Geostrategic Importance of Energy Trade and Transit and a New Transit Regime Under the International Energy Charter

Abstract

The energy transit constitutes one of the critical components of energy value chain, since it frequently involves transport and access issues as robust energy trade can only take place with access to a well-connected and well-managed transmission network. Issues such as feasibility of investments, non-discriminatory access to infrastructure and related legal regulations have elevated energy transit security to top of the energy security agenda. A search for reliable transit of energy goes parallel with multi-dimensional, evolving and administrative nature of energy security as well as with geostrategic calculations of the leading actors. Currently there is no internationally binding agreement which regulates the energy transit since transit provisions of World Trade Organization and Energy Charter Treaty are vogue. An international transit protocol has been discussed under the Energy Charter Treaty for decades, but the process has not reached an agreement. Various regional markets such as EU market have developed their own energy regulations and thus most of the transit issues within the union were solved. Nevertheless, there is still lack of an energy transit regulation in wider Eurasia (specifically from China to Turkey including Caspian states). In that sense, a more modest form of transit regime could be applicable for a specific region rather than an international one. In this paper, the geostrategic importance of energy transit and possibility of a new regime under the International Energy Charter will be discussed with a specific reference to energy market developments and new geopolitical realities in Eurasia where such kind of a regional transit community could be achieved.