This commentary is from USAK’s Energy Review Newsletter
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energyreview@turkishweekly.netThe European Union is seriously intended to ensure own energy security by the providing of alternative gas import to Russia primarily from the Caspian region. It’s almost quite long time being discussions about possible construction of NABUCCO pipeline with which gas from the Caspian region will deliver through Iran and Turkey to European markets. However, the political situation in the region, mainly in Iran, as well as the lack of clear information on the quantity of gas reserves in the states of the region, suggests that in the short-term the implementation of this project is not seen realistic. Another reason of difficulty of the realization of this project is the financial side of the business. Project promises to be expensive and require the assistance of the financial structures.
In that case, mostly realistic policy can be developed supply of gas from available pump their already feasible travel routes. One such source is the Azerbaijani gas field Shah Deniz in the Caspian Sea. It will be recalled that after the exploration of the gas reserves which is estimated by specialists at capacity of the field at approximately 1 trillion cubic meters, it was decided to begin construction of the new gas pipeline Baku-Tbilisi-Erzurum. The initial point of the pipeline in Erzurum will be connected with the Turkish internal distribution pipeline network with the aim of cover demand of gas in this country.
Afterwards with the purpose of confirmation of the initial market and the possibility of the operation of gas, the President of Azerbaijan, Heydar Aliyev, during his official visit to Turkey on March 12, 1999 signed contract with this state for a period of 15 years with the export of 79.7 billion cubic meters of gas thereby. Opening of the new gas field in the Azerbaijan sector of the Caspian Sea project operated by BP has received considerable attention from members EU states; in particular its southern flank where gasification is only marks gaining momentum. The representatives of the interests in a possible acquisition of gas such countries as Italy, Spain, Portugal and Greece which is the closest neighbor of Turkey.
Following the visit of the President of Azerbaijan Republic intergovernmental agreement signed between Greece and Turkey an on the construction of the Ankara-Dedeagac pipeline to transportation Caspian gas to Europe. Works at Turkey-Greece natural gas pipeline project Turkey part delayed because of BAYINDIR ’ťn’ľaat A’z + SUTEK consortium, who had won the tender in July 2005, ran into financial problems and failed to meet its obligations. Recently, Turkish company BOTA’z which is specialized on constructing oil and gas pipelines and also importing of gas has collected bids at its tender for completion of abandoned pipeline. Meanwhile Greece has signed contract with Italy which is aimed to build a gas pipeline, designed to supply natural gas from the Caspian region, into the states of the Southern region of the European Union. It’s planned that pipeline will be build by 2011. As stated, construction of the European pipeline will begin already next year. Part of this pipeline would be built under water, and total length will be 300 km. The project is intended to diversify the supply to Europe and minimize energy dependence on Russia. Construction of the facility will be held by Italian Energy Company Edison and Greek Company DEPA which is specialized in distributing of the public gas.
As can be seen from the above data after the construction of the pipelines between Turkey and Greece and between Greece and Italy, later that can be pursued to Spain and Portugal will be completed transport line derived from Shahdeniz field that allows EU alternative to Russia gas its southern frontier. It will be recalled that from 2006 oil from Azerbaijan began pump on the newly-built Baku-Tbilisi-Ceyhan pipeline and then with the tankers move on the Mediterranean Sea to the Italian market and then to the refineries of the neighbors states.
It should be also noted that in November 2006 the European Commission signed an agreement with Azerbaijan, a Memorandum of Understanding the arrangements for the supply of hydrocarbons from the Caspian region to Europe.
All of these initiatives concerned Russia; previously exported energy supply from the former Soviet Union states to the European states as natural monopoly of transport infrastructure. The situation is exacerbated, and the fact that Kazakhstan also intends to join in a new pipeline which will guarantied the alternative way for the delivery of its oil.
Operation of Baku-Tbilisi-Ceyhan oil and Baku-Tbilisi-Erzurum natural gas pipelines, discussed the NABUCCO project - another pipeline which will bypass Russia, moreover is talk on the possible use of Odessa-Brody piplenine as one another alternative… Therefore, Russia has decided to revive project of the construction of the gas pipeline from Bulgaria to Greece bypass Turkish Bosphorus through which tankers movement restricted because of the complex geographical topography of the Straits where sometimes the distance between the sides is only 22 meters. This was one of the main reason for building the Baku-Tbilisi-Ceyhan pipeline.
Recently several companies such as Transneft, Rosneft and Gazpromnefti, set up by Pipeline Consortium Burgas-Alexandropolis. The sharing of Transneft in a new consortium is 33.34% and Rosneft and Gazpromneft- each to 33.3% and authorized capital of a new company is about 9.1 million rubles. Project of the pipeline was began in early 90th. However, disscusions were still in place that was also underlined in words during his visit to Greece Vladimir Putin, in the summer of 2006, who said that the Baku-Ceyhan already built, and Burgas-Alexandropolis is still under negotiation.
By building the pipeline Russia is trying to recover its status quo primacy of the role of energy supply Europe on the southern flank and shift the balance of power in the former southern republics. Since the realization of such projects as Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum changed geopolitical scheme in the southern Caucasus where Georgia came open confrontation with Russia and Azerbaijan have and it is a more balanced foreign policy has been to make decisions independently. Recent attempts to change the situation in Georgia by the energy pressures ended in failure as a result of assistance provided by Azerbaijan, which also refused proposal of Russia to support sanctions against Georgia. The alternative to the European markets affected the desire of Kazakhstan to join the pipeline. Changes in the political situation in Turkmenistan also can further lead to a situation in which the country would have to find new outlets for the export of their hydrocarbon reserves. And now, even the completion of the Burgas-Alexandropolis with will not be able to change the situation. This attempt is already late to change any situation in favor to Russia and can not generally affect the trends in new processes in the region. All that may give Russia implementation of this project is the increase own exports to the same European market and still maintain a presence in the southern part of the European Union.
