The Energy Charter and Turkmenistan

Patrick Larkin

Energy Charter Secretariat

Turkmenistan Energy Outlook

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

Turkmen Gas Export Routes

Source: OECD/IEASource: OECD/IEA

WHAT IS THE CHARTER?

Dec. 1991 – Energy Charterpolitical commitment - not legally binding

Dec. 1994 - Energy Charter Treatylegally 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

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

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

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)

Energy Charter Treaty

Energy Charter Treaty

Investment

Protection

Transit Energy Efficiency

Trade

Energy Charter (Declaration)

Dispute Settlement

Energy Investment Climate

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

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

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 sustainable

and secure regional power trade based on the principles of the Energy Charter

Regional Energy Cooperation

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

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

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 Muhamedov’s initiative on the UN

resolution on “Reliable and Stable Transit of Energy and

its role in Ensuring Sustainable Development and

International Cooperation” December 2008

DISPUTE RESOLUTION MECHANISMS:ECT 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

DISPUTE RESOLUTION MECHANISMS:ECT 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 agreement

of the parties in case of failure - recommends a resolution,

sets interim tariffs and terms: 12 months, or resolution of dispute (whichever is earlier)

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

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

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

Conclusion

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

Thank you

Tel. +32-2-775-98-00Email: info@encharter.orgwww.encharter.org