Sustainable growth and reaching a natural rate of unemployment -that would not cause social unrest- have always been desirable targets for a country. These two concepts are highly correlated with each other. It is hard to talk about a low unemployment rate or social welfare in the times of instability. On the other hand, stability in inputs of an economy is sine qua non for sustainable growth. In this context, energy security has always been high on the agenda since the 20th century.

Daniel Yergin in his Price discusses Sir Winston Churchill’s dilemma while deciding a great transformation in British navy; using oil as the mean of fuel instead of coal just before the World War I. If we take this great change as a milestone, since then hydrocarbon resources and having control over them have become an important issue for the Western civilizations.

As the price of oil and consequently input costs are increasing, energy issue and finding new alternatives that would decrease the dependency to hydrocarbon resources have become more pronounced by the policy makers and nongovernmental circles. On the other hand, economists blamed Asia-Pacific countries because of their increasing demand; even some discussed the peak oil theories more enthusiastically.

Another aspect of this energy game is being played by the governments and multibillion dollar companies. Recently, what is being witnessed in energy politics can be called as pipeline projects inflation.

Supplier countries and companies being aware of monopolistic power and having accumulated a great amount of petrodollars from price increases in global scale are looking forward to protect this sweet revenue in the long term and perhaps to use this power as leverage when necessary. On the other hand, consumer countries to be able to protect them from supply disruptions and in the name of diversity are trying to increase the number of alternatives. Russia and China being big producers and consumers with their proactive approach in this context can be given as good examples. They announced many pipeline projects and multilateral deals within this year. In Turkey, Russia’s projects like Burgas-Alexandropoulos, South Stream and new pipeline project between Turkmenistan and Russia were most popular ones.

These three pipelines when to be constructed may help to decrease the tension over straits, however they also contradict with Turkey’s policy to become East-West and North-South energy corridor.

In the framework of this policy, Turkey’s first and biggest step until now can be defined as Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline project. Turkey with its partners finalized this project, despite many criticized and put forward lots of reasons that this project cannot be made. Today, thanks to this project Azerbaijan and Georgia’s dependency to Russia has decreased and Caspian Basin’s oil can be carried easily via this pipeline. Turkey wants to increase its geopolitical importance and maintain its energy security by the construction of new pipelines such as Nabucco, Samsun-Ceyhan and Turkey-Greece-Italy pipelines.

However, taken steps by Russia jeopardize the future of these projects. All aforementioned projects are in a way bypass Turkey and presents new alternatives to both Europe and Central Asian countries. Firstly, the deals made between Russia and Central Asian countries during Putin’s last visit to Turkmenistan and Kazakhstan control a great amount of produced hydrocarbons in these countries and decrease the available surplus for the third parties. Secondly, Burgas-Alexandropoulos pipeline and South Stream pipeline projects by-passes Turkey and presents good substitutes for Samsun-Ceyhan and Nabucco pipeline projects respectively.

After these developments Turkish Ministry of Energy has begun to act more proactive than before. Two weeks ago, a Memorandum of Understanding (MoU) was signed between Turkey and Iran. According to this deal the state run company TPAO will operate in Iran and exploit three natural gas areas in South Pars region of this country. Moreover, a 2000 km long pipeline will be built between the two countries to transport Iranian gas to Europe. Even though this is only a MoU, it caused a big excitement in many circles while diplomats of the US approached to the issue cautiously.

Moreover, another agreement between Greece, Italy and Turkey was signed last week. These three countries agreed to transport natural gas via Turkey to Italy. Mainly, the first comments coming from the EU and the US were positive. It is said that this project will help the EU to diversify its energy resources and it is important that this pipeline will carry non-Russian gas to the region.

The intergovernmental agreement was signed between these three countries on Thursday for the transportation of Shakh Deniz gas to Italy via the pipeline which is expected to cost $549 million. In 2011 this pipeline is expected to operate in full capacity and carry annually 11 bcm of gas from Caspian Basin. Also, Turkey will take the 15% of this transferred gas.

This agreement has many important gains in different perspectives for Turkey;

Firstly, in economical sense Turkey not only would be a transit country but will utilize from the blessings of this project by being able to take 15% of the transferred gas[1].

Secondly, Turkey takes place in an EU project as a partner and this is a good symbol of Turkey’s importance and potential as a country in its accession process.

Thirdly, after finalizing a project like BTC, this project also would be a good reference for Turkey’s future projects. Cooperating with Turkey, Azerbaijan now not only sells its oil reserves to the west but also its natural gas via Turkey. Therefore, this cooperation helps this country’s economic and social development, and also its political independence. Thus, Kazakhstan and Turkmenistan might want to cooperate with Turkey in the near future.

Last but not least, being in a project with Greece would foster the relations between these two countries, which are drawing a good profile in last years.

In the EU’s perspective this project has another dimension. As known, the EU is always criticized of pursuing energy policies in country basis. Especially, Germany’s Baltic Pipeline project is not welcome by several member countries. However, this new pipeline project between Turkey, Greece and Italy not only brings new alternatives to the Europe other than Russian gas but also it is also being supported by Brussels.

Lastly, in terms of Energy Politics this agreement shows that mainly countries are acting pragmatist and making as much deals as possible to maintain their energy security and diversify their resources. As known, just a month ago Italian ENI signed an agreement with Russia for the construction of South Stream natural gas pipeline. However, the important thing is to be able to answer the questions of feasibility, how to realize and when to realize these projects.

Hasan Selim Ozertem is the editor of USAK Energy Review

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