The Izmir agreements on the transit of Azerbaijani gas to Europe through
Turkish pipelines and the BP-proposed South-East European Pipeline for gas
raise some major, as yet unanswered questions. At first sight, they seriously
complicate the outlook for the Nabucco project and for the access of Turkmen
gas to Europe.
Azerbaijan, BP (operator of the Shah Deniz gas extraction project in
Azerbaijan) and Turkey have agreed to use spare capacities in Turkey's
pipelines for delivering Azerbaijani gas to Europe. They further envisage
building a new pipeline across Turkey, dedicated to Azerbaijani gas, for
transit volumes that will exceed the spare capacities in Turkey's pipelines.
Baku suggests putting the new line's first stage into operation by
2017 (ie, when Shah Deniz Phase Two of production comes on stream). No mention
is made of the European Union-endorsed Nabucco pipeline project. Under existing
plans, however, Nabucco would transport the gas from Shah Deniz post-2017. But
the agreements and discussions in Izmir imply transferring that role from
Nabucco to another pipeline (whether Turkish state-owned or jointly-owned).
Meanwhile, the Nabucco project enjoys an EU-compatible legal framework under
the 2009 inter-governmental agreements (IGAs), guaranteeing the consortium's
pipeline ownership and the transit regime. This necessitated years of
negotiations and seems difficult to reproduce or transfer to another pipeline,
if Nabucco is abandoned. The European Commission has expressed concern on this
and related points.
In parallel with the Izmir agreements, BP proposes an entirely new concept
(and, potentially, system) for transporting Azerbaijani gas from Turkey to
Austria. Named the South-East Europe Pipeline (SEEP), it would for the most
part use existing nationally owned pipelines, pipeline sections, and
inter-connectors, instead of building the Nabucco pipeline along that entire
route.
BP's SEEP is the last-minute entrant in the tender by which the Shah Deniz
consortium will choose the transportation solution for Phase Two of gas
production. SEEP competes against three pipeline projects, including Nabucco,
in this winner-take-all contest. SEEP is a concept, not yet a project at this
point. But it can still be fleshed out by early 2012, just in time for the
consortium's decision; and it seems in any case to spare most of the costs of
building the Nabucco pipeline. Given BP's role as the Shah Deniz project
operator, SEEP is a strong candidate in this tender.
The Izmir agreements and SEEP initiative, unlike Nabucco, do not envisage a
transportation solution for Turkmen gas to Europe. Instead, they foresee
throughput capacities matching the guaranteed gas volumes from Shah Deniz, at
10 billion cubic meters (bcm) per year from 2017 onward. In that sense, the
transportation solution for Azerbaijani gas seems to be de-coupled from that
for Turkmen gas. De-coupling would imply abandoning Nabucco's unique advantage
which combines both solutions in a 31 bcm pipeline.
BP describes the SEEP as a scalable project, implying that it can increase its
capacity later. Presumably this would depend on Turkmen gas reaching Azerbaijan
across the Caspian Sea. The SEEP, however, does not involve a linear, easily
scalable pipeline, but (as BP implies) a patchwork of pipelines, pipeline
sections, and inter-connectors, all with varying parameters, characteristics,
and ownerships.
Scaling up the capacity across such a heterogeneous system needs to be
explained more convincingly. Accessing Turkmen gas via Azerbaijan is a high
priority of the EU's external energy policy. Mandated by the EU's 27 member
countries, the European Commission is negotiating with Turkmenistan and
Azerbaijan on a trans-Caspian pipeline.
European Energy Commissioner Guenther Oettinger has reacted to these latest
developments with diplomatically phrased expressions of concern.
On gas pipeline options via Turkey, he stated that "Pipeline options within
Turkey are led by Nabucco; but alternative options [involving] dedicated
infrastructure under a strong legal framework are also being considered." On
the legal framework: as with the 2009 Nabucco IGAs, "this needs to be
compatible with EU law." On access for Turkmen gas: "Whichever option is
chosen, there must be mechanisms to allow for new gas from Turkmenistan."
Citing the January 13, 2011 joint declaration by President Ilham Aliyev and
European Commission President Manuel Barroso on Caspian gas, the commission
intends to discuss with Azerbaijan, Georgia, and Turkey all the pipeline
options, with the aim of reaching agreement on the best option.
The Izmir agreements and SEEP initiative seem to leave no gas volumes available
for the Interconnector Turkey-Greece-Italy (ITGI) and the Trans-Adriatic
Pipeline (TAP, connecting Turkey via Greece and Albania to Italy). Those two
projects, at 10 bcm of gas annually for each, competed against Nabucco in the
zero-sum contest over Shah Deniz gas. SEEP is the fourth, last entrant in the
tender.
The most influential players involved are interested mainly in supplying Balkan
and Central European countries with gas. The geographies of Nabucco and SEEP
closely overlap in that direction. Each plans for its gas flow to turn north
from Turkey into Bulgaria, and onward to Central Europe. Apart from 1 bcm or 2
bcm annually that Azerbaijan plans to deliver via Turkey to Greece, no other
volumes are known to be planned for delivery westward of Bulgaria at this
stage.
Vladimir Socor is a Senior Fellow of the Washington-based Jamestown
Foundation and its flagship publication, Eurasia Daily Monitor. An
internationally recognized expert on the former Soviet-ruled countries in
Eastern Europe, the South Caucasus, and Central Asia, Mr Socor is a
Romanian-born citizen of the United States based in Munich, Germany.
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