Turkey does u-turn on trans-Caspian
pipeline By Vladimir Socor
Turkey is revisiting the trans-Caspian gas
pipeline project after a decade-long hiatus.
Ankara is now aligning with the European Union,
Azerbaijan and Turkmenistan, supporting the
transportation of Turkmenistan's gas to Turkey and
onward to Europe.
Ten years ago, Turkey
failed to capitalize on the first trans-Caspian
pipeline project (see below). But the EU is
reactivating it in the framework of the Southern
Gas Corridor to Europe, along with the
Azerbaijan-led Trans-Anatolia Pipeline project
(TANAP) in Turkey. Thus, Ankara is justified in
seeing great opportunities in the construction of
a large-capacity trans-Caspian pipeline,
connecting via Azerbaijan with Turkey, and
maximizing the gas
flow through the TANAP
pipeline to Europe.
On September 3, the
EU's Energy Commissioner Guenther Oettinger,
Turkish Energy and Natural Resources Minister
Taner Yildiz, and Azerbaijani delegates held talks
with President Gurbanguly Berdimuhamedow and other
Turkmenistani officials in Ashgabat. A new Turkish
policy emerged on this occasion.
Yildiz
announced explicitly that Turkey intends to import
and transport Turkmenistan's gas through the
proposed trans-Caspian and TANAP pipelines. Turkey
would "buy" certain volumes for its own needs
while allowing other volumes to "flow beyond
Turkey". According to Yildiz, Azerbaijan is both a
source and a transit country for Caspian gas,
"helping" Turkey on both counts.
Ankara
now favors expanding TANAP's capacity to as much
as 60 billion cubic meters (bcm) annually in its
final phase, doubling the 30 bcm hitherto
envisaged for that final phase. Yildiz
characterized Turkey's role as that of an outlet
for Turkmenistan's gas to international markets
and an integral component of the EU's supply
diversification strategy. He unveiled these ideas
before and after his meeting with Berdimuhamedow.
With Turkmenistan having offered 40 bcm
per year for delivery to Europe (30 bcm from
onshore and another 10 bcm from offshore
deposits), and Azerbaijan's export potential
rising above 20 bcm annually after 2020 (and more
thereafter) from proven reserves, TANAP offers the
unique advantage of being scalable to accommodate
such volumes.
The line is planned for
capacity increases by adding compressor power and
parallel loops in a phased process correlated with
the supply volume growth. According to Baku's
latest estimates, the capacity increase to 30 bcm
could raise TANAP's construction costs to $7
billion from the initially estimated US$5 billion,
anticipating higher returns on the investment
thanks to the larger transportation volume.
In Ashgabat, Yildiz distinguished between
Turkmenistani gas volumes that Turkey would itself
consume and volumes to be transported via Turkey
to international markets. It does not seem clear
at this stage whether Turkey would provide transit
service for Turkmenistan's gas en route to
markets, or whether it would propose buying and
re-selling some of those volumes to third parties
at a profit to Turkey. The concept of a "gas hub"
tends to be used imprecisely or ambivalently in
Turkish debates.
Turkey's interests are
five-fold in seeking to maximize TANAP's gas flow:
to meet growing internal demand, to reduce
dependence on Russian gas supplies, to replace
Iran's overpriced and interruption-prone
deliveries, to boost Turkey's role in the energy
corridor to the European Union, and to enhance
TANAP's profitability and investor appeal.
With Oettinger and Yildiz in Ashgabat,
Berdimuhamedow reaffirmed Turkmenistan's interest
in reaching European gas markets as soon as
possible through a trans-Caspian pipeline and
onward through TANAP, while Azerbaijan confirmed
its interest in a transit role.
Ashgabat
conducted the meeting with its usual discretion
and minimal publicity. The meeting also confirmed
Ashgabat's and Baku's positions that any
trans-Caspian pipelines are a matter for the two
participant countries; and can go ahead without
awaiting or prejudicing the final delimitation of
sectoral borders.
This implies that a
trans-Caspian gas pipeline would not be held
hostage either to Russo-Iranian vetoes or to the
Ashgabat-Baku dispute over their maritime border.
In that dispute, Baku proposes joint development
of a contested oil field while Ashgabat prefers
international arbitration or litigation. Ankara is
now offering to mediate the dispute.
Promptly reacting to the Ashgabat meeting,
Tehran offers to transport Turkmenistani gas
through Iranian overland pipelines, circumventing
the Caspian Sea to connect with TANAP in Turkey.
The National Iranian Gas Company proposes to
transport the same gas volume as Turkmenistan
would deliver via a trans-Caspian pipeline to
Azerbaijan for TANAP. However, this proposal is a
non-starter on cost grounds alone, apart from the
international sanctions on Iran.
A decade
ago, Turkey helped Russia's Gazprom to kill the
Trans-Caspian Pipeline project. At that time
(until 2002), Turkey was the designated market for
16 bcm of Turkmenistan's gas annually from the
Trans-Caspian Pipeline's first phase. Turkey
(along with Azerbaijan and Georgia) was also the
designated transit country for another 16 bcm of
Turkmenistani gas to Europe, from the
trans-Caspian pipeline's second phase.
The
United States championed this project and the
Turkish state was officially on board. Trumping
the state, however, influential Turkish interest
groups joined forces with Gazprom to build the
Blue Stream pipeline from Russia to Turkey, on the
seabed of the Black Sea and onward to Ankara. Laid
in 2002 and designed for the same capacity of 16
bcm annually, Blue Stream defeated the
trans-Caspian project in the race for the Turkish
market. It also defeated Turkey's national
interest, as Gazprom's gas was priced far above
that offered by Turkmenistan. The latter was cut
off from Turkey and Europe for another decade.
In 2011, the European Union's 27 member
countries mandated the European Commission to
assist Turkmenistan and Azerbaijan in creating a
legal, regulatory and commercial framework for a
trans-Caspian gas pipeline. This year, the
Azerbaijan-led trans-Anatolia pipeline project
with scalable capacity has opened the way for
Turkmenistani gas to enter the Southern Gas
Corridor to Europe.
These developments can
resolve Turkey's energy supply dilemmas, as well
as make Turkey a major transit route for both
Azerbaijani and Turkmenistani gas to the EU.
Apparently, Ankara has decided to capitalize on
this opportunity, the potential magnitude of which
exceeds the lost opportunity of 10 years ago.
Vladimir Socor is a Senior
Fellow of the Washington-based Jamestown
Foundation and its flagship publication, Eurasia
Daily Monitor, and is an internationally
recognized expert on the former Soviet-ruled
countries in Eastern Europe, the South Caucasus
and Central Asia. Socor is a regular guest
lecturer at the NATO Defense College and at
Harvard University’s National Security Program’s
Black Sea Program. He is a Romanian-born citizen
of the United States based in Munich, Germany.
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