The Impact of TAP’s Selection on Turkey
The BP-led Shah Deniz consortium’s decision to reject the Nabucco pipeline project from the fourth energy corridor initiative directly influenced Turkey’s standing in the Eurasian energy game. With Nabucco defeated, Turkey lost its energy ties with the EU and the European Commission (EC), along with the symbol of its decisiveness towards suppliers’ dominance in the natural gas market. Instead, Turkey managed, via TAP and TANAP, to strengthen its relation with Azerbaijan and southern European countries where it would not risk competing with Russian gas supply.
On June 28, 2013, the BP-led Shah Deniz consortium, which holds the license for exploiting one of the world’s most important gas reserves, rejected the offer of Nabucco, which was the flagship of the EC’s southern energy corridor project (SECP) for increasing the EU-27’s gas supply roads, currently dominated in northern Europe by Russia. As said Reinhard Mitschek, the managing director of Nabucco Gas Pipeline International GmbH, “Nabucco delivers freedom of choice to gas consumers.”
The consortium’s decision made the Trans-Adriatic Pipeline (TAP) the first energy road bring Caspian gas to Europe. As a joint initiative of Swiss Axpo (42.5%), Norwegian Statoil (42.5%) and German E.ON (15%), TAP would run from the Turkish border via Greece and Albania to Italy. The Trans-Anatolian gas pipeline (TANAP), jointly held by Azerbaijan’s SOCAR (80%) and Turkey’s BOTAS and TPAO (20%), would deliver gas to TAP. In next decade, Azeri gas will be exported to Turkey’s border via TANAP and to Italy via TAP.
Form Turkey’s perspective, the end of Nabucco had more political impact than economic impact. Even though at the beginning of the process Turkey tried to use Nabucco as leverage for negotiating EU accession (insisting, for example, on a right to buy, at preferential rates, 15% of the gas flowing through the proposed pipeline), eventually this restricted position gave way to an approach of full cooperation. Turkey willingly and decisively signed Nabucco’s international agreements and ratified it promptly in its parliament. Turkey also considered Nabucco an opportunity to strengthen its relations with EU and to build new bridges. The EU's Nabucco negotiator said on 2009 “Nabucco is a demonstration project of Turkey's intent to join the European Union.”
This change in Ankara’s approach to Nabucco occurred when authorities began considering Nabucco as a milestone in the quest of transit countries to seek a decisive role in the Eurasian energy sector. The success of Nabucco could represent for Turkey an opportunity to redefine the Eurasian energy game, where transit countries do not have any significant influence in oil and gas pipeline projects’ decision-making processes.
When the TANAP-TAP joint gas delivery corridor project replaced Nabucco, it closed an age for Turkey, but it also opened new perspectives in the energy business.
At first economically, not only was the TANAP/TAP price offer more interesting than Nabucco’s offer, but Turkey’s share in TANAP (20%) was also more important than its share in Nabucco. Moreover, TANAP accepted to deliver natural gas to Turkey with a preferential rate. According to Turkey’s Minister of Energy and Natural Resources, Taner Yildiz, TAP also invited Turkey to invest in the project. In August 2012, TAP had already invited Shah Deniz Consortium members BP, SOCAR, and Total to co-fund TAP's development and they were each given options to purchase shares, up to a total of 50%.
In the strengthened cooperation of TANAP/TAP, Turkey reached an opportunity to develop relations with European energy giants like Statoil, Axpo, E.ON, and BP instead of mid-size energy companies from the Balkans who were set to be involved in Nabucco. Another additional asset of TAP, compared to Nabucco West, was the shareholders’ involvement in the Shah Deniz consortium--SOCAR at 10%, TPAO at 9%, BP at 25.5%, and Statoil at 25.5%.
Turkey’s rapprochement with Azerbaijan will also pave the way for future cooperation for Ionian gas pipeline and the Greece-Bulgaria Interconnector project.
Last but not least, the selection of TAP took away from Turkey a tense political decision. Russia’s energy monopoly considered Nabucco a threat to its energy monopoly on Eurasia and developed the South Stream and the Blue Stream II gas pipeline projects, running from Caspian offshore fields to the Balkans via the Black Sea, to counter this perceived danger. Russia’s action raised the question of Turkey’s standing in this bi-polar tension between the main supplier (Russia) and the main consumer (Europe). That put Turkey in a difficult position, as Russia today supplies nearly 80% of Turkey’s energy.
During the Nabucco process, Turkey preferred to oscillate between EU-backed and Russia-backed projects and to ink agreements with both sides. With the selection of TAP, Turkey moved away from the risk of opposing Russia, as TAP would supply southern European countries like Italy and Greece, which are not in Russia’s sphere of influence.
Olgu Okumuş is an affiliated lecturer in energy diplomacy at Sciences Po, Paris, and director of strategy development at LEO Advisors. She is also a PhD candidate at Sciences Po, Paris, where her research focuses on Turkey’s energy transit policy.
She can be reached at olgu.okumus@leoadvisors.com