Azerbaijan – The Emerging Caucasus Energy Player

By: Meir Javedanfar

09/02/2009

At this year's WEF meeting in Davos, the economic crisis took over the agenda, for understandable reasons.

However the issue of energy was not ignored. A whole session was dedicated to this important subject. Entitled “Energy Outlook 2009”, the panel was very informative, and original.

The originality of the panel was due to its Azerbaijani participant. When one talks about oil and energy giants, Azerbaijan is not the first country which comes into mind.

However, this small Caspian state has managed to turn itself into a regional hub. Not one which solely relies on energy for economic gains, but also a country which is becoming a regional player.

To start with the Azerbaijanis seem to understand that in the Beyond Oil world, gas, which has bigger resources than oil, will be the stop gap until such times that nuclear solar and bio fuels take over.

Azerbaijan has its own gas and oil resources. However what is interesting is that it has allowed itself to become a major energy transit hub. At least 7 energy pipelines run through it. This has given substantial weight to its position in the energy market.

What has upgraded Baku's importance is that it si the biggest investor in Georgia. This gives it important say in the all important Georgia vs Russia conflict.

What is even more important is that in the face of growing Russian influence, Western countries, especially the US will come to rely more on Azerbaijan as means of checking Russia's influence. This will add more strategic weight to Azerbaijan's standing.

Azerbaijan is not without its problems. Armenia is occupying Ngorno Karabakh, a stretch of land which Azerbaijan lost to Armenia in 1994. no solution is seen on the horizon for this important issue. Furthermore, the upcoming referendum on president Aliyev's ability to maintain his position as president may lead to more political differences, and infighting.

Azerbaijan's future, depends on its leadership. If the current planning for its energy market is to be used as a yardstick, it has the potential and resources to transfer itself into a Beyond Oil economy.

Meir Javedanfar is the co-project manager (with Gordon Wollgam) of the Beyond Oil project (www.beyondoil.net)

Obama's Nuclear Challenge

By: Meir Javedanfar

22/01/2009

Barack Obama has several challenges ahead of him. One of them is the energy policy. The recent gas crisis brought about by Russia shows that Moscow is not afraid to use its energy muscle, in the all important European market.

America uses NATO to encroach on Russia's sphere of influence; Moscow uses gas to repay the favor. One of the methods to fight back for America will be investment in renewable sources. The less Europe depends on Russian gas, the less leverage Moscow will have.

But what about the Middle East?

While many local government are asleep, the UAE has decided to lead the way. According to a recent article in the Abu Dhabi based The National:

"Abu Dhabi will become a founding member of a global organisation dedicated to renewable energy and aggressively push to have the group’s headquarters in the emirate, the chief executive of Masdar said on Wednesday.

Sheikh Abdullah bin Zayed, the Minister of Foreign Affairs, will lead a delegation to Bonn, Germany, next week to sign the founding treaty of the International Agency for Renewable Energies (Irena), said Dr Sultan al Jaber, the Masdar chief who will also attend".

What is interesting about this project is that 40 countries will become members of the organization, and as part of their membership, they will share information on technology and development on energy renewal technologies.

This decision by the UAE shows that it is ready to face the inevitable.

There is also its other decision by the UAE; to build a nuclear power plant. Although wind and solar are the most efficient methods to wean energy sources from oil and coal, according to increasing evidence, they are not yet ready to do so. The most recommended stop gap is nuclear energy, despite its risks. This is another challenge which Obama will need to manage.

Low Oil Prices – End of Beyond Oil Investment?

By: Meir Javedanfar

18/12/2008

In mid July 2008, oil prices were $147 per barrel. Today, they stand at $40. That’s a fall of almost two thirds. History has taught us that the lower the price of oil, the less money governments have at their disposal to invest in Beyond Oil future industries.

However, the world of 2008 may be different. This time, due to restructuring in major industries, such as the automotive sector in the US, green industries are likely to make a come back, despite the low oil prices.

It is understood that even if the auto sector bailout is approved later on, it will be a temporary lifeline to allow these companies to go bankrupt slowly and in a more orderly manner, instead of a spectacular crash.

These events are going to encourage investors to look for new industries in the stock exchange, which have potential for growth. It's likely that biotech, agriculture technology, and green technology, especially those specializing in low emission transportation technology are going to benefit. This adjustment is likely to compensate part of the expected loss from low oil prices.

What is important to note is that although not all loses will be recovered, the recent developments are going to encourage a larger involvement of the private sector in the Beyond Oil industries, and this is likely to set a trend for the future. As the saying goes "give a man a fish, you feed him for a day. Teach him how to fish, and you feed him for the rest of his life".