The Times of Central Asia sat down with Samuel Doveri Vesterbye, Director of European Neighbourhood Council, a research organization funded by the EU and by Member States, to discuss prospects for the further development of the EU’s relations with Central Asia.
TCA: How significant is Central Asia for Europe’s energy diversification strategy, especially in light of the need to reduce dependency on Russian gas?
Europe needs energy. Since the revolution in shale gas production and liquefied natural gas (LNG) transport, it’s clear that European energy has become more diversified, particularly since Russia’s war against Ukraine. Reliance on Russia has decreased, while importation of U.S., African and Asian LNG has increased. Pipeline gas from Azerbaijan and renewable energy are both important and rising sources of diversification. The problem is that Europe doesn’t only need energy; it needs inexpensive energy, preferably in terms of pipeline gas. This is why the Caspian region, home to some of the world’s largest natural gas reserves, is important. That’s one significant reason for Europe’s renewed interest in the region.
TCA: What are the key energy projects connecting Central Asia to Europe, and what obstacles do they face in becoming viable alternatives?
In 2022–2023, the EU and the European Bank for Reconstruction and Development (EBRD) financed and conducted the biggest connectivity study about Central Asia to date. This study outlined the full capacity, potential, and challenges of trans-Caspian infrastructure and regulatory connectivity. It has become a key roadmap for all governments involved, as well as for the private sector and international investors in renewables, gas, transport, and other types of logistical infrastructure. In January and February 2024, the EU, together with international financial institutions, provided over €10 billion in low-interest loans and grants for the construction of energy and transport infrastructure cross-regionally. This amount represents over 50% of the investment needs estimated and outlined in the EBRD study. It is a strong indication of Europe’s political and financial dedication towards the region.
TCA: How can Central Asian economies benefit from closer economic ties with Europe, particularly through energy trade?
Central Asia has significantly increased its economic engagement with the European Union. In less than a decade, the EU has become Kazakhstan’s biggest trade partner in the world, ahead of China, Russia and the United States. Uzbekistan is taking a similar direction to Kazakhstan, and is about to sign an Enhanced Partnership and Cooperation Agreement (EPCA) with Brussels covering energy, politics, security, trade, and natural resources among many other issue-areas. For Central Asia, its new relationship with the EU is strategically intelligent, as the region ceases to be only a part of so-called “Chinese transit trade”.
TCA: What economic reforms are necessary in Central Asia to align with European standards and attract more investment in energy sectors?
The relationship with the EU allows Central Asia to increase its trade and gain new technology as it also benefits from industrialization. Both Europe and Central Asia are full of small and medium-sized nations who are often under pressure from great powers. Central Asia can build long-term energy relations with Europe, instead of only over-relying on Russia and China. By diversifying its trade relations, the region can thereby gain strategic sovereignty regarding prices and security of supply. This is the case not only for natural gas and oil, but also for renewable sources like solar, wind, hydrogen, and hydro-electric, as well as nuclear.
TCA: What potential do you see for renewable energy in Central Asia?
Renewable energy has high potential in Central Asia for two primary reasons. Critical raw materials (CRMs) are abundantly available in Central Asia and those same CRMs are needed for renewable energy generation. In addition, a country like Kazakhstan, for example, has a great deal of unused open space, while solar panels and wind farms need such open space to function at cost effective levels.
TCA: What is the current state of energy infrastructure in Central Asia, and how can European investment help modernize it?
The state of energy infrastructure in Central Asia has been dominated by Russian contracts, maintenance, and construction. The EU’s recent financing of green corridor projects, which includes renewables, is an important and financially significant step towards more regional energy infrastructure. It also encourages cross-Caspian energy developments. In addition, huge investments into solar and wind by Middle Eastern financiers are also changing the landscape of energy across the region.
TCA: What are the most promising areas for EU–Central Asia energy cooperation over the next decade? What are the implications of EU energy policies on Central Asian countries’ export strategies?
The most promising cooperation on energy between Central Asia and Europe over the next decade is in the renewables, nuclear, and gas sectors. The first step should be for Central Asia to develop its own secure supply for affordable energy for industrial and supply chain purposes. This will benefit both European and Central Asian industry. A logical second step would be for Europe to connect with the region through energy infrastructure that would allow Central Asia to export this energy westward.
TCA: Where do you see Central Asia fitting into Europe’s long-term energy strategy, considering both traditional and renewable sources? What are the security risks associated with energy supply routes from Central Asia to Europe, and how can these be mitigated?
The main security risk associated with energy and connectivity between the EU and Central Asia arises from the volatile geopolitical environment. Europe aims for a multi-corridor and diversified policy vis-à-vis energy, CRMs and trade globally. Security is high on the agenda because corridors increasingly face conflict, terrorism, and other barriers which hike up prices, decrease security of supply and overall disrupt relations. In the case of the trans-Caspian corridor, its vital that the protection of critical energy and other infrastructure is guaranteed by the EU and Central Asia. It is crucial that the EU invests and works closely with other regional powers like Türkiye, as well as Azerbaijan, Georgia and Armenia in order to solve any conflict risks that could jeopardize connectivity development.
TCA: Thank you for taking the time to talk with us.
It was a pleasure.
