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Zehra Aksu, Dr
Post-doctoral Researcher, Kadir Has University

Ozgur Tufekci, Dr
Associate Professor, Department of International Relations, Karadeniz Technical University

Abstract
Due to the use of energy in regions and regionalism contexts began in the 20th century, the concept of energy regionalism has emerged as a new and significant field of study. This paper, which analyses the SCO established on an energy region in the post-Cold War period within the context of energy regionalism, will theoretically contribute to the literature by both theoretically explaining the concept of energy regionalism through utilising different evaluations of the concept and examining the SCO as a pioneering case in the energy regionalism context. The paper hypotheses that energy issues constitute the most significant agenda among the partners of the SCO and that an energy region has been established through the agency of the organisation. In this paper, the SCO has been analysed within the context of energy regionalism based on Hancock’s three criteria: driving forces, institutional structuring, and the effects of the decisions made and the activities carried out on energy regionalism. The analysis concludes that the SCO can be considered a comprehensive model of energy regionalism within the aforementioned three criteria.
Keywords: Energy Regionalism, Energy Security, SCO

Introduction 

Starting from the last quarter of the 20th century, significant socio-economic and political field changes have occurred worldwide. This change process gained momentum with the fall of the Berlin Wall in 1989, followed by the dissolution of the Eastern Bloc and the Soviet Union in 1991. As a result of the collapse of the Eastern Bloc, the republics that constituted the Soviet Union transformed into independent states, and already, independent states in Eastern Europe were relatively free of Soviet influence. However, these states, which had long been under the ideological dominance of an ideological superpower like the Soviet Union, had to confront numerous political, economic, and social challenges. The issue of energy, as one of the significant sources of income for countries in the region, has been and continues to be one of the most pressing concerns for post-Soviet states.

To safeguard their mutual interests and resolve transboundary regional issues through cooperation and peaceful means, the countries in the region have become members of various regional organisations (CIS, GUAM, EEU, SCO) established for different purposes. Although none of the international organisations based in the region has energy security as their primary objective, almost all have included it in their founding documents and activities. One of these organisations, which has numerous activities related to energy security in its founding documents and subsequent work, is the SCO, which has also been chosen as a case study in this research. The SCO is a regional entity in Eurasia that is actively engaged in energy security. This has been the primary reason for selecting the SCO as a case study for analysis.

The main objective of the prepared study is to explain energy regionalism, a new regionalisation approach, and analyse the SCO selected as an empirical case in the context of energy regionalism. Studies in which the organisation is examined regarding political or economic regionalism, energy security, and energy resources have been encountered in the literature. Still, no study has analysed energy regionalism. In the conducted literature review, access was gained through books, papers, reports, and other studies on the subject. From the specified sources, the following are particularly relevant to the topic: Andrew Hurell’s work titled “Regionalism in Theoretical Perspective,” Palestini Hancock et al.’ “The Politics of Energy Regionalism,” Corey Johnson and Stacy D. VanDeveer’s study “Energy Regionalisms in Theory and Practice,” Sopilko, N. Yuryevna et al.’ “Analysis and Prospects for the Development of Regional Energy Integration of the Eurasian Economic Union Countries,” and Lior Herman and Jonathan Ariel’s[1] paper “Comparative Energy Regionalism: North America and the European Energy Community.” However, the paper prepared by Hancock et al., which attempts to explain why and how energy regionalism emerges by examining international organisations, has been utilised more extensively for this reason.

Energy issues are the most crucial agenda among the SCO partners who want to gain an advantage in the production, processing, and trade of fossil fuels, and an energy zone is created through the organisation. The study seeks an answer to this question:“ What conditions prepare the groundwork for the analysis of the SCO within the context of energy regionalism?”. The analysis of the organisation’s approach to energy regionalism was based on the criteria (driving forces, institutional structuring, and the effects of decisions made and the activities carried out on energy regionalism) as specified by Hancock et al. (2020: 10-13). This research investigated the criteria met by the SCO. The mentioned criteria have been further developed by Herman and Ariel (2021: 3) and Aksu (2022: 118), and a detailed analysis has been conducted in the paper. By empirically analysing energy regionalism as a case study, the goal has been to contribute to the body of work on energy regionalism in the literature. This study also aims to provide a different perspective on the SCO, established in Eurasia, one of the world’s significant energy regions, to enhance the understanding of energy regionalism in this particular context.

This study examines the criteria of energy regionalism met by the organisation. The study, limited to the period from the end of the Cold War, mainly focuses on analysing empirical data obtained from printed and internet-based primary and secondary sources. Primary and secondary sources encompass official documents, formal organisational materials, reports of international energy companies, newspaper articles, publications on interstate political and economic relations, internet-based commentaries and discussions, policymakers’ statements, and data from international energy agencies. The data obtained from primary and secondary sources were systematically investigated using content analysis and then interpreted through qualitative research methodology.

Energy Regionalism as a New Approach to Regionalism 

Energy, the most critical input in modern and postmodern modes of production, has become one of the crucial resources for states and individuals in the present day. Mainly, the utilisation of fossil fuels (coal, oil, natural gas) and the imbalance in their availability, with certain regions having an excess while others lack sufficient resources, have made energy a top priority in international politics, and energy issue has become a determining factor on the agenda of relations between states. While the regional cooperation goals are dealt with in the classical sense through three types: economic, political, and security, it has become necessary to evaluate the energy issue as an independent type of regionalisation due to its connection with these three types because none of these three types of regionalisation failed to produce sufficient arguments to develop solutions for energy problems.

It has been understood that energy is a particular field that cannot be addressed separately in three different types of regionalism, such as increasing economic prosperity, achieving political integration, or resolving security problems. The fact that energy is a theme encompassing these three approaches and a unique domain is the fundamental factor behind its inability to be fully explained within the other types. Therefore, this situation necessitated energy analysis in the context of a new regionalism approach. Energy regionalism, constructed as a new design model from elements gathered from economic, political, and security regionalism, blends these three approaches. There is no agreed-upon definition in the literature on energy regionalism, which is still a new regionalism approach.

Both conceptually and empirically, energy regionalism, in its early stages of development, is generally examined in terms of both relational networks and regional entities alongside the infrastructure that plays a role in energy problems (Johnson and VanDeveer, 2021: 1). Therefore, based on the concept of energy security, in general;  it can be defined as the access of states and their citizens, in a designated region to energy services, free from the risk of serious service interruption, at reasonable prices, environmentally acceptable, of sufficient quality. In other words, energy regionalism can be defined as the collaborations developed by countries that recognise the critical importance of energy in every aspect of life to utilise existing energy resources efficiently.

What is an Energy Region? Is Eurasia Also an Energy Region? 

Regions are located between national and global levels, for they form a structure among inter-countries and a “fundamental, even driving force of world politics” (Fawn, 2009: 5). Regions can be defined based on natural or artificial characteristics that can be the fundamental units of geography (Börzel and Risse, 2016). In the context of a simple territorial definition, regions that cannot be solely addressed have cultural and political characteristics as well.

Regions act as focal points that connect at least two states for common purposes through transportation and communication. These focal points can arise for various reasons, including economic, security, environment, trade, energy, religion, politics, or social factors. Energy is one of the focal points connecting states via regions, and it is a new field that is the source of regionalism approaches. According to Sopilko et al. (2020: 14), energy use in regional definitions began in the 20th century, particularly after establishing the European Coal and Steel Community (ECSC). Following the establishment of the ECSC, which has an essential place in the emergence of the energy region concept, the European continent has become the geography described as the first energy region. Therefore, the increasing interest in energy, since the second half of the 20th century, has directed states to regional integration projects and made the concept of energy region emerge. Since the concept came to the fore after establishing the ECSC, it has led to the adoption of two approaches in the literature.

According to the first of these approaches, energy regions are defined through the “political areas” that emerge from a regional organisation. In the second, the concept was described over the “geographical areas” where energy resources are concentrated. However, both approaches are spatial and give an idea of energy regions. Indeed, if we were to make a definition within the context of these two different views, “energy region” is generally the name of areas where energy resources are located or regional associations established in these areas to meet energy needs and to ensure energy security among states. Like the definition, the literature has no agreement on how energy regions are formed and which countries constitute them. However, the study titled “The Politics of Energy Regionalism” by Hancock and colleagues in 2020 is significant in providing information about energy regions in the world in the context of fossil energy resources.

The article analyses the studies on energy regionalism in the world by the authors, and it concludes in the majority of these studies, energy region definitions were made on the places where all kinds of renewable energy and fossil energy sources are located. The article highlights that collaborations established in regions with fossil energy reserves are more prominent than those based on renewable energy sources. The study categorises the fossil energy regions globally into nine regions: Europe, Arctic, MENA, Asia, Caspian Basin, Eurasia/Central Asia, North America, Latin America/Caribbean, and Africa. These regions are characterised by abundant fossil energy resources (Hancock et al., 2020: 3-4). Furthermore, the article states that energy is the key factor influencing the recognition of these regions within the international system, even suggesting that the only thing that makes these regions important and distinctive is their energy resources.

In conclusion, energy resources are one of the decisive features used to define a region. Energy regions established between at least two states serve the function of catering to a specific area and can draw the boundaries of the area they will serve themselves. Therefore, energy regions have loosely defined boundaries based on the perceptions or thoughts of states. For example, many people have a rough idea about the region’s location, Eurasia. However, no standard and comprehensive definition of which countries constitute Eurasia exists.

Similarly, no clear consensus exists on whether the Baltic countries belong to the European or Eurasian region. Therefore, the boundary of an area is more of a matter of perception and creation than any criterion agreed upon officially. Not all states on the same continent must be evaluated under a common regional definition. Subregions can be formed among neighbouring states located on a common landmass.

Subregional definitions can be made for the African region, North and South, Eurasia, Central Asia, Caspian Basin, or South Caucasus. It should be noted that this categorisation, again, is based on energy resources and between countries adjacent to each other as neighbours. Therefore, when evaluated in the context of the production-needs index, sub-energy regions, like energy regions, are called regions where their resources are considerably higher than their needs. The difference between sub-energy regions is that they only have a limited geographical area and fewer resources. This situation also applies to regional organisations established to develop areas of cooperation in the energy field. Not all states are located on a common landmass, and possessing energy resources is required to be a member of a single organisation (Dag and Firat, 2020; Firat and Dag, 2023). States whose national interests are compatible can create their own energy regions.

Furthermore, in regional organisations where energy security is set as a common goal, not all members have to be energy producers; consumer or transit countries can also participate in established regional organisations. The only decisive factor here is that the regional organisation is based on the geography of the energy source and among the states in that geography. The establishment of the ECSC in Europe, the SCO in Asia, the EEU in Eurasia, and other examples of this situation can be given.

As discussed above, if there is a need for a “political area” to talk about Energy Regionalism, then it can be claimed that the SCO fits with the theoretical requirement. In order to do that, there needs to be an empirical analysis of whether or not it gets along with it.

The SCO is a regional organisation established in Eurasia. In its Charter, energy is identified as one of the fundamental strategic objectives (SCO Charter, 07.06.2002: Article 1-11). With this goal in mind, political, security, and economic integration are aimed at establishing and developing relationships among its members, which, as stated in the statute, energy is indicated as one of the main strategic objectives. The organisation adopts a proactive approach that targets all three types of regionalism:  political, economic, and security, and it covers a massive land, a region in which fossil energy resources are abundant.

Figure 1: Analysis Criteria for Energy Regionalism

Source: This Figure has been developed by the authors, drawing upon the studies conducted by Hancock et al. (2020: 10-15), Aksu (2022: 118), and Herman and Ariel (2021: 3).

In the following section of the paper, the SCO will be analysed in relation to the study conducted by Hancock et al., The authors’ studies have identified three criteria for analysing energy regionalism case studies:  driving forces, institutional structure, and the impact of decisions and activities on energy regionalism. While developing these criteria, Aksu (2022: 118) categorised the driving forces into two sections: mandatory and other factors. On the other hand, Herman and Ariel (2021: 3), in their paper analysing energy regionalism, not only referenced Hancock et al.’s work but also concentrated on the dimension of energy trade. Consequently, Figure 1 has been developed in this study by drawing upon all three mentioned works[2]. The authors’ studies have bifurcated the third criterion into two subcategories: decisions taken and concrete steps, as well as energy trade. In conclusion, in this section of the study, all factors indicated in Figure 1 have been employed in the analysis of the SCO. The analysis will discuss the SCO’s impact on addressing energy-related security problems in the region, the extent to which the organisation meets the energy strategies of its members in the context of energy policies, and the identification of any deficiencies or excesses.

Energy Regionalism in Eurasia: Empirical Case Analysis of the Shanghai Cooperation Organization

Driving Forces

Today,  the SCO, spanning from Europe’s eastern to the Pacific, is a significant actor that would shape international politics, with nine full members (China, Russia, Tajikistan, Kazakhstan, Kyrgyzstan, Uzbekistan, India, Pakistan, and Iran), three observer members (Afghanistan, Belarus, and Mongolia,) and nine dialogue partners (Armenia, Cambodia, Azerbaijan, Türkiye, Nepal, Sri Lanka, Saudi Arabia, Qatar, and Egypt) (SCO, 2021; Samarkand Declaration, 16.09.2022: 9, Aydın and Berdaş; 2023). Geopolitically, the organisation is located along the north-south transit and connectivity routes in the east-west direction. Its geographical location renders it essential in terms of geostrategy.

The participating countries possess significant potential in terms of their geographic size, population, and strategic energy resources. That motivates SCO partners to engage in energy-related studies and directly develop their work on the axis of energy regionalism by deepening the interaction between them. Therefore, similar to other energy regions, some factors drive states towards energy regionalism in Eurasia. While some of these factors are considered “compelling driving factors” that are present in all energy regionalism initiatives, others can be regarded as “auxiliary factors” (Aksu, 2022: 118). The factors that drive SCO member countries towards energy regionalism are explained below.

Quantity of energy resources: The main energy-producing and exporting countries among the SCO member states are Russia[3], Kazakhstan[4], Uzbekistan[5], and Azerbaijan[6]. According to the latest published data, the proven total natural gas reserves of the SCO member states amount to 1,577.9 trillion cubic feet (tcf), the total oil reserves amount to 145.8 billion barrels, and the coal reserves amount to 191.289 million tons (BP, 2020; EIA, 2018). As it can be understood from the latest published data, the organisation is self-sufficient in terms of energy, given the riches it possesses. The significant resources among the member states signify that the organisation embodies the principle of reserve abundance, a fundamental element of energy regionalism.

  • Energy security problems: Major security problems in the region encompass a multifaceted array of issues, ranging from geopolitical concerns to environmental pollution, terrorism and piracy threats, border disputes, and technological inadequacies in the energy infrastructure. The aforementioned problems can only be solved through collective security platforms and leading SCO member states to focus on energy security and energy regionalism.
  • Interdependence: Producer countries seek to trade the resources they produce, transit countries aim to transport them through their territories, and consumer countries strive to access the energy resources they need. According to Hayter (2004), it creates mutual interdependence, which becomes another “mandatory” driving force of energy regionalism. Mutual interdependence is an important and necessary condition for developing cooperation opportunities in the energy sector. Mattli (1999) states that in cases of mutual interdependence, relations tend to progress positively. As interdependence increases, regionalism becomes even more significant and valuable. The SCO, hosting energy-exporting, importing, and transit countries, is one of the regional international organisations with a high level of mutual interdependence.
  • Potential of member countries: The SCO market is one of the world’s most dynamically developing markets. SCO currently partners with eighteen countries, including full members, observer members, and dialogue partners. Upon examining the member countries, it can be observed that the organisation includes not only energy-producing countries but also transit and consumer countries. While the most essential transit countries are Türkiye, Belarus, Iran, Afghanistan, and Russia, the vital consumer countries of the organisation are other partners such as Türkiye, especially China and India. Therefore, it can be understood that these countries in the organisation also carry transit and consumption issues, which are the other side elements of energy regionalism. Objectively, these characteristics provide a solid foundation for potential international complementarity in the economy and energy sectors.
  • Desire to enhance social and economic welfare: The energy security issues in the region are affecting the SCO partners, who depend on energy resources as economic inputs. Therefore, all members share the common goal of resolving the existing problems and achieving social and financial well-being. This desire, which explains the emergence of cooperation in energy among the SCO states, appears as another driving factor after the energy security problems.
  • The reflex of not wanting external actors in the region: Eurasia is one of the regions with significant potential in terms of energy reserves. This characteristic makes the region particularly attractive to industrialised and developed countries. Policies pursued particularly by actors such as the United States and the European Union regarding the region’s energy resources are disturbing for the countries in the region. According to Aras (2001: 241), the countries in the region perceive the actions of the external actors as an attempt to establish hegemony by acting in their interests since they tend to use every opportunity to secure the energy resources they need. Therefore, SCO countries (especially Russia and China) that are uncomfortable with the desire of external actors seek to increase intra-regional investments and projects in the production and transit of energy resources. Economic cooperation is among the top priorities of the SCO and forms the organisation’s most vital aspect.
  • The role of regional hegemony: The members of the SCO are divided into two categories: Those who perceive the organisation as a development instrument and the regional powers[7] that view it as an instrument of foreign policy. According to this understanding, Russia and China come to the fore as regional hegemonic powers of the SCO.

– Identity: These countries, which played a significant role in the organisation’s establishment process, have assumed the catalytic role in the emergence and institutionalisation of regionalism. While Russia is trying to have a say in the new world order and to realise the region’s energy policies under its control by using the SCO, China aims to develop in the economic field and reach its goal of sustainable growth. Russia and China’s more substantial political, economic, and military potentials compared to the other member states make them essential actors in regionalism studies. In this respect, the organisation meets the last driving force as well.

In conclusion, it is observed that the SCO seems to fulfil the driving factors identified in Figure 1, which are one of the criteria for analysing energy regionalism. Specifically, it is seen that the SCO carries all the mandatory factors and the majority of the other remaining factors.

Institutional Structure of Energy Governance in the SCO

To achieve the objectives and goals stated in the SCO Charter, the organisation operates through seven main organs that ensure its institutional functioning. These organs are the Council of Heads of State, the Council of Heads of Government, the Council of Foreign Ministers, the Council of Ministers of State and/or Heads of Institutions, the Council of National Representatives, the Regional Anti-Terrorism Agency, and the Secretariat. In addition to these key organs, the SCO Energy Club and the SCO Interbank Consortium are institutions within the organisation that have significant contributions to the energy field (SCO Charter, 07.06.2002: Article 1-11), and detailed explanations about them are specified below.

  • SCO Interbank Consortium: The SCO Interbank Consortium, also known as the SCO Development Bank, has been formed with the membership of banks representing various countries, namely Kazakhstan Development Bank, China Development Bank, Kyrgyzstan RSK Bank, India Infrastructure Finance Company, Tajikistan Amonatbonk, Uzbekistan National Bank for Foreign Economic Affairs, Pakistan Habib Bank Limited, and Russia Vnesheconombank. Also, the Consortium declared its establishment in a statement released on October 26, 2005, which included the participation of the Eurasian Development Bank, Belarusbank, and Mongolia Development Bank as partners. The establishment of the Development Bank aims to provide financial support and services for investment projects of SCO member countries, enhance interactions with the financial institutions of observer states and dialogue partners within the SCO framework, and promote cooperation with leading economic institutions operating within the SCO sphere (SCO Joint Communique, 26.10.2005). The Bank’s activities related to energy resources are of great significance, as it can support energy investment projects for all members. Thus, this aims to reduce dependence on non-regional countries, capital inflows, and foreign companies, support regional investors, and remove barriers to sustainable economic development.
  • The SCO Energy Club: The Shanghai Energy Club, whose intellectual foundations were laid in 2002, was proposed by Putin at the SCO summit in Shanghai, China, in 2006. Although the main idea for establishing the Club was originated from Russia, countries other than Uzbekistan showed close interest in the project. Russia proposed to diversify its export market, coordinate and control the energy policies of other producing countries (Overland et al., 2010: 165), maintain control over transit routes, benefit from high-potential markets such as China and India, and enhance its position in the global energy market.

China responded positively to Russia’s project due to several reasons. China, driven by its economic growth and increasing energy consumption, sought to meet its energy needs from SCO members, desired to direct energy flows along the East-West corridor towards itself, and aimed to deepen its cooperation with Russia, known as a catalyst in the region. Kazakhstan and Iran, resource-rich countries within the SCO, welcomed the Energy Club idea positively. It offered opportunities to expand their export potential, ensure supply security, and complete economic development. Consumer countries, including Tajikistan, Kyrgyzstan, India, and Pakistan, also positively approached the Energy Club concept, as it could help meet their energy needs. Observer members and dialogue partners have also welcomed the Club idea for similar purposes, such as developing their transit potential and meeting their energy needs through affordable and reliable routes. Based on this information, the overlapping interests of the SCO founding members have provided a strong foundation for establishing the Energy Club.

The Energy Club, officially established on December 6, 2013, has set its official objective in line with the expectations of the signing member countries[8], which is to provide “a forum for discussing energy cooperation among states, proposing new projects, and addressing issues related to energy transportation, production, and consumption” (InfoSCO, 2007). Therefore, a common SCO energy field has been established among SCO participants to ensure the coordination and regulation of energy strategies. As evident from its founding objective, the SCO Energy Club, which brings together energy-rich countries like Russia and Kazakhstan with high-energy demand countries like China and India, is designed as an open structure based on a “win-win” approach.

The Club is intended to be an essential institution where political decisions can be made on issues such as consolidating energy transportation tariffs, establishing a common tax base, and coordinating activities at the supplier level. It is anticipated that the club would contribute to the creation of an economic zone in the Eurasian region and that it would facilitate the establishment of a regional security system, including energy security as a crucial component and the harmonious management of intergovernmental relations (Bushuev and Pervuhin, 2012). In other words, considering the ongoing instability in the global economy, the SCO’s proactive energy policy is expected to play a significant role in ensuring sustainable growth for its member countries. The Club, expected to shape a common “SCO energy domain” in the long term, has been established within the framework of a spirit of unity for economic and security purposes (The Russian Government, 2014).

Indeed, the Club, which assumes a functional role in resolving disputes in line with the expectations of member states, offers significant opportunities in various fields. For example, Energy Club members (especially Russia and China) are trying to address security vulnerabilities that may arise during the shipment of energy resources. Counter-terrorism mechanisms are being developed to ensure production and transit security in terms of the dimensions of energy security. Security exercises are frequently conducted for effective security measures in the region, and infrastructure works are being developed (Lengacher, 2018). In the meetings organised within the Club, energy security efforts are being intensified, and new decisions continue to be made. Therefore, it can be understood that the Club has adopted a mission to prevent threats and dangers in regional security issues while promoting cooperation. Despite its non-binding nature and relatively new organisation, the Energy Club provides an important framework for collaboration among states. The activities of the Club have a vital role in evaluating its activities in the context of the “energy regionalism” of the SCO.

In conclusion, the SCO, where treaties and other norms determine energy cooperation, is an important institution that can contribute to resolving problems due to its institutional structure. The establishment of the SCO Interbank Consortium and the Energy Club by SCO members, who are aware of their fossil energy resources and intend to use them rationally, is a significant development. The organisation is expected to significantly contribute to the energy and energy security field with the established institutional structure and its organs. It is seen that the institutional structure is quite functional, and it is understood that it carries the institutional infrastructure, which is an essential step in energy regionalism.

The Impact of Decisions and Activities on Energy Regionalism

The SCO has been analysed in the previous subsections in terms of the driving factors and institutional structure, and it is understood that the organisation meets the criteria of energy regionalism in these two aspects. However, the investigations revealed only the organisation’s potential, and the need to explain the functional aspect of the organisation as a final stage has arisen to qualify the organisation as a full-energy regionalism. In this section, the SCO has been analysed in the context of the criteria pertaining to the decisions taken, concrete steps, and energy trade.

Decisions Taken and Concrete Steps

While the ultimate goal of energy regionalism is to ensure the energy security of the regional countries, the information below is provided regarding the decisions and concrete steps taken by the SCO bodies concerning energy security. Mentioning the crucial projects and declarations, published after the summit meetings held in the organisation, will assist in explaining the functional aspect of the SCO in the context of energy regionalism.

  • Recognition of the transboundary nature of energy and its acceptance as one of the areas of common interest that can be used to promote regional cooperation, acknowledging it as a necessary action, creating a conducive environment for trade and investment to ensure the free flow of goods, capital, services, and technologies; implementing joint environmental programs and projects; enhancing the transit capacity of member states and improving energy systems; proposing the establishment of a free trade zone and undertaking efforts to eliminate barriers during the trade of energy resources (SCO Charter, 07.06.2002: Article 1, 3; SCO Joint Communique, 15.12.2014: 1; Dushanbe Declaration, 2008: 1-3),
  • Utilising the potential of observer states and dialogue partners to ensure energy security; establishing modern international centres for infrastructure, logistics, production, and trade; constructing new fields, modernising railways, enhancing economic connectivity between Europe and Asia; accelerating access to global markets, and ensuring supply security; improving the effectiveness of cooperation in timely and joint responses to natural and man-made emergencies (Yekaterinburg Declaration, 2009: 1-3; Tashkent Declaration, 24.06.2016: 1-17; SCO Joint Communique, 12.10.2018: 1-10; Astana Declaration, 15.06.2011: 1-5),
  • Strengthening the connections between the main production and consumption regions within the SCO countries; increasing participation in international events such as the International Specialized Exhibition EXPO-2017; and enhancing the SCO’s international image and prestige (Dushanbe Declaration, 17.09.2021; Astana Declaration, 09.06.2017: 1-10),
  • Conducting collaborative work with the EAEU within the framework of the “Belt and Road Initiative” project by China; ensuring regional stability by strengthening existing norms and mechanisms; joint efforts to combat corruption[9], which is recognised as one of the factors negatively impacting security in the region, often rooted in energy resources; preparing a program aimed at integrating transportation lines in the area, including the establishment of new international multidimensional logistics centres and the modernisation of existing ones within the SCO (the initiative by Uzbekistan to establish a “Regional Centre for the Development of Transportation and Communication Links in Central Asia” under the auspices of the UN and the proposal for “Enhancing Cooperation among Railway Administrations” serve as examples of steps taken in this regard); developing projects that enhance the effective utilisation of transit potential among SCO member states by increasing activities such as the implementation of the 2030 Sustainable Development Agenda for Intercontinental Eurasian Transport Corridors (Geneva, 27 February 2020); and ensuring the continued commitment to elevate cooperation within the SCO to a new level and transform the SCO region into a zone of lasting peace, friendship, universal well-being, and harmony (Moscow Declaration, 10.11.2020: 11-19),
  • Supporting the efforts of Central Asian countries to ensure the well-being, peace, and sustainable development of the region, recognising Central Asia as the core of the SCO; ensuring welfare and security in the wider SCO region through the strengthening of mutual connections between Central and South Asia, and the enhancement of inter-civilisational relations by continuing efforts to strengthen the mutual connectivity and prosperity in the SCO region; combating[10] terrorism, separatism, and extremism, which affect the region’s energy security; developing common principles and approaches to prepare a unified list of prohibited terrorist, separatist, and extremist organisations for the member states and expanding joint counter-terrorism exercises; organising and increasing the frequency of counter-terrorism exercises such as “Pabbi-Anti-Terror-2021” and “Solidarity 2019-2021”; conducting regular peacekeeping missions, joint military anti-terrorism command, and staff exercises to improve counter-terrorism methods; the idea to harmonise progress with the ASEAN, other Southeast Asian countries, and relevant states and multilateral organisations to create the “Great Eurasian Partnership” concept; enhancing the potential of the Business Council and the SCO Interbank Consortium; approval of a cooperation agreement (SCO Infrastructure Development Program) to increase communication between members and create cost-effective transportation corridors; initiating a procedure for Belarus to become an SCO member, granting the status of SCO dialogue partners to the Kingdom of Bahrain, the Republic of Maldives, Kuwait, the United Arab Emirates, and the Union of Myanmar, and signing memoranda on granting the status of SCO dialogue partners to Egypt, Saudi Arabia, and Qatar (Samarkand Declaration, 16.09.2022: 1-8),
  • Supporting the development of cooperation in ensuring energy security by the SCO Heads of State Council by 2030 and committing to ensuring access to energy resources through sustainable and reliable means; consensus on providing investments and support to energy companies during the operation of fossil energy sources (SCO Statement, 16.09.2022: 1-3),
  • Promoting further cooperation among SCO partners and expanding settlements in national currencies (Statement of the SCO Heads of State Council on Ensuring Reliable, Sustainable, and Diversified Supply Chains, 16.09.2022: 1-2).

A chronology of decisions related to energy security taken by the SCO bodies has been presented above until the summit meeting, where the SCO Charter was signed on June 7, 2002, and the Samarkand Declaration was signed on September 16, 2022. A total of fourteen meetings have provided information on energy-related matters. When a general assessment is made of these meetings, it is observed that more emphasis was placed on the economic aspect of energy. In the sections related to energy security, there was a greater focus on the transit and supply security dimensions of energy, while the environmental and production dimensions remained limited. The main point of concern is that the SCO, which was established based on separatism, extremism, and terrorism, did not show the necessary attention to the issue of piracy threats in the field of energy. However, despite the existing shortcomings, significant steps have been taken within the organisation toward energy security, which is the driving force behind energy regionalism.

Additionally, the organisation has implemented a significant series of action plans and projects. In addition to the listed points, some of these projects have been emerged due to bilateral discussions, while others have been designed to include all member countries. Some of these projects are as follows (InfoRos News Agency, 2022):

  • The trade agreement between India and Russia, signed on January 15, 2020 [India to invest in Russia’s Vostok Oil Arctic (The joint venture between Russia’s state-owned oil giant Rosneft and Russia’s private oil producer Neftegazholding, designed to explore oil reserves in the Arctic) project],
  • The purchase and sale agreement for natural gas supply through the Power of Siberia pipeline (Sila Sibiri Pipeline 1 and Sila Sibiri Pipeline 2) between Russia and China,
  • A memorandum of understanding in 2013 aiming to increase Russia’s oil supply to China by 10 million metric tons annually,
  • A 25-year strategic cooperation agreement in 2003 between Gazprom and Tajikistan for hydrocarbon exploration activities,
  • An agreement in 2009 between Russia and China for the construction of the East Siberia-Pacific Ocean (ESPO) oil pipeline curve towards China,
  • The Skovorodino-Mohe oil pipeline between Russia and China was completed in 2010.
  • The construction of an oil refinery plant in Tianjin,
  • Collaborations in the geological exploration field in member countries (such as Sakhalin 3, Magadan 1, and Magadan 2) have been mentioned to illustrate the opportunities the SCO provides regarding energy extraction and transportation in the region. Among these projects, the most significant is the Belt and Road Initiative, a crucial step and indicator of energy regionalism that connects countries in the region.

This project, brought up by Xi Jinping in 2013 and known as the “New Silk Road”, is a transportation network extending from China through Central Asia and Moscow to Venice. The project includes planned corridors for land roads, railways, oil and gas pipelines, and other infrastructure investments in Asia and Europe. The goal is to connect the developed European economy with the Eastern countries, including the transportation of goods and energy resources, through the established corridors (Erbil and Tanrisever, 2024). The Belt and Road Initiative, considered a regional development project, is expected to be a significant step in energy trade between Asia and the West, similar to the historical Silk Road. This project, brought up in the same year as the official establishment of the SCO Energy Club, has been positively welcomed by resource-rich countries in the region, especially Russia.

Since 2013, more than 150 countries and 30 international organisations have signed Belt and Road cooperation documents with China. China launched more than 20 multilateral dialogue and cooperation platforms with its cooperation partners in railway, port, finance, taxation, energy, green development, green investment, disaster risk reduction, anti-corruption, think tanks, media, culture exchanges, etc. (Ibrar et al., 2019). China has conducted over 3,000 cooperation projects with relevant parties and catalysed investments of nearly USD 1 trillion (Huichen, 2023). The regional countries, realizing that it will be an essential step for economic development and energy security, assert that the implementation of the project by 2050 will yield multilateral benefits.

As a result, concrete steps have been taken by the SCO in the field of energy security. The sub-organisations established within the organisation, summit meetings, exercises, declarations, and projects indicate that SCO countries attach importance to energy security. The region’s strategically important hydrocarbon reserves and significant natural resources compel the regional governments to act together.

The SCO, which encompasses energy producers, consumers, and transit countries, is engaged in significant activities related to energy security. However, these efforts need further development to maximise their effectiveness in the context of energy regionalism. It is evident that the SCO has taken various measures regarding technological inadequacies, border issues, environment, terrorism, separatism, transit, and production. However, it is notable that specific issues, such as the legal status of the Caspian Sea, Russia’s dominant power, and political instability, have not been addressed. The decisions and projects implemented thus far are positive but insufficient in addressing and enhancing integration for many issues. Concrete attention has not been adequately given to some key components of energy security, namely production security, environmental security, transit security, and consumption security.

Increasing the number of members, developing cooperation mechanisms to address existing problems, and making more binding decisions will improve economic efficiency and a secure environment in the energy field. The organisation’s high potential, inclination to increase its membership, and successful projects contribute to a positive perception of its future. With the security and cooperation environment established in the region, the SCO will also contribute to ensuring stability in other areas. The decisions made by the organisation, the treaties it has entered into, and the concrete steps it has taken through its actions collectively demonstrate that it represents a significant initiative towards ensuring energy security in the Eurasian region. Indeed, when the organisation is evaluated in the context of decisions taken and concrete steps, it is understood to be a significant example of energy regionalism.

Energy Trade

SCO member countries hold a leading position in reserves of energy sources such as oil, gas, and coal. For this reason, energy cooperation is considered an important component of the SCO’s economic agenda and is acknowledged as a factor contributing to the region’s stability and sustainable development (Penh, 2022). The organisation’s partners possess one-tenth of the world’s oil reserves, a quarter of its natural gas reserves, and 40% of its coal reserves (Hong, 2022). The full members of the organisation, including Russia and Central Asian countries, are the main suppliers of oil and natural gas, while China and India are the principal energy consumers within the SCO. Since Saudi Arabia and Qatar were granted the status of dialogue partners in 2022, these countries are not characterised as the main suppliers of the SCO in this study. However, to understand the potential of the SCO in terms of energy trade, data on the energy exports and imports of major observer and dialogue partners, as well as the full members of the organisation, are also provided below.

Table 1:  SCO Partners’ Energy Trade Activity

Country Natural Gas Exports (Tcf) Natural Gas Imports (Tcf) Oil Exports (thousand barrels daily) Oil Imports (thousand barrels daily) Coal Exports (Million Tons) Coal Imports (Million Tons)
Russia 7.4% 11.5% – 16.5% –
China – 17.2% – 17.7% 1.0% 18.0%
India – 5.2% – 8.4% – 15.4%
Pakistan – 1.8% – – – –
Other regional countries (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan) 8.8% – 2.9% – 2.0% 1.5%
Türkiye – 2.8% – – – –
Saudi Arabia – – 12.9% – – –
Qatar 21.0% – – – – –

Source: This table was created by the authors using data from the report prepared by the Energy Institute (2023: 27-42).

According to the latest published data specified in Table 1, among the member countries of the organisation, Russia, Qatar, and other regional countries are prominent in natural gas exports, while China, India, Pakistan, and Türkiye are importers of natural gas. Russia, Saudi Arabia, and other regional countries export oil, whereas China and India import oil. Among the organisation’s partners, Russia is a coal exporter, and India is a coal-importing country. Coal imports and exports are also conducted in China and other regional countries. In the organisation, comprised of member states that there is a trade energy among themselves, for instance, according to the 2023 data, Russia has exported to China 9.6 million tons of crude oil and 6.1 tcf of natural gas, and to India 7.3 million tons of crude oil and 0.6 tcf of natural gas. Other regional countries have exported 6.0 million tons of crude oil to China and 0.8 million tons to India. On the other hand, the new partner, Saudi Arabia, has exported 2.1 million tons of crude oil to China and 9.1 million tons to India (Energy Institute, 2023: 27-42; IEA, 2023). These figures reveal the scale and strategic nature of bilateral energy trade within the SCO framework. The global trade value of SCO member states has been steadily increasing. While the world’s international crude oil trade has seen a 4% increase from 2022 to 2023, Central Asian countries have come to the forefront with their export volumes; notably, the Asia-Pacific region, led by China and India, has seen a significant rise in import volumes (accounting for 60% of the total amount).

Consequently, these data demonstrate that the organisation also meets the criterion of energy regionalism in terms of its energy trade dimension. It is understood that the organisation provides an essential platform for addressing energy security issues and promoting sustainable energy development in the region. 

Conclusion and Policy Implications 

Eurasia, which has the largest landmass in the world, is one of the most crucial energy regions, but it faces serious issues with its fossil energy resources. The region, one of the most strategic energy production centres of the 21st century, faces numerous problems at the regional level concerning production, consumption, transit, and the environment, which require/demand regional implications. It is evaluated that these multidimensional problems, which negatively affect both producer and consumer and transit countries, can only be resolved through collective security platforms. Since energy is a global commodity, it is not possible to address energy security issues and generate solutions solely at the national level. The SCO is one of the most important alliances established to seek solutions to common problems encountered among Eurasian countries. While carrying different motivations, the SCO includes energy security in its founding documents and activities, and significant work is being carried out in this regard. From Western Europe to the Pacific, the SCO is an organisation large enough to influence international politics, with nine full members, three observer members, and nine dialogue partners. The organisation includes not only countries rich in fossil energy resources and significant transit countries for these resources but also consumer countries with solid international market characteristics. This situation guides SCO partners to engage in activities related to energy and to develop their cooperation further within the framework of energy regionalism by deepening their interactions.

As a significant initiative model for ensuring energy security in the Eurasian region, the SCO, when analysed empirically as a case study within the context of the energy regionalism criteria established by Hancock et al. and further developed by Herman and Jonathan and Aksu, reveals:

  1. Driving Forces: The SCO, which is one of the organisations where treaties and other legalised rules govern energy cooperation, satisfies the criteria of driving forces in the context of energy regionalism based on seven factors.
  2. Regarding ensuring energy governance institutional structure: The SCO is a fully developed organisation with seven main organs. These organs facilitate the institutional functioning of the organisation. In addition to these organs, the Energy Club and the Interbank Consortium are also present. These organs, established to enable more systematic decision-making and implementation of activities regarding energy resources, demonstrate that the organisation meets the institutional structure factor of the analysis criteria for energy regionalism.
  3. Impact of Decisions and Activities on Energy Regionalism: Another phase of the analysis of the organisation’s approach to energy regionalism involves elucidating its functional aspects. When analysing the SCO in a functional context, the focus is on the decisions and concrete steps taken within the organisation, as well as the energy trade between the organisation’s partners.

– Decisions and concrete steps: Although the SCO was established with multiple objectives, numerous treaties and action plans regarding energy have been implemented within the organisation since its inception. Twelve treaty texts have been published within the organisation, and peace mission exercises have been conducted regularly to combat potential threats to energy security. The execution of significant projects, such as China’s Belt and Road Initiative and the proposal to establish a free trade area among regional countries, indicates efforts to establish an energy union within the organisation. Within this dimension, the organisation meets the criteria of energy regionalism in terms of decisions made and activities carried out. The decisions and agreements made within the organisation’s framework prove that the SCO is a significant initiative to ensure energy security in the Eurasian region. However, it should be noted that considering the region’s energy potential and the series of security issues during energy production and transportation, the decisions made and concrete steps within the organisation need to be further developed and deepened. This is because energy remains vital for the states in the Eurasian region.

The measures taken by Eurasian countries regarding energy security are disproportionate to their sensitivity to this issue. The decisions made within the region’s most significant organisation do not meet the expected level when evaluated regarding the region’s potential. While creating various integration platforms to discuss security issues is crucial, there are shortcomings in their implementation. Furthermore, some significant issues causing disagreements do not become part of the agenda in the relevant institutions of the organisation. The SCO needs to take a more active role in ensuring common interests and for the decisions made within its institutions to be binding and implemented by all member countries for regionalisation. Resolving the problems related to the production, transit, and marketing of fossil energy resources, which are crucial commercial products for the region, through established regional cooperation and mutual dialogue will contribute to solving other regional issues and accelerate cooperation processes among regional countries. The challenges in producing, processing, and trading fossil fuels necessitate energy cooperation and regionalism. The successful management and implementation of energy regionalism in the region is the fundamental element that can solve these issues and enhance economic prosperity. Therefore, although the SCO’s primary purpose is not energy regionalism, it has great potential due to the crucial role of energy as a commodity.

  • Energy trade: The trade of energy among SCO member countries is a dynamic component of their economic and political interactions, having significant effects on regional stability and global energy markets. While energy trade contributes substantially to the GDP of exporting countries within the SCO, it also impacts the sustainable development of importing countries. Extensive pipeline networks, such as the East Siberia-Pacific Ocean oil pipeline and the Central Asia-China gas pipeline, underscore the infrastructural investments that guide these trade relations. Within the organisation, Russia (7.4%) and Qatar (21%), along with Azerbaijan, are key partners in natural gas exports, whereas countries like China (17.2%), India (5.2%), and Türkiye (2.8%) are principal importers. Russia (11.5%) and Saudi Arabia (12.9%) are the main oil-exporting countries, while China (17.7%) and India (8.4%) are importing countries. Among the organisation’s partners, Russia (16.5%) is the leading coal exporter, with China (18%) and India (15.4%) being the top importers by volume. These data indicate that the SCO meets the final energy regionalism criterion, transforming the organisation into a significant multilateral consortium that influences regional energy policies and trade. Fossil energy trade is a fundamental component of the SCO’s economic and political interactions, shaping regional power dynamics and contributing to the economic development of its members.

Indeed, the region’s vast fossil fuel reserves are central to member states’ energy security and economic stability, influencing their domestic and foreign policies. The quantity of fossil fuels leads to expectations that SCO partners will become increasingly influential in the energy trade. This is because ongoing changes in global energy markets, including Europe’s diversification away from Russian energy supplies, are prompting SCO members to reassess their energy trade routes and partnerships.

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[1]In their work, the authors not only base their analysis on the study by Hancock et al. but also focus on the commercial dimension (the total share of imports to and exports from the region by the parties involved) while examining the functional aspects of energy regionalism.

[2]“The Politics of Energy Regionalism,” “Energy Regionalism as a New Approach to Regionalism: Shanghai Cooperation Organization and Eurasian Economic Union,” and “Comparative Energy Regionalism: North America and the European Energy Community.”

[3] 1340.5 tcf natural gas, 107.2 billion barrels oil, 162.166 million tons coal.

[4] 93.7 tcf natural gas, 30.0 billion barrels oil, 25.605 million tons coal.

[5] 42.7 tcf natural gas, 0.6 billion barrels oil, 1.375 million tons coal.

[6] 100.5 tcf natural gas, 7.0 billion barrels oil, (s) million tons coal.

[7] Regional powers also have economic objectives, but in addition to these objectives, they strive to become global powers in the international system compared to other countries (Belyi and Talus, 2015).

[8] Russia, Kazakhstan, Kyrgyzstan, China, Tajikistan, Afghanistan, Belarus, India, Türkiye, Iran, Mongolia, Pakistan and Sri Lanka

[9] All manifestations of corruption pose a threat to national and regional security, reduce the effectiveness of governance, have a negative impact on international prestige, and hinder socio-economic development.

[10] In line with this objective, it has been announced that the SCO will provide greater opportunities for practical cooperation in these areas through its organs, particularly the RATS (Regional Anti-Terrorist Structure), and the establishment of certain subordinate organs (such as the SCO Border Control Agency and the SCO Information Security Center) is planned.

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