MESOP : ERDOGAN’S & PUTIN’S ENERGY PROJECTS – Turkey’s Renewed Ambitions on the Eurasian Energy Chessboard
Author: Göktuğ Sönmez, PhD Candidate, School of Oriental and African Studies (SOAS)Date: Mar 08, 2015 Abstract – After the recent Russo-Ukrainian crisis, EU’s energy security is in question once again. This is not the first time the EU questioned the reliability of the Russian supply, considering the crises in 2006 and 2009. Since the 2006 crisis, the general view has been that politically-motivated steps by Russia make the EU’s dependency on the Russian resources too and that therefore it needs to diversify supply and transit routes. In terms of alternative routes, Turkey has been an important candidate since the end of the Cold War. From the Baku-Tbilisi-Ceyhan (BTC) pipeline to the failed Nabucco project, it has been at the scene with the ambitions of linking the Caspian basin’s resources to the West. Turkey’s increasing energy demand, the Trans Anatolian Natural Gas Pipeline (TANAP) project and recent change of plans of the South Stream project, could all help to reinvigorate Turkey’s dream of becoming an ‘energy hub’. This article argues that this ambition might well be possible –if pursued with delicate policies which are interest– driven yet do not alienate any leading actor in the realm.
Due to Turkey’s ‘fortunate’ geographical location close to 70 per cent of oil and gas reserves of the world –.e. the Middle East and the Caspian basin– [1] Turkey has the clear opportunity to play the role of a key energy transit route, and act as an ‘energy hub.’ The question is whether Turkey will be able to play the delicate energy game with the two leading actors, namely the EU and Russia, or not. Turkey needs to do so without alienating either while pursuing its strategy of being part of pipeline projects or carrying the Caspian and the Middle Eastern resources to the West. In addition Turkey could use projects of each side against the other when it perceives beneficial to do so, and make the most of the energy game as a leading transit country. Evaluation of Turkey’s potential in this regard, –how other actors approach it, and how the recent Trans Anatolian Natural Gas Pipeline (TANAP) project and Russia’s diversion of the South Stream pipeline [2] can contribute to Turkey for realising it– will be analysed in this paper.
Within the last month, two recent visits highlighted Turkey’s potential as a key ’Eurasian energy hub.’ First, U.S. Vice-President Joe Biden’s visits to Ankara visiting Ankara in November 2014 and in the aftermath of Russia’s annexation to the Crimea, emphasised the importance of Turkey within the context of the East-West energy corridor –i.e. the energy transit route linking the Caspian resources with the Western energy market. Traditionally, many European countries have been largely dependent on Russian gas. The crisis resulted from Russia’s reaction to the potential ‘loss of a dear country to the West’ which is a part of its ‘near abroad’ conceptualisation. Russia’s steps in response to such possibility in Ukraine included annexing Crimea and encouraging the subsequent emergence of the self-proclaimed, ethnic Russian Republics of Donetsk and Lugansk (both declaring independence from Ukraine). The ensuing stand-off between the EU/US and Russia clearly show once again the risks for Europe to be over-dependent on energy imports from Russia.
During his visit, Biden referred to the ‘European Energy Security Strategy’ of May 2014 in which the European Commission directly refers to the recent crisis in Ukraine, and once again warns its EU Member States to act in unity and encourages the use of renewables in order to limit energy dependence on Russia.[3] Despite its alarming tone, for the ones knowing the unimpressive results of similar strategic documents previously published in 2006, 2007 and 2009, this strategy seems ill-fated as well. Nevertheless, and after recalling the strategy, Biden referred to the use of energy as a weapon and a dangerous move threatening nations’ security and presented the idea of diversifying supply as a way out. This diversification of supply and transit routes is where Turkey can play a role to help realise the EU’s long-pursued goal of a common regional energy policy.
So far, the ability of the EU to pursue a genuine common energy policy has been limited. This is not only because of the memories of failed initiatives and hopes in this regard, but mainly due to the diversity of individual members’ energy policies and their bilateral contacts with Russia. Yet, one thing is crystal clear: Biden’s statements on the need for the EU to diversify its energy supply and his emphasis on Turkey for this goal is a clear sign of the United States’ assessment of Turkey’s role as a key to free the EU from the political use of energy resources at the hand of the Russian establishment. This position was strongly encouraged especially in the 1990s and the early years of the new millennium as well as engendered the operationalisation of the Baku-Tbilisi-Ceyhan Oil Pipeline (BTC) and Baku-Tbilisi-Erzurum Natural Gas Pipeline (BTE, also known as the South Caucasus Pipeline). These are the two most important energy transit channels by-passing the Russian route and thus two great achievements for both Turkey and the West in the post-Cold War era with their symbolic meaning of reaching the ex-Soviet space.
Indeed, Biden’s visit and his statements regarding the need for the EU to limit its over-dependence on Russia as soon as possible pointed to an issue which was underlined more and more eagerly by the EU especially since the first Ukraine crisis in 2006. After the energy crisis in Ukraine in 2006, a Green Paper entitled “A European Strategy for Sustainable, Competitive and Secure Energy” was published. Here, the question of dependency was underlined and diversification of supply and diversification of the energy mix –shares of different fossil fuels in the general consumption– as a way to get rid of this dependency problem as well as a strong emphasis on an integrated external energy policy were mentioned.[4]
The subsequent 2007 Communication, “An Energy Policy for Europe” argued that the energy dependency would be 93 percent in oil and 84 percent in natural gas in 2030.[5] Europe’s main supply in this regard would stem from three major suppliers, Russia, Norway and Algeria.[6] It is quite illustrative of the inability of the EU to act united in the energy realm that even in the 2014 “European Energy Security Strategy,” the main issue is still the lack of inter-EU solidarity. This problem can be regarded as the key to understand the failed attempts of the Union in the energy realm. However, some limited successes were achieved in the meantime, such as the development of back-up infrastructures and reverse flow capabilities in order to minimise the vulnerability of the EU in the face of similar energy crises. In order to avoid the negative impact of such crises, as its predecessors did in the past, this report also encourages use of renewables in energy production and sets an ambitious goal of a 27 percent share of renewables in the EU’s energy consumption in 2030 (which was around 14 percent by 2012).[7]
Russia’s President Vladimir Putin’s visit to Turkey in December 2014 sent shock-waves through the EU following his announcement of the ‘death’ of the South Stream project and proposed diversion of it in a way that passes through Turkey towards the EU. The project was originally designed to challenge the Nabucco project[8] and consolidate Russian leverage over the EU in the energy realm. However, the Nabucco project, once an ambitious project devised by the EU failed when Russia managed to convince countries such as Austria, Hungary, and Bulgaria to participate in the South Stream pipeline. Nabucco’s little brother with a shorter transit line, Nabucco West,[9] endured the same issues and failed too. Yet, it should also be noted that the Nabucco project was far from a perfect opportunity for Turkey, as the EU refused to give-in to Turkey’s demands to receive 15 percent of the transported gas for internal consumption and to unblock the negotiation chapter on Energy in Turkey’s EU membership negotiations.[10]
In response to the failure of the Nabucco project, cooperation between Azerbaijan and Turkey resulted in the materialisation of the TANAP project, which will carry natural gas from the Shah Deniz-2 field of Azerbaijan. Initiated by Azerbaijan’s State Oil Company of Azerbaijan Republic (SOCAR) and Turkey’s state-owned Boru Hatları İle Petrol Taşıma Anonim Şirketi (Petroleum Pipeline Corporation) (BOTAŞ), the BP as latecomer joined to the TANAP project. The TANAP project is expected to be operational in 2019 with a capacity of 16 bcma –billion cubic meters per annum–, of which 6 bcma will be used for Turkey’s internal demand –an important achievement for Turkey comparing to its refused demands in the Nabucco project with respect to its domestic consumption. The project is expected to reach 31 bcma –equal to the Nabucco pipeline’s projected capacity[11]– and is designed to be expanded to be able to carry 60 bcma.[12] This is not only equal to almost half of Gazprom’s current supply level to Europe, but considering the expected increase in the pipeline’s capacity up to 60 bcma, also shows implicit expectations about the future participation of other Caspian and Middle Eastern players and their natural gas supply.
Due to the tension Russia and the EU experienced because of the Ukraine crisis in 2014, Russia used its opportunity to counteract during Putin’s visit to Turkey in December 2014. Along with the TANAP project’s ambitious 60 bcma potential, 63 bcma natural gas which had been expected to be carried through the South Stream pipeline but was diverted to Turkey.[13] The total amount can make Turkey the key ‘Eurasian transit hub with regard to energy.’ If both pipelines operate at full potential, the amount Turkey will be able to transit will account for more than one-fifth of the EU’s natural gas demand (currently around 550 bcma). TANAP’s medium-term goal of 31 bcma, combined with 63 bcma coming from the proposed diversion of the cancelled South Stream project, means that Turkey would be able to channel much more resources than the two most important Russia-to-Europe natural gas channels up to date: the famous Nord Stream (55 bcma) and the Yamal pipeline (33 bcma).[14]
The question is whether Turkey would be able to carry out both EU-backed TANAP and Russia-backed ‘Thrace Hub’ –i.e. a name in circulation for some time referring to the proposed new version of the South Stream project to Turkey- projects in the energy realm. As a country that is badly needed for both the EU –to reach the landlocked energy-rich countries of the Caspian region– and Russia –to by-pass the politically problematic Ukrainian route–Turkey has proven quite capable of playing the role of an important transit country. Turkey has put its weight wholeheartedly behind the TANAP project, which would significantly benefit not only Turkey but also the EU as the ‘missing link’ between Caspian energy resources and the Trans-Adriatic Pipeline (TAP). On the other hand, Turkey did not hesitate to follow a flexible approach with respect to the South Stream project from the beginning by constantly underlining that it does not oppose or challenge the project by the pipeline projects it plays the role of the transit country such as the Nabucco project or TANAP project. It even signalled participation in the project. The achievement of such a positive approach to the project is clear after Putin’s U-turn in the project and Turkey’s subsequent role in this new version of the pipeline.
In addition, the unprecedented improvement in economic ties with Russia regarding Russia’s construction of Turkey’s first nuclear energy plant in Mersin, Akkuyu in spite of occasional political tensions –such as their clashing views over the Syrian conflict– shows Turkey’s pragmatic energy perspective. This pragmatic role has also paid-off well –due to the nuisance Russia that has felt because of the West’s attitude –during the Ukraine crisis– with a 6 percent discount on gas which would possibly be followed by further discounts and additional 3 bcma natural gas to be sent for Turkey’s energy consumption by Russia. However, it is important for Turkey to avoid the image of ‘shifting axis’ which is a key concept referring to Turkey’s so-called shift to the ‘Orient’ in the last decade in the energy realm and continue stressing its role as a player in the realm that can participate in both sides’ projects in line with its own interest-driven calculations.
Furthermore, acting as a secure and reliable transit point requires the respective party to conduct good relations with both importer and exporter sides as well as being as invulnerable as possible to external challenges –two important points that translated each Russo-Ukrainian crisis into energy crisis for the EU– in order not to disrupt the energy-flow. This implies that Turkey’s ability to maintain this delicate strategy is the key to its pursuit of the role of a key energy transit point linking the Caspian and the Middle Eastern resources with the growing European demand while also satisfying its own energy-hungry domestic market.
All in all, Turkey seems to be the most promising transit player in the energy chessboard. While ensuring that its own energy demands are met more easily, Turkey has the potential to transport almost one-fifth of the EU’s energy demand in the medium to long-term and help to incorporate the Middle East and the Caspian region into a wide web of energy transportation which in turn could foster their socialisation within greater global community. Its interest-driven energy approach in which the impacts of day-to-day political divergences and regional shifts are quite limited, signals the revival of its dream of becoming an energy hub. This goal emerged for the first time in the immediate post-Cold War era due to the rich energy resources of the states of both Caucasus and Central Asia with whom Turkey expected to establish closer relationships compared to any other actor. This did not turn out to be the case though.
Still, Western support helped Turkey to realise two projects, the BTC and BTE. This time, compared to the 1990s version of the energy hub perception which would carry the Former Soviet area’s energy resources to Europe in order to limit Russian leverage, Turkey now approaches its transit role from an ‘upgraded’ point of view. It has adopted a strategy that prioritises its own perceptions of power-maximisation and positions itself as a pragmatic, business-minded and interest-driven Eurasian energy hub which can take part in any energy project in its surrounding regions it assesses beneficial for both its global and regional profile and its own increasing energy demand stemmed from its growing economy. As long as Turkey succeeds to maintain a balanced and multi-dimensional energy role that does not alienate the two key partners, the EU and Russia, it has the opportunity to prove itself as the ideal ‘Eurasian energy hub.’
Göktuğ Sönmez, PhD Candidate, School of Oriental and African Studies (SOAS)
Please cite this publication as follows:
Sönmez, G. (March, 2015), “Turkey’s Renewed Ambitions on the Eurasian Energy Chessboard”, Vol. IV, Issue 3, pp.24-32, Centre for Policy and Research on Turkey (ResearchTurkey), London, Research Turkey. (http://researchturkey.org/?p=8222)
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Endnotes
[1]Katinka Barysch, “Turkey’s Role in European Energy Security” (2007b). Centre for European Reform Essays (2007), p.1.
[2]The pipeline was originally designed to carry 63 bcma natural gas from Russia to Austria via Bulgaria, Serbia, Hungary, and Slovenia.
[3]See European Commission, European Energy Security Strategy, European Commission, Brussels (2014).
[4]Ali Tekin and Paul Andrew Williams, Geo-politics of the Euro-Asia Energy Nexus- The European Union, Russia and Turkey (Palgrave Macmillan: Basingstoke: 2011), p.24-25.
[5]European Commission, An Energy Policy for Europe, European Commission, Brussels (2007), p.25.
[6]European Commission, A European Strategy for Sustainable, Competitive and Secure Energy, European Commission, Brussels (2006), p.3.
[7]See European Commission, European Energy Security Strategy, European Commission, Brussels (2014).
[8]The failed Nabucco project was designed to transport natural gas from Azerbaijan, Turkmenistan, Iraq, and possibly Iran, and Egypt to Europe passing through Bulgaria, Romania, and Hungary before reaching its destination, Austria via a 3800-km long pipeline with a capacity of 31 bcma of natural gas.
[9]The 1326 km pipeline which is a short-cut version of the Nabucco project, designed to carry natural gas from the Turkish-Bulgarian border rather than the Nabucco’s projected direct reach to the Caspian resources to Austria.
[10]Olgu Okumuş, “What Did Turkey Lose When EU Lost Nabucco?”, Al Monitor,(2/7/2013). [Accessed on 15 November 2014], Available at:
http://www.al-monitor.com/pulse/originals/2013/07/eu-nabucco.html
[11]Lada Evgrashina, “Azeri oil fund to help finance TANAP gas pipeline,” Reuters, 6/11/2012. [Accessed 17 November 2013], Available at:
http://www.reuters.com/article/2012/11/06/azerbaijan-energy-idUSL5E8M6C1P20121106
[12]Gulmira Rzayeva, “TANAP-Hazar Gazını Avrupa’ya Taşıyan Atılım Projesi.” [Accessed 16 November 2014], Available at:
http://www.hazar.org/UserFiles/yayinlar/MakaleAnalizler/Gulmira_Rzayeva.pdf
[13]See “Russia drops South Stream gas pipeline plan,” BBC, 1/12/2014. [Accessed 2 December 2014], Available at:
http://www.bbc.com/news/world-europe-30283571
“Putin Blames EU as Russia abandons plans for South Stream gas pipeline,” The Guardian, 1/12/2014. [Accessed on 2 December 2014], Available at:
“In Diplomatic Defeat, Putin Diverts Pipeline to Turkey,” The New York Times, 1/12/2014. [2 December 2014], Available at:
http://www.nytimes.com/2014/12/02/world/europe/russian-gas-pipeline-turkey-south-stream.html?_r=0
[14]“Delivery Statistics.” [Accessed on 18 November 2014], Available at:
http://www.gazpromexport.ru/en/statistics/
“Nord Stream- the pipeline.” [Accessed 12 November 2014], Available at:
https://www.nord-stream.com/the-project/pipeline/
“Yamal-Europe.” [Accessed 2 November 2014], Available at:
http://www.gazprom.com/about/production/projects/pipelines/yamal-evropa/