The Energy Charter and Turkmenistan

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The Energy Charter and Turkmenistan

• Patrick Larkin
• Energy Charter Secretariat

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Turkmenistan Energy Outlook

• Considerable proven gas reserves
• Regions largest gas producer
• Substantial potential to expand production
• Scope to reduce domestic gas consumption
• Multiple export routes possibilities
• Potential for additional exports

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Turkmen Gas Export Routes
Source OECD/IEA
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WHAT IS THE CHARTER?

• Dec. 1991 Energy Charter
• political commitment - not legally binding
• Dec. 1994 - Energy Charter Treaty
• legally binding (51 states EC and Euratom)
• entered into force April 1998
• Energy Charter Process
• based on the ECT international policy
  forum,best practices exchange, cooperation with
  interested third parties

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Energy Charter Constituency

• Observer States
• Energy Charter Treaty Signatory States (1994)
• Observer Organisations ASEAN, EBRD, IEA, OECD,
  UN-ECE, World Bank, WTO, CIS Power Council, BSEC,
  BASREC

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KEY PRINCIPLES

• Open and efficient energy markets
• Non-discrimination among participants
• Sustainable development
• State sovereignty over natural resources
• Freedom of transit
• Environmentally sound and energy-efficient
  policies

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ECT MAIN FOCUS

• protection of foreign investments, based on the
  extension of national treatment or most-favoured
  nation treatment (whichever is more favourable)
• non-discriminatory conditions for energy trade
  based on WTO rules
• ensuring reliable cross-border energy transit
• resolution of disputes between participating
  states, and - in the case of investments -
  between investors and host states
• promotion of energy efficiency (PEEREA)

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Energy Charter Treaty

Investment Protection
Energy Efficiency
Transit
Trade
Energy Charter Treaty
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Turkmenistan and the ECT

• Prominent member since early days
• One of the first to sign Treaty and actively
  involved in all Charter activities since then
• Seventeen years of successful cooperation only
  the beginning

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CENTRAL ASIA IMPORTANT REGION OF THE ECT
CONSTITUENCY

• Major energy-producing region
• Active members of the Energy Charter Conference
  and Groups
• Active participants in the Energy Charter Process
• Regional Energy Cooperation

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REGIONAL ENERGY COOPERATION

• Regional Task Force on Electricity Cooperation in
  Central and South Asia
• Afghanistan, Kazakhstan, Kyrgyzstan, Pakistan,
  Tajikistan, Turkmenistan and Uzbekistan
• Established in 2007, 6 meetings
• Focus developing a framework for sustainableand
  secure regional power trade based on the
  principles of the Energy Charter
• ? Regional Energy Cooperation

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PROTECTING THE SECURITY OFENERGY FLOWS

• Model Cross-Border Agreements
• Dispute resolution mechanisms,in particular
• ECT Article 27 on State-to-State disputes
• ECT Article 26 on Investor-State disputes
• ECT Article 7(7) on Transit disputes

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MODEL CROSS-BORDER AGREEMENTS

• Oil and Gas Pipelines 2ND edition
• Model Inter-Governmental Agreement for
  state-to-state agreements
• Model Host Government Agreement for agreements
  between an individual state and the project
  investors
• Electricity Projects (being finalised)
• Adapted from Pipeline MAs, plus System and Market
  Interoperability Model Agreement

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Secure and Reliable Transit

• For many years ECT members have been engaged in
  negotiations on a separate Protocol on Transit
  which is intended to specify the binding rules of
  the Energy Charter Treaty in more detail
• President Gurbanguly Muhamedovs initiative on
  the UN resolution on Reliable and Stable Transit
  of Energy and its role in Ensuring Sustainable
  Development and International Cooperation
  December 2008

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DISPUTE RESOLUTION MECHANISMSECT Article 7(7)

• ECT Article 7 on Transit
• Access to transit
• Conditions of transit
• Non-interference of transit
• Freedom of transit principle
• ECT Article 7(7) conciliation procedure for
  transit disputes

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DISPUTE RESOLUTION MECHANISMSECT Article 7(7)

• TRANSIT REMAINS UNINTERRUPTED
• Exhaustion of all previously agreed remedies
• a party submits a summary to the Secretary
  General, who notifies all concerned parties
• within 30 days SG appoints a conciliator
• within 90 days the conciliator seeks agreementof
  the parties
• in case of failure - recommends a
  resolution,sets interim tariffs and terms
• 12 months, or
• resolution of dispute (whichever is earlier)

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Discussions on Areas of Mutual Interest and
Concern

• ECT a leading inter-governmental forum for
  exchanging information on matters such as access
  to transit pipelines, tariff setting, congestion
  management and investment in new transit
  infrastructure
• ECT important to ensuring that energy relations
  in the region operate on basis of international
  law
• ECT encourages investment

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Future for the Energy Charter

• A need to think carefully on arrangements for
  energy governance
• Modernisation of the Energy Charter Process
• Modernisation means strengthening existing
  provisions and supplementing the ECT with new
  protocols and clarification of the existing text

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Energy Charter Modernisation Process

• Energy Charter Conference
• Energy Charter Groups
• The Strategy Group
• Rome Statement (2009)
• Road Map for the Modernisation of the Energy
  Charter Process

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Conclusion

• Energy Charter Process a positive contribution
  to the energy future of Turkmenistan and the
  whole Energy Charter Constituency

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• Thank you
• Tel. [phone]Email info_at_encharter.orgwww
  .encharter.org