together top officials from the Department of State and USAID; energy executives from BP America, Chevron, and SOCAR; and the energy policy officials from the Trans-Caspian countries to discuss how the energy demand collapse brought on by the COVID-19 pandemic is impacting energy market in the Caspian region and provide suggested next steps, Report informs.

CPC’s Executive Director Efgan Nifti opened the event with welcome remarks that were followed by introductory comments from the panelists.

“Energy security has been and remains a critical factor in countries’ national security calculations and in the overall international relations agenda with the Trans-Caspian region playing an important role as a supplier and a transportation route for oil and natural gas,” said Mr. Nifti.

Kurt Donnelly, Deputy Assistant Secretary for Energy Resources at the U.S. Department of State; Javier Piedra, Deputy Assistant Administrator for Asia at USAID; Elnur Soltanov, Deputy Minister of Energy of Azerbaijan; Elshad Nassirov, Vice President for Investments and Marketing at SOCAR; George Chikovani, Chief Executive Officer of the Georgian Energy Development Fund; Robert Scher, Head of International Affairs at BP America; and Amy Conroy, Director of the International Government Affairs at Chevron were among the webinar panelists who talked on the current state of the COVID-19 pandemic in the Caspian region, a range of policy actions to support energy suppliers dealing with the impacts of the pandemic and response measures, methods implemented by global energy companies to maintain critical partnerships in the region, implications of geopolitical conflict for regional energy infrastructure and development, and actions to enable energy distribution networks in laying the grounds for recovery.

“What is needed at any time, especially at a time we are facing now, is a vision from governments, companies, actors, thinkers, inventors, and creative people. This is the kind of vision that gave us the Southern Gas Corridor,” said Kurt Donnelly, Deputy Assistant Secretary for Energy Resources at the U.S. Department of State. “The Southern Gas Corridor is a great achievement, but we can’t stop there,” he added.

“The Trans-Caspian inter-connector makes sense: this will help increase the region’s energy security, help bolster independence and sovereignty, have a more equal footing in the energy markets, help the Caucasus and Central Asia become crossroads, and promote interregional cooperation,” shared Javier Piedra, Deputy Assistant Administrator for Asia at USAID. “Central Asian Regional Electricity Market (CAREM) will promote energy independence for the region by establishing a transparent, integrated, market-based power trade network, which will lead to improved energy reliability and lower electricity costs and enable the environment for the private sector to thrive. Our partnerships with private industry are at the heart of our strategy. At USAID, we know that private enterprise is the single most powerful force for improving livelihood, for strengthening communities, and accelerating self-reliance,” he added.

“Right now, we are going through an unprecedented water shortage period, and this creates a lot of problems for Azerbaijan as a downstream country. It pushes us towards a greater regional cooperation and points to an urgent need to push for wind and solar energy,” said Elnur Soltanov,Deputy Minister of Energy of Azerbaijan.

“Now, when the Convention on the status of the Caspian Sea has been signed, and Southern Gas Corridor is almost completely operational, there is nothing that can stop the transportation of the Caspian hydrocarbons to the EU,” said Elshad Nassirov, Vice President for Investment and Marketing at SOCAR. “Over the last two years, we transported almost 5 million tons of liquid oil through Azerbaijan to the world market. It means that the Trans-Caspian Energy Corridor already exists,” he added.

Most of the regional producers in the Caspian depend on the production and export of hydrocarbons to sustain local economies. Even though many countries in the region managed to contain the spread of the virus by implementing strict social-distancing measures and introducing comprehensive multi-sector programs to address any negative externalities resulting from these measures, the volume of energy investments sharply declined due to the COVID-19 pandemic and it resulted in short and long-term shocks on the global energy market. The webinar, moderated by the CPC Board Member Ambassador (ret.) Robert F. Cekuta, promoted fruitful exchanges amongst the panelists on the COVID-19 recovery and mitigation efforts, specifically on the energy policies in the Greater Caspian Region to mitigate impacts of the COVID-19 pandemic.

“Chevron has had an incredible symbiotic relationship with Kazakhstan since 1993 when we signed a 40-year contract. Since then we have produced 3.1 billion barrels of oil and have invested 1.9 billion in Kazakhstani employees and social programs, as well as 3.3 billion in local goods and services. We are very dedicated to the local economy, people, programs, and the environment. We also support and help Kazakhstani companies develop sustainable business models. And through this really difficult time, I have to emphasize, we are deeply committed to our partnership,” said Amy Conroy, Director of the International Government Affairs at Chevron.

“It’s really the whole region that we need, not just one country. It especially true for the Caspian region where transportation is very critical to get the energy supplies to where the markets are. That’s why we need a region with stable governments and regulations, a region at peace, which is critical and something that we don’t always have, and a region that seeks to work together with good and reliable partners,” said Robert Scher, Head of International Affairs at BP America. “We are still committed to working with our longstanding friends to figure out how to produce and transport the energy the world needs in a way that also appreciates and understands that we have to do so in a way that spends less of our overall carbon budget. It is noteworthy to note the amount of focus Azerbaijan has put into pursuing its ambitious alternative energy programs,” he added.

“I’d like to use this opportunity to invite our colleagues in Washington and elsewhere to think about how fragile the Ganja corridor and the Trans-Caspian region are and how to provide military and physical security to the corridor that provides energy security to Europe,” said Elshad Nassirov, Vice President for Investment and Marketing at SOCAR.

During the webinar, the speakers highlighted the importance of regional collaboration among the Greater Caspian Region countries and energy companies operating in the region, the geopolitical significance of the Southern Gas Corridor, Trans Adriatic Pipeline, and Trans-Caspian Pipeline to allow for hydrocarbons to be efficiently transported to profitable markets in the Eastern Mediterranean and Europe.

The panelists also emphasized the need for seeking new transport routes, diversifying power sources, and improving renewable energy production to safeguard energy security. The participants discussed the enduring significance of goals established by public and private actors in the region to increase green energy production. They underlined the importance of maintaining commitments to pre-pandemic green energy production goals and the need for public-private sector collaboration to promote continued development in the Caspian energy sector.