Azerbaijan's Approach to the Russia-Turkey Gas MoU
Turkey's Minister for Energy and Natural Resources, Taner Yildiz, announced that gas supply agreements between Russia and Turkey will not impact the implementation of the Trans-Anatolian gas pipeline (TANAP) project, which is aimed at transferring Caspian basin gas, including Azerbaijani resources, towards Europe.
Russian President Vladimir Putin stated in Ankara on Monday that the South Stream Project could not continue in this environment…Russian considers delivering 63 billion cubic meters of gas per annum via Black Sea Pipeline instead.
"We decided to construct a new gas transfer system to meet Turkey's needs and to create a hub for natural gas supplies for Southern European consumers through Turkish territories," Putin said.
The underwater Black Sea Pipeline will replace the South Stream Project, which was designed to supply 63 BCM to Europe via Bulgaria. Bulgarian tenders, however, for building the pipeline did not fulfill European Union criteria and the project itself was not in line with the EU’s Third Energy Package stipulating third-party access.
Gazprom and Turkey’s BOTAS, a state-owned pipeline company, signed a memorandum of understanding (MoU) on December 1st on the construction of an offshore gas pipeline across the Black Sea towards Turkey with the annual capacity of 63 BCM of gas per year.
Under this agreement, 14 BCM is planned for supply to Turkey and the remaining portion, nearly 50 BCM, will head to the Turkish-Greek border.
There is another project, aimed to deliver an initial16 BCM of Azerbaijani gas to Turkey via the Trans Anatolian Pipeline that will join the Trans Adriatic Pipeline, of which 6 BCM will be supplied to Turkey by 2018 and the remaining volume earmarked for export to the EU.
Azerbaijan optimistic over Turkey-Russia gas MoU
Professor Rovshan Ibrahimov, an expert on energy security and former head of Foreign Policy Analysis Department at Center for Strategic Studies under the President of the Republic of Azerbaijan, told Natural Gas Europe that “Putin's visit to Ankara marked the beginning of a new stage of cooperation between Russia and Turkey. To date, the trade between Russia and Turkey has already exceeded $30 billion. By 2020, these countries are expected to increase trade up to $100 billion.”
According to him, construction of the Black Sea pipeline instead of the South Stream is a very pragmatic decision for Russia. “Turkey is not a member of the EU, is not subject to the requirements of the Third Energy Package. Russia hopes to create an infrastructure to the border between Turkey and Greece and continue to supply natural gas to the European markets.”
As a result, Russia will provide alternative access to European markets, reducing dependence on Ukraine, as well as strengthening its position in the Turkish market, where this country has the leading role in gas market. In turn, Turkey will have the opportunity of additional gas supplies from Russia at lower prices. At the same time, Turkey will become a transit country for Russian gas, the fact which will also change the relationship between these two countries.”
Moscow will also reduce the gas price for Turkish customers by 6 percent from January 1, 2015, Putin said on Monday. Later, OAO Gazprom's CEO Alexei Miller said the discount could reach 15 percent, subject to negotiations.
Ibrahimov, who received a PhD in political sciences at Ankara University, said that Turkey after the implementation of this project, and TANAP, will become a gas hub. “In this case, it will strengthen the strategic position of Turkey towards the EU and other European states. As can be seen, both countries are looking at this project in terms of geopolitics. In this case, even if they have different objectives, interests are coinciding.”
A top official of the State Oil Company of Azerbaijan Republic (SOCAR) who didn’t want to be named also told Natural Gas Europe that the signed MoU between Turkey and Russia will not affect the Azerbaijan’s gas projects to (and through) Turkey.
“Azerbaijan has already signed an agreement with Turkey to realize TANAP and Ankara hasn’t put any limits against Azerbaijan in term of supplying gas via this pipeline” he said.
The SOCAR official added that "Azerbaijan’s President Ilham Aliyev announced before that Baku does not recognized the South Stream Pipeline as a rival for its European gas markets and both of them has their own clients. Then replacing any project with South Stream wouldn’t change our approach, we have a 25-year agreement to supply Shah Deniz Stage 2’s gas towards the west and for realization of this project, Trans Adriatic Pipeline has chosen its commerce consortium before.”
Bakhtyar Aslanbeyli, another Azerbaijani expert on energy security issues explained to Natural Gas Europe that being a gas hub in the region was Turkey’s dream and is attempting to realize this. “Turkey has not tools to use its position as a energy hub for politically motivated interests, because it relies on energy import itself, but its energy security role in the region would be strengthened more.
Dalga Khatinoglu