WRITTEN QUESTION E-0190/03

by Erik Meijer (GUE/NGL) to the Commission

(31 January 2003)

Subject: US dominance vis-à-vis the EU with regard to the extraction and transport of petroleum from the region to the south east of the current and future territory of the EU

1. Are countries such as Azerbaijan, Turkmenistan and Kazakhstan becoming very heavily dependent on cheap oil exports and the use of cheap labour in the wake of the virtual collapse of their economies during the period 1991-98?

2. What contacts does the EU have with the above states in connection with the extraction, purchase and transport of petroleum from this region?

3. Do such contacts based on economic interests mean closer links between the EU and non-democratic regimes? To what extent are these relations being used, or will they be used in the near future, in order to protect democracy, human rights and the environment?

4. Are conditions to be imposed in connection with possible accession to the EU on Turkey, which is participating in the US Baku-Ceyhan pipeline project, with regard to the supply of the oil concerned, or a proportion of it, for use in Europe?

5. Does the Commission anticipate that pressure from the USA on these oil-producing regions will increase if the USA does not quickly succeed in bringing the Iraqi oil fields under its control?

6. Have ideas already been formed on how to prevent the region to the south east of the future territory of the EU from becoming a US military and economic sphere of influence, which could operate in a way that is disadvantageous to Europe?

Source: Netherlands daily newspaper De Volkskrant of 18 January 2003

Answer given by Mrs de Palacio on behalf of the Commission

(14 March 2003)

The oil sector in the three countries mentioned by the Honourable Member is a very important part of their economies and a major source of foreign earnings. Azerbaijan, one of the world's oldest oil-producing countries, has seen steady economic growth since 1995 fueled, to a large extent, by foreign investment in its oil and natural gas sectors. Of the 14 million tonnes of oil produced in the year 2000, some 55 % was exported either as crude or refined products and these accounted for some 70 % of Azerbazijan's exports. Oil-related revenue accounts for nearly 50 % of budget revenues. Wage rates in Azerbaijan, Turkmenistan and Kazakhstan tend to be lower than in Europe. The Commission has no evidence that these countries are illegally exploiting their labour force in the oil and gas industries.

Kazakhstan is likewise heavily dependent upon oil revenues and its recent economic growth has been assisted by foreign investment in the oil and natural gas sectors. Of the 35 million tonnes of oil produced in the year 2000, net exports of crude and refined products accounted for some 79 %. The oil industry currently accounts for approximately 30 % of Kazakhstan's budget revenues and half of it exports.

While Turkmenistan has some of the world's largest deposits of natural gas and this sector has been the major spur for economic growth in recent years, the oil sector is an important sector of the economy. In the year 2000, some 7,7 million tonnes were produced and net exports of crude and refined products accounted for 60 %.

The Community has signed Partnership and Co-operation Agreements (PCA) with all three countries mentioned by the Honourable Member. While those signed with Azerbaijan and Kazakhstan have entered into force, that with Turkmenistan has yet to be ratified.

In the framework of the PCA with Azerbaijan, the scope of the existing Sub-Committee on Trade will be widened this year (2003) to include energy issues. Expert dialogue with Kazakhstan was extended in 2002 to include energy matters as well.

The Commission is also providing technical assistance in the field of oil and gas infrastructure to these countries under the framework of TACIS (the Inogate programme).

At a commercial level, Union energy companies are particularly active both in Azerbaijan and Kazakhstan.

All Union relations in the energy sector aim at promoting increased transparency, encouraging market reform and enhancing environmental awareness. By developing relations in a defined area of evident mutual interest and facilitating political and commercial contacts between the Union and these countries, these countries will be encouraged to integrate more closely into the global society and thereby be more aware to global values and concerns.

In addition, all the Partnership and Co-operation Agreements signed with these countries include a strong focus on respect for democracy and the principles of international law and human rights as defined in particular in the United Nations Charter and the Helsinki Final Act. They also include articles designed to develop and strengthen co-operation on environmental and human health issues.

The oil market is an integrated global market and the destination of specific production is much less important than ensuring the diversification of the sources of supply. In addition, it is clear that the decision to build new pipelines and the routing of such pipelines is a matter for the private sector based upon economic and commercial considerations.

The United States, like the Union, pursues an active policy of ensuring the geographical diversification and competition between different sources of supply. It is clear that this policy will be continued into the future, whatever should happen in any particular region of the world. Should oil production from Iraq not reach the international markets for a period of time for whatever reason, there is enough global spare capacity for the market to be supplied. In this context, it is clear that, should the market disequilibrium be such that it threatens to seriously affect economic growth in the Union, serious reflection should be given to the potential use of the strategic oil stocks held by Member states.

It is clear that the Union has strategic geopolitical interests in this region. The main Union objective is to promote regional co-operation with a view to contributing towards political stability. Such political stability will contribute to an enhanced role for Caspian energy resources in the energy security of the enlarged Union. In this context, the Honourable Member should be aware that the Commission is planning a Communication later in 2003 on energy links with neighbouring countries.