Governing Energy in Europe and Russia
3 – 4 September 2010
Radcliffe House, University of Warwick
Turkey Between EU and Energy Resources
Kenan Aksu
Politics Department, Goldsmiths College
University of London
Abstract:
The importance of the security of energy supply and diversification of supply routes
occupy centre of stage in the European Union’s (EU) future plans. Turkey, a
candidate for a full membership to EU and a country which is located very close to 70
% of the world’s oil and gas reserves, offers a passage for a large pipeline namely
Nabucco Gas Pipeline to carry gas from the Caspian and the Middle Eastern regions
to create an alternative to Russian supply routes by being the fourth energy corridor
for Europe. The project is clearly aimed at loosening Russia's grip. This will
positively affect EU-Turkish relations as it would be of mutual benefit, providing the
EU with a reliable supply route for energy whilst simultaneously providing transit
fees to bolster the Turkish economy. Most importantly, Turkey would be able to
prove itself as an indispensable partner and a deserving candidate for EU
membership. This study examines Turkey’s role in the EU’s quests to ensure secure
access to energy resources through the Nabucco Gas Pipeline and how this will affect
Turkey’s membership prospects in future.
Key words: Energy Security, EU, Turkey, Nabucco Gas Pipeline, Caspian
Region, Russia,
Introduction:
The importance of the security of energy supply and diversification of supply routes
occupy centre of stage in the EU’s future plans. Following the Ukrainian crisis of
2006 the EU realised that it needed to diversify its energy sources. Turkey, a
candidate for a full membership to EU and a country which is located very close to 70
% of the world’s oil and gas reserves, offers a passage for a large pipeline to carry gas
from the Caspian and the Middle Eastern regions to create an alternative to Russian
supply routes. Of six energy projects pinpointed for future development, commission
officials said one of the absolute priorities was to forge ahead with the southern gas
corridor namely Nabucco Gas Pipeline, which is supposed to transport gas from the
Caspian basin to Europe while, for political reasons, bypassing the world's biggest gas
producer, Russia. The project is clearly aimed at loosening Russia's grip. The leader
of the European Commission Jose Manuel Barroso says: We must not sleepwalk into
Europe's energy dependence crisis. The EU wants different sources of supply.1
The proposed Nabucco gas pipeline is the new flagship project of the diversification
strategy. Once in operation, this pipeline will make Turkey an alternative energy
corridor for the EU. This will positively affect EU-Turkish relations as it would be of
mutual benefit, providing the EU with a reliable supply route for energy whilst
simultaneously providing transit fees to bolster the Turkish economy. Most
importantly, Turkey would be able to prove itself as an indispensable partner and a
deserving candidate for EU membership.
This study examines Turkey’s role in the EU’s quests to ensure secure access to
energy resources through the Nabucco Gas Pipeline and how this will affect Turkey’s
membership prospects in future. After giving a brief literature review on the topic, the
first part of this study describes the existing energy security issues of the EU due to its
heavy reliance on a single source of supply, namely Russia, for its natural gas imports
and to a certain extend oil imports. The second part of the study discusses Turkey’s
role in European security of energy supply, the relative utility of the proposed
Nabucco Project for both EU and Turkey and its possible affects on Turkey’s
membership possibility in future.
1
Ian Traynor, EU Unveils energy plans to reduce dependence on Russia, Guardian, November 13,
2008
In conclusion, the paper suggests that although the existing supplies of energy
resources and heavy reliance on Russia urges EU to have a more positive attitude
towards Turkish membership in the Union, it does not mean that the EU cannot obtain
its goal of energy security without Turkey as a full member even if it involves higher
political and economical costs. Turkey on the other hand must do more then just being
an energy hub to get closer to EU membership.
Literature review:
Whilst studying the literature on the importance of energy security and its impact on
EU-Turkey relations it is possible to find some literature that lay a hand on these
matters such as Mankoff’s work,2
essays produced at the Centre for European
Reform (CER)3 and green papers of the European Commission on energy issues.4
However, it is also evident that in EU-Turkey relations significance of energy security
is understudied even though official commission documents continue to imply the
importance of this issue. As the Green Paper of the European Commission on the
strategy for the security of energy supply published in 2000 writes:
“Security of supply aims to reduce the risks of over dependence. Among the
objectives to be pursued are those balancing between and diversifying of the
various sources of supply by product and by geographical region.”5
The focus of the literature on EU-Turkey relations is still concentrate by and large on
other issues such as religion, Cyprus issue, military’s involvement into politics and
human rights concerns but not energy. Written materials in libraries about European
energy supply issues have a tendency to underestimate the scale of any possible
Turkish contribution towards it. One factor in this might be that the energy security
issue as a whole is not as attractive to writers as other topical subjects as the former
energy commissioner of EU Andris Piebalgs says:
2
Jeffrey Mankoff, Eurasian Energy Security, Council on Foreign Relations, Council Special Report
No:43, New York 2009
3
Katinka Barysch, Turkey’s role in European energy security, Centre for European Reform Essays,
December 2007
4
Green Paper, (European Commission), “A European Strategy for Sustainable, Competitive and
Secure Energy”, March 3, 2006,http://www.energy.eu/directives/2006_03_08_gp_document_en.pdf
5
Green Paper, ibid, p.2
“They tend to forget or fail to appreciate the importance of energy and mutual
future security issues even though they are at the forefront of the new
European security agenda.”6
One other reason for this could be that the idea of Turkey being the fourth energy
corridor for Europe after Russia, Norway and North Africa, is quite a new initiative
and the work on this subject is just being produced. For instance works of Moran7 and
Youngs8 can be categorised as model research prepared on energy and energy security
issues. However, the core subject of the paper the Nabucco Project is very recent and
the pipeline is predicted to be not operational at least until 2015. As a result of this,
there are not many published accounts on this particular project apart from few
chapters in newly published books such as Shaffer,9 Korin and Luft10, mass media
coverage such as the Times, Guardian, Zaman, Milliyet, articles in academic papers
such as Barysch11, Winrow12, Norling13 and Ozdemir14 and Internet resources such as
http://www.nabucco-pipeline.com.
In terms of the energy resources surrounding Turkey, there are many scholarly written
accounts which give as crude facts such as Yergin 15 and Kandiyoti 16. However, there
are many biased and politically motivated publications on energy issues as it can be
used as a foreign policy tool such as Aliyev 17 and Pinder 18. Overall the study realizes
that one of the main problems associated with the literature on the energy issues are
6
Andris Piebalgs, ‘European Energy Security Policy’, Speech at the European Business Summit,
Brussels, February 21, 2008
7
Daniel Moran and James A. Russell, Energy Security and global Politics, Routledge Publishing,
London, 2009
8
Richard Youngs, Energy Security, Routledge Publishing, Abingdon, 2009
9
Brenda Shaffer, Energy Politics, University of Pennsylvania Press, Philadelphia, 2009
10
Gal Luft and Anne Korin, eds., Energy Security Challenges for the 21st Century, A Reference
Handbook, Praeger Security International, Santa Barbara, Denver and Oxford, 2009
11
Barysch, ibid
12
Gareth Winrow, Problems and Prospects for the “Fourth Corridor”: The Positions and Role of
Turkey in Gas Transit to Europe, Oxford Institute for Energy Studies, June 2009
13
Nicklas Norling, Gazprom’s Monopoly and Nabucco’s Potential: Strategic Decisions for Europe,
Central Asia Caucasus Institute and Silk Road Studies Program, Washington and Stockholm,
November 2007
14
Volkan Ozdemir, Turkey’s Role in European Energy Security, in Svante Cornell and Niklas Nilsson,
eds., Europe’s Energy Security: Gazprom’s Dominance and Caspian Supply Alternatives, Stockholm
and Washington, The Central Asia-Caucasus Institute and the Silk Road Studies Program, 2008
15
Daniel Yergin, The Prize: the epic quest for oil, money & power, Free Press, New York, 2008
16
Rafael Kandiyoti, Pipelines: Flowing Oil and Crude Politics, I.B.Taurus, London, 2008
17
Heydar Aliyev, Azerbaycan Oil in the World PolicyAzerbaycan Publishing House, Baku, 1997
18
John Pinder and Yuri Shiskov, The EU and Russia: the promise of partnership. Federal Trust for
Education and Research, London, 2002
that they can be biased and politically motivated. Lack of written accounts on
Nabucco can be seen as another weakness of the literature and therefore poses a
limitation to the research to a certain degree.
As Nabucco is a grandiose project in terms of investment and politics involved, the
study will try to show the extend of Turkey’s ability to handle such a big project by
taking a look at the currently running BTC pipeline as a case study where there is
relatively more published work available such as Akiner,
19
Starr and Cornell
20
and
Winrow21. Nevertheless, this study suggests that when working on the relations
between Turkey and EU relations there is a reasonable magnitude of gap in the field
of energy. By pursuing this study, I therefore, try to fill at least some of this gap
through seeking out the importance of energy for EU- Turkey relations by making it
the core of the paper.
European Energy Issues:
Europe mainly consumes fossil fuels and about half of the energy consumed in the EU
is imported. Only 0.6 % of the world’s oil reserves and 2.0% of proven natural gas
reserves are located in EU. When we look at some essential facts about EU energy
imports one can understand the importance of diversification strategy and therefore
contribution Turkey might be able to offer towards the security of European energy
supply.
Due to limited indigenous hydrocarbon resources and rapidly rising demand, total
energy import of EU is constantly increasing. In 1995 it was only 44 % while it went
up to 61 % in 2008 22 and expected to reach 70 % by 2030 23 (% 84 in gas). Russia’s
share in European energy marked is remarkable as Europe currently imports 42 % of
its gas, a third of its oil and a quarter of its coal from Russia. Although oil remains as
the single largest fuel in the primary energy mix, demand for natural gas will grow
19
Shirin Akiner, The Caspian: politics, energy and security. Routledge-Curzon Abingdon, 2004
S. Frederick Starr and Svante E. Cornell , The Baku-Tbilisi-Ceyhan Pipeline: Oil Window to the
West, Central Asia Caucasus Institute & Silk Road Studies Press, Uppsala, 2005
21
Gareth M. Winrow, Turkey and the East-West Gas Transportation Corridor, Turkish Studies, Vol. 5,
No. 2, Spring 2004
22
Green Paper (European Commission), “Towards a European strategy for the Security of energy
Supply”, November 29, 2000, http://www.aei.pitt.edu/1184/01/energy_supply_security_gp_com
23
Winrow, ibid, p.234
20
most rapidly, mainly due to strong demand from power generation. This fact will
increase European reliance on Russian energy even further. When considering the
dramatic rise and great dependence on a single energy source in EU energy import,
the policy makers are right to think about diversifying the supply routes to prevent
possible future problems this might create.
As said above, the EU relies on imports for almost 80 % of its oil supplies and
indigenous oil supply is expected to move below 10 % of consumption in maybe less
than ten years. Without any doubt, the EU security of oil supply is fundamentally a
question of the security of supply to be expected from the global oil market too.
24
Therefore, it is vitally important for the EU to secure its oil supply through diversified
sources. In 2002, 38 % of oil imports came from OPEC with Norway (24 %), Russia
(22 %) and others, including Kazakhstan, Mexico and Azerbaijan, making up the rest.
With EU’s dependence on external oil supplies rising to 90 % by 2020 with imports
derived substantially from politically unstable areas, notably in the Middle East and
Russia, whose share of Europe’s import market has been growing in recent years. For
that reason political stability and peace in these areas are fundamentally important for
the European energy security. It is also important for these regions to carry on
producing enough energy for reasonable prices to meet the demands of the European
market to make financial gains as the money Europe spends on oil is quite a big
amount. At present oil price levels the EU’s oil bill for imported and domestically
produced oil stands at around 250 billion € year or roughly 2.3% of GDP.25
In terms of natural gas which is the cleanest fossil fuel compared to other hydrocarbon
resources, European dependency is increasing further than oil. Natural gas
consumption has been growing steadily for decades within the EU, offering
environmental as well as economic benefits. In 2006, consumption was at around 515
billion cubic metres (bcm) per year- roughly one quarter of total EU energy
consumption- and is foreseen to grow further, both in absolute and relative terms,
towards some 635 bcm by 2030 under the conditions laid down in the 2005 Baseline
24
European Commission Staff, Working Document: Annex to the Green Paper, A European Strategy
for Sustainable, Competitive and Secure Energy: What is at stake – Background Document, 2006, p. 19
http://www.energy.eu/directives/2006_03_08_gp_working_document_en.pdf
25
Ibid, p. 20
scenario.26 Contrary to this increase in consumption, EU gas reserves are limited to 14
years at current production rates and as indigenous production falls and domestic
demand continue to rise. Against the 2005 baseline scenario consumption increase, a
doubling of natural gas imports from presently 275 bcm annually to 535 bcm by 2030
is foreseen.
As mentioned before, with this speedy increase in demand (which the EU in its Green
Paper on Energy Security published in 2002 anticipated a 45% increase in gas
demand between 1998 and 2030, most dramatically in power generation) overall
European gas import dependency could raise to 80% by 2020 and over 60 % of EU’s
gas imports are expected to come from Russia. Due to the figures given below, one
unavoidable fact will continue to shape Europe’s energy policy: the EU members lack
sufficient indigenous energy deposits to meet their growing demand and maintain
their high standard of living. Consequently, Europe will continue to be heavily
dependent on foreign supplies to meet its energy needs especially Russia.
While 40 per cent of natural gas imports come from Russia, the EU never worried
much about its reliance on Russian gas until January 2006, when Gazprom Russia’s
state controlled energy giant, temporarily cut off supplies going through Ukraine due
to disagreements on the price of the gas sold to this country. Gazprom accused
Ukraine of stealing Russian gas from the transit pipelines that deliver supplies to
Europe through its territory. When the pressure dropped in gas pipelines in many
European countries including Austria and Hungary, doubts were raised about Russia’s
reliability as a source of energy to Europe. An alarmed debate about Europe’s future
security of energy supply started in the heart of EU. Russian actions towards Ukraine
was seen in Europe as unacceptable. Many European officials viewed it as an attempt
to use energy resources as a political weapon to blackmail a neighbouring consumer
state that depends heavily on Russian supplies. Even those who do not worry that the
Kremlin may one day use gas as a political weapon against EU countries are
increasingly concerned about persistent underinvestment within Russia. Any growth
in Russia’s gas output is gobbled up by a fast-growing domestic market. Although this
26
Ibid, p. 24
is already limiting Russia’s export capacity, it has ambitious plans to sell more energy
to China, Japan and the US.27
The result of major gas disputes was that energy-poor Europeans have finally become
fully aware of possible negative consequences of their dependence on imported
hydrocarbons. And they have become increasingly uncomfortable with an energy
game in which the producers set the rules. Now, energy security became a core issue
of the EU’s foreign policy agenda. A report issued by the European Commission in
March 2006, carried a strong warning about the European dependence on energy
supply. It suggested a clear policy on securing and diversifying energy supplies
especially for gas by building new pipelines -opening the fourth corridor- from
different sources into the heart of the EU.
Particularly, the Ukrainian crisis made the idea of diversifying energy supply routes
even more important and vital for the future energy security of EU. Officials arguing
for using Turkey as a bridge or energy corridor to help reduce European dependence
on single source started to raise their voices lauder than ever. Turkey on the other
hand, started lobbying to make sure a major pipeline namely Nabucco crosses its
territory that helps European security of energy supply as it would be mutually
beneficial for EU and for Turkey.
As mentioned above Russia provides substantial amount of energy for EU and in the
near future it is expected that Russia will provide 60 % of the European gas imports
(it is important to note that Turkey also depends on Russian energy as much as
Europe). Especially Eastern and some Central European countries totally depended on
Russian energy in particular gas. Russia, the world’s largest exporter of natural gas
and second largest exporter, after Saudi Arabia, of oil has used these resources with
the advantage of being Europe’s neighbour and has become the EU’s major partner
thus making Europe dependent on its natural gas supplies. It is very obvious that
Russia will remain as the EU’s single biggest gas supplier for a long time. But the
Europeans want their additional future demand to be met by a broader range of other
producers. When the European Commission published its energy policy package in
27
Barysch, ibid, p.3
January 2007, it put the diversification of sources of supply right at the top of the
priority list.
The Caspian and Central Asian regions are essential to the Commission’s
diversification plans. However, one of the questions that attracted most attention in
the early 1990s was the size of the Caspian hydrocarbon deposits. By the end of the
first post-Soviet decade, it was still too early to make firm predictions, but it was
estimated that Azerbaijan, Kazakhstan and Turkmenistan together contained in the
range of 16.5 to 32 billion barrels of proven oil reserves and around 166 trillion cubic
feet of natural gas.28 Although exploration is still at an early stage, analysts say that
the region contains 4-5 per cent of global oil and gas reserves. It also offers Western
oil companies reasonably good access, in contrast to the Gulf States and
(increasingly) Russia, which prefer to exploit their natural resources through statecontrolled companies.29
Europe has been importing direct-oil from Caspian region (bypassing Russia) through
the Baku-Tbilisi-Ceyhan Pipeline (BTC). However in terms of gas, until now, Europe
has only been able to import from Central Asia and the Caspian via Russian territory
(the Turkey-Greece interconnector breaks this monopoly, but the quantities are small
so far). Gazprom has a monopoly over all gas pipelines, which turns gas imports from
other countries into Russian gas at the border. This setup provides the Kremlin with
political clout and Gazprom with windfall profits: it buys Turkmen gas for $100 per
1,000 cubic meters and sells it to Europe at 2.6 times that.30 Consequently, Caspian
states are desperately on the lookout for alternative transportation routes.
Especially with Turkmenistan, long term contracts signed by the former president of
Saparmurat Niyazov makes things easier for Russia as there are no other major
options for Turkmenistan to sell its energy at present as many initiatives including
Trans Caspian Gas project were kind of forced out of agenda by Russia. But the new
president Gurbanguly Berdimuhamedow appears ambivalent about Russia’s dominant
position in Turkmenistan. Though financing remains problematic, he is exploring new
Shirin Akiner, The Caspian Politics: energy and security, ‘Ten Years On: Achievements, New
Concerns, Future Prospects’, Routledge Curzon, London and New York, 2004, p. 365
29
Barysch, p.3
30
Ibid, p.4
28
pipelines to Iran, South Asia, and China. In April 2008, the Turkmen president told a
high-level EU delegation that he was committed to developing a mechanism for
sending Turkmen gas directly to Europe, and he offered to supply 10 bcm as early as
2009. Privately, many officials are sceptical that either the volumes or the political
commitment will materialize in such a short time.31 But his efforts are not going to get
rid of the agreements already in place. As a result, Russia has no problem of gas
supply from Turkmenistan. While this monopoly is a problem for Turkmenistan, for
Russia, the transport monopoly will get more important if and when its own gas
production falls short of domestic and European demand. It could then use Turkmen
and other Central Asian gas to make up for shortfalls – but not if these countries have
good alternative outlets.32
The Caspian countries have been seeking out alternative ways to bypass Russian
pipeline networks since the end of the Cold War and diversify their energy export
routes to secure their independence from Russian dominance on energy sales. There
have been so many proposals to built variety of pipelines to pump the rich energy
resources out of this landlocked region.33 However, none of them except the BTC
have been successful due to the involvement of great powers and their political
agendas which is ironically named as ‘the New Great Game’ by Lutz Kleveman34 to
reference the rivalry and the conflict between Russian Empire and the British Empire
during the 19th century to control Central Asia. But in this particular instance the
British Empire was replaced by the United States of America.
In the New Great Game, Russia is against any pipeline that damages its monopoly
over the exportation of energy resources from the Caspian Region. USA (and EU in
most cases) on the other hand is in support of any project that breaks Russian
monopoly but against any that crosses Iranian territory. Then again Turkey is against
any pipeline that crosses Armenian territory (could be said was as the recent political
31
Mankoff, ibid, p.p.23-24
Ibid, p.4
33
Sonia Shah, Crude: the story of oil, Seven Stories Press, London, 2004, p.151
34
Lutz Kleveman, The New Great Game: blood and oil in Central Asia, Atlantic Books, London, 2004
32
developments between Armenia and Turkey is getting better after ‘the football
diplomacy’)35 but in support of any others that crosses through its territories.
Following the Cold War, the great struggles to control the energy resources of the
Caspian Basin generated a major agreement. After years of wrangling ‘the Contract of
the Century- BTC’36 to carry historic Caspian oil to Mediterranean via Georgia and
Turkey, which US President Clinton described as one of his most important foreign
policy achievements 37 was signed in 1999. This contract meant that the historic Baku
oils was going to be transported to the Mediterranean with a twenty first century
parallel to the route pioneered by Nobels, Rothschild’s, and Samuels in the late
nineteenth century.38 Many political analysts thought this project was not profitable
and therefore would not be completed. However, in 2005, against all the odds the
BTC Pipeline was finally completed and the first oil dropped at the port city of
Ceyhan in the Mediterranean coast of Turkey in 2006.
Many people are not very keen on building the Nabucco Pipeline for almost the same
reasons as once some disagreed with the BTC. On the other hand, people who support
Nabucco are greatly encouraged by the success of the currently running BTC pipeline.
Therefore, they pursue with their demand that a pipeline must be built to sell Caspian
gas to Europe via Turkey at any cost as it would be mutually beneficial for the West
and the East equally. Recently, important European officials, including former energy
commissioner Andris Piebalgs and the President of the European Commission José
Manuel Barroso showed their support of Nabucco to diversify European energy
supply to protect the future security of European energy demand through Turkey and
possibly other routes. Running the BTC pipeline successfully encourages Turkey to
try to become a candidate country for being the fourth energy corridor of Europe.
Tony Halpin, ‘Football Diplomacy Seals the Deal Between Armenia and Turkey’, The Times,
October 10, 2009
36
Aliyev, p. 9
37
Zeyno Baran, The Baku-Tbilisi-Ceyhan Pipeline: implications for Turkey, in The Baku-TbilisiCeyhan Pipeline: Oil Window to the West, edited by S. Frederick Starr and Svante E. Cornell , Uppsala
University Press, Uppsala, 2005, p. 107
38
Yergin, p. 764
35
Turkey and diversification of European energy supply:
Geographically, Turkey is located in a strategic region connecting Europe to the
Caspian and Middle Eastern regions, which hold a substantial amount of the world’s
oil and gas reserves. According to Barysch, Turkey is located between 70 % of the
world’s oil and gas reserves and the European Union.39 This alone makes Turkey’s
location strategically invaluable. It is notable that while connecting the EU with the
Middle East Turkey also is an important player in the Mediterranean.40 The potential
of Turkey to become an important country for oil and gas transit from Russia, the
Caspian Sea region and the Persian Gulf adds to the strategic importance of Turkey
for the EU.
Currently, about 4-5 % of world’s daily oil consumptions go through the Bosporus
Straits, Kirkuk-Yumurtalik and BTC pipelines41. Again major gas pipelines from
Russia (Blue Stream Pipeline), Azerbaijan (South Caucasus Pipeline) and Iran
(Tabriz-Ankara Pipeline) connects Turkey with main energy producing regions.
Looking at the existing situation, it can be argued that Turkey already fulfils the role
of a middle range energy hub. However, knowing its great positioning on the world
map it is trying to expand the pipeline networks to connect Europe with energy rich
regions.
Turkey’s ambitious plans to become a key Eurasian energy hub tally with the EU’s
need to find new suppliers of, and routes for, oil and gas.42 In the European
Parliament, debates on energy security heavily focus on the issue of Europe's energy
dependency (especially gas) on Russia.43 During these debates Turkey is coming up
as a strategically important partner for EU. An EU paper on energy policy issued in
2000, designated Turkey as an ‘energy corridor’ that should be developed.44
39
Barysch, ibid
Karsten Mecklenburg, EU-Turkey relations in the field of energy, Brussels, European Parliament,
2006
41
Ozdemir, ibid, p.102
42
Barysch, p.3
43
‘The Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy’
http://ec.europa.eu/energy/green-paper-energy
44
Murat Yetkin, Energy: Turkey’s Triumph Card in EU Membership Talk, Turkish Weekly, April 08,
2005
40
According to Gareth Winrow it was originally a US strategy, to get around Iran and
Russia. Now there is the EU wanting to diversify its resources and build new
pipelines45 and the obvious and a secure route is to go through Turkey. Better
connections with supplier countries and energy consumers would not only increase
Turkey’s geopolitical standing. They would also bring lucrative business, in the form
of transit fees or through new refineries, LNG terminals and trading facilities. And
they could make it easier for Turkey to diversify its own energy supplies and to reexport any surplus gas it may have. 46
Out of the diversification strategy of European Energy supply the idea of Nabucco
Gas Pipeline which is planned to carry Caspian and Middle Eastern gas through
Turkey to Europe was born. Turkey is strongly lobbying for the Nabucco to be built
even though there are some concerns about this project due to the involvement of
politics and huge financial costs. But as said Turkey is trying as many pipeline as
possible to cross through its soil starting from Caspian to Iran and Russia to Middle
East to become an important energy corridor. Currently the hottest project is the
Nabucco which is officially given a go ahead in July 2009. It is the flagship project of
the diversification idea of the EU and vitally important for Turkey, EU, the Caspian
and the Middle Eastern Regions.
Nabucco: the flagship project of diversification idea
After having nightmares over the transportation of gas through Ukraine, the European
Commission has decided to open the fourth energy corridor namely ‘the Southern
Corridor’ with support of the USA. This corridor will have three major pipelines
including Nabucco, Turkey-Greece-Italy Interconnector (ITGI) and Trans Adriatic
Pipeline (TAP).
Within the Southern Corridor, the new grandiose project for the diversification of the
energy supply of the EU is the cross continental gas pipeline of Nabucco which
connects the Caspian and Middle Eastern energy resources with Europe through
Turkey. Strongly backed by the USA, this project is seen as rival to the Gazprom led
Gareth M. Winrow, Turkey’s Changing Regional Role and its Implications, Koc University, Istanbul,
2 December 2005 (Presented at the Conference titled: Europeanization and Transformation)
46
Barysch, ibid, p.2
45
South Stream Project which is a proposed gas pipeline to transport Russian natural
gas to the Black Sea to Bulgaria and further to Italy and Austria. Russia is against this
project and passionately trying to keep Europe (mainly East and Central Europe)
within its orbit to continue its anachronistic way of doing business with. On the other
hand, the Central Asian/Caucasian states have been signalling for years that they seek
other outlets. The Nabucco pipeline, connecting Turkey with continental Europe, is
the essential link to realize these emerging opportunities and tie these states to
Europe.47
The name of the project Nabucco comes from the famous opera of Giuseppe Verdi
that five initial representative of the Nabucco Consortium had listened to at the
Vienna State Opera House after their first talk in 2002. Historically Nabucco was the
name of a well known king of Babylonia (or Nebuchadnezzar in English).
In December 2003, the European Commission awarded a grant in the amount of 50%
of the estimated total eligible cost of the feasibility study including market analysis,
and technical, economic and financial studies. On 28 June 2005, the joint venture
agreement was signed by five Nabucco partners. The ministerial statement on the
Nabucco pipeline was signed on 26 June 2006 in Vienna. On 12 September 2007,
Jozias van Aartsen was nominated by the European Commission as the Nabucco
project coordinator. 48
After a very enthusiastic start, there has been years of delay on the Nabucco due to
some complications on transit issues and availability of enough gas to supply the
pipeline. Transit issues were the main concerns at the start of the talk as they were
linked to the Turkish accession process to the EU. As Winrow writes, there is a
general sense in Ankara that the Europeans are demanding various concessions from
the Turks without offering anything in return – blocking the opening of the energy
chapter for example. On the other hand, there appears to be a feeling among officials
in Europe and among some energy companies that if Turkey wants to be a full
member of the EU it should immediately sign up to European norms and regulations.
47
48
Norling, p. 27
See www.nabucco-pipeline.com (FAQ section)
Misunderstandings and breakdowns in communication appear to further cloud the
picture.49
Finally on July 13, 2009, EU governments and Turkey signed a transit agreement for
the Nabucco gas pipeline, which clearly aims to reduce Europe's energy dependence
on Russia. Transit countries Turkey, Bulgaria, Romania, Hungary and Austria signed
the accord in Ankara, giving the €7.9 billion project a major political boost. The
Nabucco consortium consists of OMV (of Austria which will be managing the
consortium), MOL (Hungary), Transgaz (Romania), Bulgarian Energy Holding
(Bulgaria), Botas (Turkey) and RWE (Germany).50 After the signature of the
agreement President of the European Commission Barroso said:
"We are starting to confound the sceptics, negotiations once seemed
irrevocably blocked, but now we have an agreement and I believe this pipeline
is inevitable not impossible.51 The Nabucco project is of crucial importance
for Europe's energy security and its policy of diversification of gas supplies
and transport routes. The signature will show that we are determined to make
this pipeline a reality as quickly as possible. I am extremely pleased that
Turkey and the Member States of the European Union have reached an
agreement based on the principles of mutual solidarity, mutual equality and
interdependence."52
Then energy commissioner of the European Union Piebalgs has also shown his
appreciation after the signature of the agreement in Ankara by stating that Turkey and
the European Union have found the right balance in the Nabucco intergovernmental
agreement. He expressed his views further by saying:
“Let’s hope that this is a starting point for further fruitful cooperation in our
bilateral relationship, between supplier and consumer countries and to give all
players the freedom to pursue their own interests, within a secure legal
framework”.53
Gareth Winrow, Problems and Prospects for the “Fourth Corridor”: The Positions and Role of
Turkey in Gas Transit to Europe, Oxford Institute for Energy Studies, June 2009, p. 23
50
See www.nabucco-pipeline.com
51
Reuters News Agency, See http://www.reuters.com/article/idUSLD63762220090713
52
Press releases, July 10, 2009, see www.europa.eu
53
ibid
49
Many politicians including the Prime Minister Recep Tayyip Erdogan connect
Nabucco with Turkish membership to EU. During the Nabucco summit in Ankara,
after mentioning that Turkish progress in adjusting its energy market with the
domestic market rules of the EU during the negotiations process, he expressed his
views by stating that:
“It is a historic moment. The Nabucco project will lay the groundwork for
further improvement of Turkey's relations with the EU in energy as it shows
Turkey belong in EU. We are taking an important step for our countries,
friendship and peace, and the welfare of upcoming generations. This project
raises Turkey's importance in energy security and being the fourth main
natural gas artery in Europe is among our main targets.”54
According to the agreement, the pipeline will be constructed from the TurkishGeorgian and the Turkish-Iraqi border (Centring in Turkish gas hub city of Erzurum)
to Baumgarten Hub in Austria. It is anticipated that the lifespan of the pipeline will be
50 years. The route of the 3300 km (could be up to 4000 km depending on the feed
line concept) Nabucco Pipeline will be stretching from Turkey to Austria, crossing
Romania, Bulgaria and Hungary. The diameter of the steel pipes will be 56 inches
wide and 20 to 36 mm thick which will be buried minimum 1 m below the surface.
There will be two control centres as well as in country control centres in each country
that the pipeline crosses.55
The construction of the pipeline is scheduled to start at the end of 2011 and the first
gas is expected to flow at the end of 2014. In the first construction phase, a link will
be built between Baumgarten in Austria and Ankara in Turkey. When this phase is
completed existing pipeline links between the Turkish-Georgian and Turkish-Iranian
borders will be used to allow the pipeline to start operation.56 The capacity will,
however, be limited to 8 bcm. The second construction phase will begin in 2012 and
54
See www.bbc.co.uk
See www.nabucco-pipeline.com
56
Ibid
55
be ongoing until the end of 2013, when the links between the Turkish border to
Georgia and Iran are expected to be completed.57
After the completion of the pipeline the full discharge capacity of 31 bcm per year is
expected to be reached in 2020 at the earliest. Half of the gas would be used by
shareholding nations; the rest would be offered for sale. Estimates suggest that in the
high scenario, 16 out of 31 bcm per year will be supplied to Europe, and in the low
case scenario, 13.5 out of 25.5 bcm per year.58
As mentioned before Nabucco will be opening the fourth main gas supply corridor for
Europe. The importance of Nabucco is not the amount of gas it will supply to Europe
but the fact that it is opening an alternative corridor. Although the gas transported at
full capacity would account for less than five percent of EU’s forecasted demand by
2030, the project resonates well with a continent-wide agreement to increase the
number of pipelines that connect Europe with non-European fields. Therefore, top EU
officials are showing their support in different platforms regularly. Expansion and
diversification of the transmission network is taken as a precondition to reducing
over-dependence on any given supplier and any specific route, above all the one that
crosses Ukraine.59
As domestic production of gas is decreasing dramatically all over Europe, in order to
meet future demand, new infrastructure sources have to be established with the
European gas markets. In this respect, the Caspian Region and Middle East with their
vast gas reserves - as well as Egypt - will play a crucial role both in terms of
diversification of supply as well as security of supply for Europe. The opening up of a
fourth main supply corridor is the only solution to meeting all of Europe's future gas
demands. Consequently this route offers a wide range of supply sources for the
Nabucco gas pipeline, receiving gas from the Caspian Region (Azerbaijan,
Turkmenistan and perhaps Kazakhstan), the Middle East, (Iraq and Egypt and may be
Qatar, Syria and Saudi Arabia) and if the political climate changes Iran which holds
57
Norling, ibid, p. 27
F.Yesim Acollu, Major Challenges to the Liberalisation of the Turkish Natural Gas Markets, Oxford
Institute of Enegry Studies, November 2006 (quoted in Norling, ibid)
59
Peter Pogany, Nabu, Nabucco, Nabukov, Energy Bulletin, September 7, 2009
58
1,045.7 trillion cubic feet of natural gas60 (the world’s second largest gas reserves
after Russia).
In terms of examining if Turkey can handle such a large undertaking one can look at
the BTC pipeline that connects Caspian energy resources to Mediterranean. BTC was
built to utilise the hydrocarbon resources of the Caspian region. Since the break-up of
the Soviet Union in the early 1990s, the countries in the region have gained
independence and the Caspian Sea has emerged as a potentially significant energy
reservoir.61 Due to heavy reliance on the Russian pipeline network to export their
energy resources newly independent states wanted to diversify their export routes and
get out of Russian dominance. The BTC therefore was not only a pipeline but a very
politically motivated project.
The BTC is a 1,768 kilometers long crude oil pipeline from the Azeri-ChiragGuneshli oil field in the Caspian Sea to the Ceyhan, a port on the Southeastern
Mediterranean coast of Turkey. It is the second longest oil pipeline in the former
Soviet Union, which crosses through Azerbaijan, Georgia and Turkey, after the
Druzhba pipeline. This pipeline has many similarities to the Nabucco; it had a very
strong presence of the political involvement from various regions, it is very long, it
crosses through three different countries including some unstable regions (Georgia
with internal problems and Turkey with PKK terrorism), construction of it took a very
long time, it was built against the Russian will by a consortium of eleven members.
Even though it only supplies 1 % of global demand it was strategically very important
and it was strongly backed by the USA and the EU (as Turkey was a strategic asset
for the west during the Cold War).62
After being pumped in May 2005 from Baku, the first oil reached Ceyhan on 28 May
2006. And finally on 4 June 2006, the British Hawthorn tanker left the Turkish port of
Ceyhan, carrying with it the first Caspian oil to be exported via the Mediterranean.
Lord Browne, the chief executive of British Petroleum (BP), described the event as a
60
Oil & Gas Journal, January 1, 2010
Idris Bal, Turkey’s Relations with the West and the Turkic Republics, the Rise and fall of the
Turkish Model, Ashgate Publishing, Hampshire, 2000, pp.84-85
62
William H. Park, The Security Dimensions of Turkey-EU Relations, in The EU and Turkey: A
Glittering Prize or a Millstone?, Edited by Michael Lake, Federal Trust for Education and Research,
London 2005, p.128
61
major historical event which “reintegrates significant oil supplies from the Caspian
into the global market for the first time in a century.”63 From the time when the first
oil was pumped the pipeline is running smoothly.
The BTC was strongly supported by Turkey, for both economic and political reasons.
Economically, Turkey stood to benefit from the foreign investment and increased
employment as a result of operating as a transit state, and from the rentals for the
section of the pipeline through Turkish land, as well as from the increased oil supply
to meet a growing domestic need. Politically, control of the pipeline would bring
Turkey an increased international influence and prestige, particularly within Western
powers such as the European Union and the United States. Therefore, Turkey fought
until the last minute to make sure BTC was built. It is evident that Turkey is fighting
almost as hard for the Nabucco as the benefits of having a pipeline are much more
than problems as seen in the case of BTC. Looking at the BTC case we can assume
that if it is successfully built, Turkey can provide the security of Nabucco pipeline and
Europe would have its gas without any kind of disruptions. However, many Turkish
officials including Erdogan see Nabucco more than a pipeline as they have done in the
BTC case. This has created some resentment in Europe as they think EU negotiations
should not be mixed up with energy issues.
Some European officials have also been uncomfortable with the remarks made by the
Turkish officials regarding Turkey being an international energy trade hub rather than
just a physical energy hub by building the Nabucco project. European negotiators
taught Turkey would re-sell 15 percent of the gas that is transported through its
territory. However, BOTAS made it clear that it was not to their intention to become a
trading hub for the near future using Nabucco. Presumably, these officials would not
have been happy with the suggestions of Van Aartsen, in his Activity Report, on
natural gas hubs. Instead of Turkey becoming a single hub, the EU’s coordinator
proposed somewhat unrealistically that four alternative natural gas hubs should be
developed for the southern or fourth corridor in Azerbaijan, Romania, Greece and
Austria.
63
‘Horizon’, BP Publication, Issue Five, August 2006, p. 16
Turkish officials have noted, somewhat optimistically perhaps, that even without
Nabucco, the realisation of the Turkey-Greece-Italy (ITGI) and/or the Trans Adriatic
Pipeline (TAP), could still make Turkey a part of a fourth gas corridor. 64 However, it
should also be noted that for Turkey to become energy hub its domestic pipeline grids
needs to be upgraded and extended to meet the new demands. If Nabucco and other
proposed projects are constructed Turkey has to invest around €6 billion to handle the
increased volume of gas.
Conclusion:
Geostrategically Turkey is located in an amazing part of the world which has been the
main attraction of the mankind since prehistoric times. Especially, fertile and secure
lands of Anatolia is said to be the cradle of the civilisations that was home to many
ancient people such as Trojans, Lydians and Phrygians. As a result it has also become
the main battle ground of the world powers at the time from Hittites to, Greeks,
Alexander the Great’s Macedonians to the Persians, from Romans to the Ottoman
Turks and many more. Turkey now wants to utilise this advantageous potion for its
benefits by being an energy hub. Nabucco is the new flagship project to make Turkey
an energy hub. Even though there are some security issues to pay attention such as
PKK terrorism in the south-eastern corner, Turkey can handle such a large
undertaking as it is proven by other projects such as BTC and Blue Stream.
Nabucco has many positive sides to it. It will create employment opportunities in
Turkey (even though most of them are temporary) as two-thirds of the 3,300kilometer-long pipeline will be constructed in Turkey. It will also create employment
opportunities in any country that it has got a link from the Caspian to Middle East and
from Bulgaria to Austria.
The pipeline will also strengthen Turkey’s European Union bid. Especially public
opinion in Europe might positively be changed towards Turkish entry as in many EU
countries it is not too keen for various reasons including migration and religion. It will
also increase the number of people who support Turkish entry to EU within Turkey
due to the fact that the feeling of Turkey being a key player for the well being of EU
rather than commonly known vice verse.
64
Winrow, ibid, p.p. 26-27
It is very clear that the EU is extremely worried about its reliance on a single energy
source namely Russia after the Ukrainian crisis. Opening another corridor will not get
rid of the head ache EU might get due to this reliance on Russian energy but by
opening one more energy corridors, it might strengthen EU’s hand when dealing with
Gazprom. As John Roberts says “if Nabucco promted Russia to drop its prices by as
little as €1 per thousand cubic meters then even if not a single cubic meter of gas ever
flowed through Nabucco it would provide a good return on its €5 billion
investment.”65 As well as new important pipelines, it would also be advantageous for
Europe to develop new LNG infrastructure to be able to import natural gas from
variety of different suppliers.
The Consortium says that the Nabucco project falls under the EU Environmental
Impact Assessment Directive and Turkish EIA legislation and is thus required to
undertake an Environmental and Social Impact Assessment (ESIA). However
Environmental concerns are raised by many as pipelines sometimes can be
devastating for the regions they cross. It is vital that the pipeline route is designed
well to have as little negative impact on the social and environmental life as possible.
There are some other issues related to Nabucco such as disagreements between
Turkey and Azerbaijan over gas pricing and the routing of gas to be produced in the
second phase of Shah Deniz. However, it does appear, with regard to Nabucco at
least, that policy-makers in Ankara have been able to better coordinate their positions
in recent months and the conclusions reached at the Prague Summit in May 2009
would suggest that the Europeans are also beginning to speak more with one voice on
energy matters.66
The full utilization of the Caspian Basin's energy resources has been slowed down by
the disagreement on choosing the most cost-effective and appropriate pipeline routes.
Gas analyst John Roberts predicts that once a direct link – however small – between
the Caspian and the EU market has been established, investor interest in Caspian gas
will increase massively while Caspian producer countries will start taking the idea of
selling gas to Europe seriously. With prospects of bigger and more secure supplies, an
65
66
Cited by Barisch, p. 4
Winrow, ibid, p. 28
ambitious pipeline like Nabucco might become easier to build.67 Therefore, once
Nabucco is built, the Caspian region will benefit hugely by being able to sell their gas
with proper market prices to Turkey and Europe as well as pulling direct foreign
investment to their country. Middle Eastern resources have also been affected by
political problems including Iraq and Iran. In these problematic regions some issues
might be solved easier than they might otherwise be with the involvement of a large
scale project like Nabucco.
Once it is in operation, Nabucco is likely to create a bridge that provides major
benefits for the East and the West. However, it is not the project that will save Europe
from future dependency on Russian energy. Therefore, Europe also needs to think
other ways such as utilisation of more renewable resources and efficient use of
available resources to secure itself. On the other hand it is a great opportunity for
Turkey to home such a large project and it will strengthen Turkish hand in EU
negotiations. However, it will not directly grant a full membership to Turkey if the
required criteria to become a member of the EU are not met.
67
Katinka Barisch, Should the Nabucco Pipeline Project be shelved?, CER, May 2010
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