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Turkey: Europe’s Emerging Energy Corridor for Central Eurasian, Caucasian and Caspian Oil and Gas

January 20, 2007

By Mehmet Efe Biresselioglu

One important geopolitical consequence of the demise of the Soviet Union was the rise of intense political and commercial competition for control of the vast energy resources of the eight newly independent and vulnerable states of Central Eurasia: the sub-region of Central Asia, consisting of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan; and the sub-region of the Caucasus, consisting of Armenia, Azerbaijan and Georgia.

Another effect was the change of control of the Caspian Sea basin from two littoral states, which had been the Soviet Union and Iran, to the five countries of Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan. Enormous oil and natural gas reserves attracted the major actors of the world into the region, and analysts early on dubbed it a new chapter in the old “Great Game.”

According to the US Energy Information Administration, the oil and natural gas reserves of these regions are significant. The proven oil reserves of five Caspian Sea Region Countries are 153.8 BBbbl, which is 14.6 percent of the world’s proven oil reserves. Their proven reserves of natural gas are 2688.3 tfc, which is almost 50 percent of the world’s proven reserves. If we include the possible reserves of the five Caspian Sea region littorals and Uzbekistan, figures reach up to 30 percent of world oil reserves and 60 percent of natural gas reserves.

Europe’s Growing Energy Needs

Europe is entering a new era in its energy consumption. Energy demand will continue to increase as there is, and will increasingly be, strong competition for global energy resources. In 25 years’ time, between 60 and 70 percent of Europe’s oil and natural gas needs will be met by third countries which are not members of the European Union. The expectation of total energy demand growth is only about 0.5 percent per year on average through 2030, and oil demand will hold steady, according to a World Energy Outlook report.

However, the European Union’s main problem is high and volatile energy prices, and a lack of energy supply diversity, because of the EU’s dependence on external suppliers, especially Russia. It is frequently argued that Russia cannot be considered a reliable partner of the EU in this respect because of the frequent arguments among various countries of the former Soviet Union, between suppliers and transit countries, a phenomenon which has negative effects on supply. Also, there is a limit to how much gas Russia can sell to Europe, since Russia needs gas for itself and is reaching its limit of exports.

Therefore, Europe needs alternative energy suppliers in order to diversify its energy supply. The former Soviet states of Central Eurasia, the Caucasus and Caspian Sea have the potential to meet Europe’s oil and natural gas needs; Central Asian and Caspian Sea Basin oil reserves rival those of Saudi Arabia and the Middle East, and the region also has the world’s richest reserves of natural gas. There are many advantages for the European energy markets in these regions according to the context of energy need and diversity. Yet the possibility of realizing these advantages hinges on one crucial issue: how is the gas and oil to get to its potential markets?

Turkey’s Crucial Role as a Supplier of Energy to Europe

Energy has become a strategic factor in global politics. It is a key to national power as well as a major requirement for economic growth. Turkey’s geo-strategic position makes it a natural energy bridge and a transit point between the main oil producing areas in the Caspian, Caucasus and Central Asia on the one hand, and consumer markets in Europe on the other. For Turkey, which has few energy supplies of its own, the recently completed Baku-Tbilisi Ceyhan (BTC) pipeline is the initial step in its effort to become a major energy player, not as a producer but as a transit point.

In an era when countries are increasingly looking to diversify their energy sources, Turkey hopes to establish itself as a kind of energy supermarket, betting that controlling oil routes will turn out to be as strategically valuable as producing the stuff. Geographically, Turkey is endowed with advantages, so the country would like to use those advantages to take on a role as a supplier of energy resources.

The BTC pipeline offers landlocked Caspian basin states another export route to global markets, significantly and purposefully, bypassing Russia in the process. Here Turkey has a dual role because of Russia’s interest in Turkey’s role in a north-south (Black Sea-Mediterranean) corridor to bypass Ukraine (Russia is currently using Ukraine to export oil and natural gas to Europe). If Turkey could balance the Western and Russian interests, it would become an important energy route indeed.

There are many oil and gas pipeline projects in which Turkey is directly involved. These are:

East-West Corridor:

Baku-Tbilisi-Ceyhan Project (Completed)

Kirkuk-Ceyhan Oil Pipeline (Completed)

South Caucasus Pipeline (under construction)

Turkey-Greece-Italy Gas Pipeline (Under Construction)

Nabucco Gas Pipeline (Projected)

Trans-Caspian Gas Pipeline (Projected)

Kazakh Oil-expansion to BTC (Projected)

Iraqi Gas (Projected)

North-South Corridor:

Blue Stream Gas Pipeline (Completed)

Samsun-Ceyhan Bypass Oil Pipeline (Projected)

Burgas-Alexandroupolis Oil Pipeline-Bypass for straits (Projected)

Samsun-Ceyhan Gas Pipeline (Projected)

Turkey-Israel Oil/Gas Pipeline (Projected)

Turkey has one big advantage compared to the other countries which would like to take its place as a transit hub: it is a longstanding NATO ally with a future committed to becoming an EU member. Turkey is currently adopting the necessary EU regulations and acquis. Also, from a perspective of trans-Atlantic security, Turkey could be seen as the right choice for becoming an energy transit country to the West, as it has already proven itself a strong and trustworthy ally in this respect also.

Turkey has adapted itself to the post-Cold War conditions in functional energy strategy, and so connected itself to several major energy markets and sources. Along with important bilateral agreements, Turkey has managed to connect itself to the main energy markets, including the European energy market, through complex energy projects. In this sense, it can be argued that Turkey has contributed to the emergence of a new energy regime in Eurasia.

Turkey will have ready access to diversified supplies of natural gas and oil income from existing pipelines and those under construction. These two benefits alone can drive economic growth. If Turkey can balance the interests and demands of the many parties with a stake in its natural gas transport infrastructure, then its geopolitical location can be used to its advantage in both trade and foreign policy relations. Thus, as a critical player in transit shipping supply and distribution of oil and gas, Turkey will gain new sources of income and greater global influence. This will nevertheless require an active foreign policy with a determined strategy of its own, which will succeed in fending of monopolistic ambitions.

Turkey‘s ability to become an energy transport hub will depend on an array of intergovernmental, territorial and business agreements. Turkey is not a producer of energy, but considering its location, one should realize that the most viable way to transport natural gas and oil from the Caucasus, Caspian Sea region and Central Eurasia is through Turkey. Today, Turkey is already becoming a vital energy corridor for Europe by virtue of the pipelines that have been constructed, are under construction or are projected for the future.

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