Tag: Energy

  • Energy Security and the PKK Threat to the Baku-Tbilisi-Ceyhan Pipeline

    Energy Security and the PKK Threat to the Baku-Tbilisi-Ceyhan Pipeline

    By Nihat Ali Özcan, Saban Kardas

    In the wake of the conflict in Georgia, the future of energy transportation from the Caspian basin and Central Asia to world markets is once again on the agenda. By looking at the attack by the Kurdistan Workers’ Party (PKK) on the Baku-Tbilisi-Ceyhan (BTC) pipeline in August, we will discuss how growing instability in the region highlights the interconnectedness for Turkey of security of energy pipelines, terrorism and regional stability.

    Given the political, military and economic implications of oil and natural gas production and transportation, one can better appreciate the search, on the part of producers, investors and consumers, for cheaper and more secure energy transportation routes. Even a seemingly technical decision over the optimal transportation lines is shaped by political competition. The rivalry is present at all stages of energy transportation including project, construction and management. Such struggles range from securing investment capital to sharing profits, providing physical security, and ensuring political stability in the countries involved.

    Today, in addition to their high economic value, energy pipelines play important roles in diplomatic, economic, military and ecological terms. In addition to offering immediate economic benefits to transit and terminal countries, pipelines may act as the building blocks of alliances and boost cooperation among states. Likewise, pipelines may shape domestic politics in countries that are increasingly dependent on imported energy for heating or power.

    One strategy that appeals to countries situated astride alternative pipeline routes is to engage in activities designed to undermine the profitability of rival existing routes and render them risky for investors. Since investors will be discouraged from financing projects in volatile and insecure regions, destabilizing rival routes by sponsoring terrorist or insurgent organizations that operate in the transit corridors is a common strategy.

    It is widely documented that terrorist groups around the world often attack energy pipelines and the personnel working there. Through acts of sabotage, bombing and kidnapping, terrorist or insurgent groups may seek to derail the construction of pipelines or the flow of oil or gas. Such attacks have occurred in many countries, including Colombia, Nigeria, Sudan, Algeria, Iraq, and Saudi Arabia. Likewise, during the last 25 years, the PKK has threatened the security of pipelines running through Turkish territory and from time to time has mounted actual attacks on them.

    Various reasons explain why pipelines are targeted by terror organizations and their sponsors. First, the direct and indirect impact of pipelines on society makes them highly valuable targets. The effects of attacks range from the interruption of heating in winter conditions to environmental disasters, fluctuations in world energy markets, and diplomatic and legal disputes over compensation. These repercussions empower terrorist organizations in terms of bargaining power and propaganda purposes. Second, because securing infrastructure is extremely difficult, the physical vulnerability of pipelines and related facilities make them easy targets. Given the availability of explosives, blowing up pipelines can be accomplished by terrorists easily, further complicating security. Third, since petroleum and natural gas can easily ignite, terrorists prefer to attack them with explosives. Despite many safeguards developed to reduce the impact of sabotage acts and resume the operation of pipelines through quick repairs, overall pipelines are still considered vulnerable targets.[1]
    The PKK and Kirkuk-Yumurtalik Pipeline.

    Turkey has two strategically important trans-border pipelines, aside from the ones serving domestic needs: Kirkuk-Yumurtalik and Baku-Tbilisi-Ceyhan. When the Nabucco pipeline project is finalized it will connect the Baku-Tbilisi-Erzurum (Turkey) and the Tabriz (Iran)-Erzurum gas pipelines to Austria, feeding extensive European gas networks (see nabucco-pipeline.com). During the deliberations over the selection of these projects, their implementation, and the administration of pipelines, multinational companies had to factor the instability caused by the PKK’s terror campaign into their calculations, making the PKK an indirect player in the game.

    Turkey completed the construction of the first strategic oil pipeline, Kirkuk-Yumurtalik, between 1978 and 1984. It was completed in 1984, the year when the center of gravity of the Iran-Iraq war shifted from the Persian Gulf to northern Iraq. Having benefited enormously from oil revenues in financing the war, Iraq negotiated with Turkey to build a parallel line. To undermine the feasibility of Kirkuk-Yumurtalik pipeline, Iran supported the Kurdish peshmerga forces in Northern Iraq and the PKK in Turkey. [2] Coincidentally, the PKK initiated its terror campaign around the same time (Hurriyet, Milliyet, Cumhuriyet, August 18, 1984).

    The PKK and the Baku-Tbilisi-Ceyhan Pipeline

    The new political geography of the Caucasus and Central Asia following the dissolution of the Soviet Union led to a power struggle between Russia, Iran and Turkey. More importantly, the growing demand for energy worldwide directed the attention of the developed countries seeking to diversify their suppliers to the vast energy resources in these regions. [3] The discussions concerning the transportation of Azerbaijan’s energy resources to the world markets brought Turkey to the forefront, agitating Iran and Russia.

    The BTC route emerged as the most efficient option for the transportation of Azeri gas and oil to the West. It was eventually expected to be expanded to carry the rest of the Caspian basin resources. Since the lynchpin of these developments was the transportation of Azeri and Caspian resources to the West in circumvention of Russian-controlled lines, preventing or delaying the BTC project was in the interests of Russia, Iran and Armenia. Russia was concerned about losing its influence in the region and being left outside the calculations concerning the Caspian region. Iran was worried that oil revenues might boost Azerbaijan’s power and increase separatist sentiments among Azeris in Iran. Armenia was naturally irked by the close relations between Azerbaijan and Turkey and by the likely increase in Azerbaijan’s power.

    The strategy of Russia, Iran and Armenia was based on portraying the BTC corridor as risky and unstable. Through acts of omission and commission they contributed to this perception in the 1990s. Armenia’s conflict with Azerbaijan in 1993 and its invasion and ongoing occupation of Nagorno-Karabakh played a role in perpetuating instability in the Caucasus. Russia’s support for Armenia and meddling in the domestic affairs of Azerbaijan and Georgia in 1992-1993 prompted instability in these countries. The escalating PKK violence inside Turkey raised questions about the safety of the transportation corridor, further delaying the project.

    During the debates on the Baku-Ceyhan pipeline, the Turkish Armed Forces (TSK – Turk Silahli Kuvvetleri) came close to eliminating the PKK through a cross-border operation in northern Iraq in September 1992. The PKK had to relocate to camps in Zeli in northern Iraq, far from the Turkish border. The deteriorating conditions forced PKK leader Abdullah Ocalan to declare a unilateral ceasefire in March 1993 (Hurriyet, March 15, 1993). In May 1993, during his visit to Turkey, the Azerbaijani prime minister signed the contract for the construction of the pipeline. In the intervening period, the PKK maintained close ties with Iran and Russia. [4] On May 24, 1993, the PKK resumed violence, ambushing a military convoy on the Elazig-Bingol highway, killing 33 recruits discharged from their duties (Hurriyet, May 25, 1993). As the TSK intensified its counter-terrorism operations, the conflict escalated. Consequently, growing instability in the energy corridor forced investors to suspend the project.

    Around the same time, Russia and Iran stepped up their efforts to sell Turkey their natural gas. The Blue Stream pipeline (a trans-Black Sea natural gas pipeline supplying Russian gas to Turkey) that increasingly rendered Turkey dependent on Russian gas was initiated under these conditions.[5] Similarly, Turkey signed a contract with Iran for the construction of a pipeline to carry Iranian gas to Turkey. The resumption of the BTC project came only in the early 2000s, after Turkey expended enormous resources to capture Ocalan and bring the PKK violence under control.

    New Russian Security and Foreign Policy Doctrine

    Russian foreign and security policies in the Putin era were centered on a new doctrine that sought to channel energy revenues to the realization of Russia’s strategic priorities (Eurasianet.org, February 1, 2006). Rising energy prices after the Iraq war and the increasing demand for oil worldwide provided perfect conditions for implementing this project. The sustainability of this approach depends on the maintenance of Russia’s influence over ex-Soviet countries, and the continuation of the West’s dependence on hydrocarbons and continuing high energy prices.

    Russia’s interest in the production, marketing and transportation of oil and natural gas is particularly visible in the case of the BTC, hence in its policies as well toward Azerbaijan, Georgia and Turkey. Anxious to diversify energy supply routes and break down Russia’s dominance, the United States and the European countries have grown increasingly interested in the BTC as well as other routes through Turkey. Although, the BTC and the Baku-Tbilisi-Erzurum gas pipeline are buried underground, concerns over their security never fully disappeared. [6]

    In this context, the recent conflict in Georgia has refocused the attention to energy security in the Caucasus. Coincidentally, prior to the outbreak of hostilities in Georgia, the BTC came under attack on August 5, 2008, disrupting the oil transportation for 14 days (see Eurasia Daily Monitor, August 8). The pipeline had been pumping 850,000 to 900,000 barrels per day before the explosion. Although some 200,000 barrels per day were diverted to underused pipelines running through Russia and Georgia, the financial loss over 14 days still came to over 1 billion dollars (see U.S. Department of Energy, Energy Assurance Daily, August 8). The oil that burned, expenses for putting off the fire, personnel and repairs cost another 20 million dollars.

    These economic losses aside, the security of the BTC corridor and reliability of Turkey as an alternative supply route again came into question, as in the 1990s. During the invasion of Georgia, the Russian army did not destroy the BTC pipeline but some railways and trains used for oil transportation were destroyed. The interruption of the railways and the sabotage of the pipeline temporarily forced Azerbaijan to divert some of its crude oil through routes controlled by Russia (RFE/RL, September 2). In the wake of the Georgian crisis, Azerbaijan is wary of the idea of bypassing Russia entirely in energy transportation, as reflected by the cool reception U.S. Vice President Dick Cheney received during his September 3 visit to urge Baku to commit to pipeline routes that would avoid Russian territory. [7]

    In the coming days, the debate on energy security and alternative energy corridors is likely to intensify. If Turkey cannot counter economically and politically costly attacks on pipelines in its territory and prevent instability in the surrounding regions, it will face enormous consequences. Not willing to incur billion dollar losses in every attack, multilateral corporations might explore alternative routes, and seek compromise with the PKK to cease its attacks on the pipelines. As a country aspiring to become a major transportation hub connecting Middle Eastern and Caspian hydrocarbon reserves to Europe, Turkey will come under pressure to ensure security at home and in its neighborhood. Through its diplomatic initiatives, such as the proposal for a Caucasus Stability and Cooperation Platform, it has sought to stabilize relations in the Caucasus region (Today’s Zaman, August 19). Likewise, it has to restore the credibility of its territory as a secure route, especially given its plans to push for the Nabucco pipeline and discussions on the integration of trans-Caspian pipelines into the BTC.

    Turkey’s ambitions will paradoxically make it a target of the actors seeking to discredit the routes stretching through Turkey. As long as Turkish territory remains one of the main theaters of battle over energy transportation, the interest in the PKK either from Turkey’s regional competitors or from the West will not cease. The motivations that led the PKK to sabotage the BTC in August are unclear. In any case, this move shows that the PKK closely follows regional developments and is in search of new roles and potential supporters. By targeting the BTC pipeline, the PKK might have been attempting to find new strategic partners. There are grounds to be concerned that the PKK may be receiving limited international support, though as of yet no definitive evidence is available. This sabotage was the PKK’s first attack on the BTC; interestingly, it came on the eve of the crisis in the Caucasus. As the attack broke with the movement’s long-standing caution in avoiding alienating Europe and the United States, it is possible the PKK may have received guarantees from other potential sponsors. Given Russia’s record of limited support for the PKK in the past (such as harboring PKK leader Abdullah Ocalan), the August 5 PKK attack on the BTC pipeline may have to be analyzed within the context of broader debates on the future of energy transportation in the region and Russia’s attempts to solidify its dominant position as the major supplier of Caspian and Central Asian energy reserves.

    Notes:

    1. See “Threats to Oil Transport,” Institute for the Analysis of Global Security, n.d., ; “Terrorism and Oil Make Volatile Mix,” Pipeline & Gas Journal, May 2006, pp.32-33. .

    2. Nihat Ali Ozcan, PKK (Kurdistan Isci Partisi) Tarihi, Ideolojisi ve Yontemi, Ankar, ASAM Yayinlari, 1999, pp.222-237.

    3. A. Necdet Pamir, Baku-Ceyhan Boru Hatti, Ankara: ASAM Yayinlari, 1999.

    4. For PKK-CIS relations, see reports submitted to the 5th Congress of the PKK, Vol. 2, Damascus, 1995, pp.569-586; on PKK-Iran relations, see pp.553-567.

    5. Firat Gazel, Mavi Akim, Istanbul: Metis Yayinlari, 2003).

    6. For an account of the motivations of regional actors to destabilize the BTC, see: Gal Luft, “Baku-Tbilisi-Ceyhan Pipeline: Not Yet Finished and already Threatened,” Energy Security, November 4, 2004 .

    7. Mete Goknel, “Kafkas Krizinin Ardindan Enerji Kaynaklari Konusundaki Gelismeler,” September 11, 2008, .

  • IRAN TO SUPPLY ARMENIA WITH GAS AND ARMENIA TO EXPORT ELECTRICITY TO IRAN

    IRAN TO SUPPLY ARMENIA WITH GAS AND ARMENIA TO EXPORT ELECTRICITY TO IRAN

    By Emil Danielyan

    Tuesday, September 30, 2008

     

    Armenia appears to have completed construction of a pipeline from neighboring Iran that will supply it with natural gas and significantly ease its heavy dependence on Russia for energy resources. The development will also allow the small landlocked country to avoid disastrous consequences if Moscow decides to cut off gas deliveries to Georgia, a possibility that has become real since the outbreak of the Russian-Georgian war.

    The first, 24.6 mile (41-kilometer) Armenian section of the pipeline was inaugurated by the presidents of Armenia and Iran in March 2007, more than a decade after the two governments agreed to launch the multimillion-dollar project. The national gas distribution company ARG has since been busy building its second and final section. Armenian President Serzh Sarkisian announced on September 3 that work on the almost 120-mile (200-kilometer) stretch, passing through the country’s most mountainous region, was essentially complete; and that the pipeline would go on stream “in late October or early November” (Armenian Public Television, September 3).

    Armenian Energy Minister Armen Movsisian confirmed this later in September, saying that ARG specialists only needed to conduct testing and other technical operations on the facility within the next few weeks. “Iran will pump three million cubic meters of gas [a day] to Armenia during this winter,” the head of the Iranian Gas Export Company, Reza Kasaei-Zadeh, was reported to have announced last week (www.panarmenian.net, September 23).

    The pipeline project has given a massive boost to the close political and economic relations that the Islamic Republic has maintained with its sole Christian neighbor since the break-up of the Soviet Union. Iranian President Mahmoud Ahmadinejad reaffirmed Tehran’s intention to deepen those ties when he received Armenian Foreign Minister Eduard Nalbandian in mid-September. “There is no limit to the expansion of relations with Armenia,” the Iranian media quoted him as saying. Armenian-Iranian cooperation, said Ahmadinejad, should serve as a model for the rest of the world (IRNA news agency, September 16).

    Successive Armenian governments have keenly sought this cooperation in order to mitigate the effects of the economic blockades that its two other neighbors, Turkey and Azerbaijan, have imposed on it because of the unresolved conflict over Karabakh. The war in Georgia, which temporarily disrupted the vital transit of Armenian cargo through Georgian territory, has only enhanced Iran’s geopolitical significance for Armenia in the eyes of local policy-makers and the public in general. As Movsisian put it, the Iran-Armenia pipeline will “guarantee” his country’s energy security in “cases of crisis” in the region. It was an obvious reference to the continuing Russian-Georgian conflict and its possible consequences for Armenia.

    The most severe of those consequences would be a Russian decision to end gas supplies to Georgia through a pipeline that also feeds Armenia. With Georgia still heavily reliant on Russian gas, such a move is arguably the most powerful weapon in Moscow’s arsenal of sanctions against Tbilisi. Should the Russians decide to use it, they will almost certainly be unable to pump gas to Armenia through Georgian territory. Both South Caucasus countries use Russian gas for winter heating and for generating a large part of their electricity.

    The launch of the pipeline from Iran could thus hardly come at a better time for Armenia. Access to Iranian gas will not only give Yerevan a viable alternative to Russian deliveries but could strengthen its bargaining position in difficult tariff negotiations with Gazprom. The Russian monopoly plans gradually to raise its gas price for Armenia, which is currently set at $110 per thousand cubic meters, to international levels. Under an agreement signed by Gazprom and ARG executives in Moscow on September 17 and disclosed by the Armenian government a week later, the price will rise to $154 per thousand cubic meters in April 2009 and on to $200 in April 2010. Yerevan’s bargaining position will be limited, however, by the fact that Gazprom has a controlling share in ARG. Whether the Armenian gas company will be ready to cut back on supplies from its parent company if the Iranians offer it a better deal remains to be seen.

    According to energy officials in Yerevan, the new pipeline will have the capacity to pump at least 2.3 billion cubic meters of Iranian gas per annum. That is slightly more than the 2007 volume of Armenia’s gas imports from Russia, which was enough for meeting its energy needs. Officials say that Iranian gas will therefore be mainly converted into electricity at Armenian thermal power plants which will then be exported to Iran. In preparation for a surge in Armenian electricity exports, the two countries are currently building a third high-voltage transmission line linking their power grids.

    Armenia might also need extra gas if it starts selling electricity to Turkey, with which it has no diplomatic relations or open border. According to Movsisian, a relevant agreement was reached during Turkish President Abdullah Gul’s historic September 6 visit to Yerevan that marked an unprecedented rapprochement between the two historical foes. “The Turkish side has asked for four months to complete their part of the [preparatory] work, after which we will start electricity supplies experimentally for a few days and then on a regular basis,” he said (RFE/RL Armenia Report, September 11). Armenia’s state-run power transmission company said that it would deliver 1.5 billion kilowatt/hours of power to a Belgian utility firm in Turkey in the next two years with the option of more than doubling the supply in 2011 (Arminfo news agency, September 16). The Turkish government has yet to confirm the agreement.

  • Armenia needs open borders for energy

    Armenia needs open borders for energy

    YEREVAN, Armenia, Sept. 30 (UPI) — Though Russia and several other countries are using energy as a political tool, Armenians need to take a practical view of opening their borders, officials say.

    In an interview Tuesday with the Armenian news agency A1 Plus, President of NATO Parliamentary Assembly Jose Lello said the high cost of energy and export prices for Armenia challenges conventional market conditions.

    “So I think the Armenian people and Armenian authorities must look on perspectives emerging from open borders with great pragmatism,” he said.

    Russian energy giant Gazprom Thursday said it would increase the price of gas exported to Armenia by 40 percent starting in April, and on Wednesday Azerbaijan, citing territorial disputes, said there are no plans to alter the route of the proposed Nabucco pipeline through Armenian territory.

    Commenting on Russian aggression in the Caucasus region and its forceful moves in the energy market, Lello said Moscow should realize energy does not define geopolitical strategy, despite mounting demands for oil and gas in the region.

    “Russia has to understand that life is not only energy, oil and gas,” he said.

  • KRG confirms South Korea oil deals

    KRG confirms South Korea oil deals

    By United Press International

    South Korea was granted the lead role in two northern Iraq oil projects and increased interest in six others, United Press International has confirmed.

    The Korean National Oil Corp. has also pledged $2.1 billion in infrastructure projects in Iraq’s Kurdish region as part of the deal, but $1.5 billion will be withheld until oil exports begin.

    Iraq’s central government has called most of the 20-plus oil deals signed by the Kurdistan Regional Government illegal and is pledging to confiscate any oil produced.

    The KRG and KNOC have confirmed leaders signed a massive Implementation Agreement for Oil & Gas Infrastructure Projects Thursday in Seoul.

    In exchange for the investment in electricity, water, road and other infrastructure — the remaining $1.5 billion will come from KNOC’s earnings from oil exports — KNOC was granted two production-sharing contracts.

    The state-owned firm will have an 80-percent ownership of the Qush Tappa block PSC and 60-percent ownership of Sangaw South.

    KNOC was also granted interest in existing production contracts: a 15-percent stake in each of Norbest Limited’s K15, K16 and K17 blocks; a 15-percent interest in block K21; and a 20-percent stake in Sterling Energy Ltd.’s Sangaw North block. It also was given 20 percent more of the Bazian block, of which KNOC is the lead company in a consortium that was granted a 60-percent stake last November.

    The agreement was seven months in the making, when a memorandum of understanding was reached between the two sides. In June, contracts for oil stakes were agreed to, as well as an investment project. All of the details were negotiated since then and the deals made official Thursday.

    Iraq Oil Minister Hussain al-Shahristani, in a June interview in his Baghdad office, told United Press International all but the four KRG contracts signed before February 2007 would be regarded as illegal.

    “That oil will be confiscated; they have no right to work in that part of the country,” he said. “We’ll use a number of measures to stop any violation of Iraqi law. Those contracts have no standing with us, we don’t recognize them and they have no right to do that.”

    A draft version of a new oil law for Iraq was approved in February 2007 by the Iraqi Cabinet but was scuttled after changes were made and interpretations varied.

    KRG Prime Minister Nechirvan Barzani urged Baghdad to concentrate on passing the law instead of condemning the regional government’s contracts.

    Ben Lando, UPI Energy Editor

  • MORE SPEED, LESS HASTE RESULTS IN TURKISH NUCLEAR TENDER FIASCO

    MORE SPEED, LESS HASTE RESULTS IN TURKISH NUCLEAR TENDER FIASCO

    By Gareth Jenkins

    Thursday, September 25, 2008

     

    Turkey’s latest attempt to acquire nuclear power resulted in humiliating failure on September 24, when only one consortium submitted a bid to build the country’s first nuclear power plant at Akkuyu, near the eastern Mediterranean port of Mersin.

    In the six months following the announcement of the contract in March, 13 consortia bought tender documents. However, almost all had subsequently expressed reservations about the project; not least about the terms of the state guarantee to buy electricity for the first 15 years of the proposed plant’s operating life. Their concerns were exacerbated by the recent turbulence on the international markets and increased uncertainty about the prospect of securing financing for the project. In the run-up to the September 24 deadline for bids, there were repeated calls for an extension of the deadline pending a resolution of ambiguities in the tender terms and a decline in the turbulence on international financial markets (see EDM, September 23). The ruling Justice and Development Party (AKP), however, remained adamant that the process would continue as scheduled.

    “Turkey has already waited until very late for nuclear energy. It doesn’t have the luxury of being able to afford a postponement,” Prime Minister Recep Tayyip Erdogan declared on September 22 (Anadolu Ajansi, September 22).

    As a result of the AKP’s intransigence, all but one of the potential bidders declined to make an offer. Humiliatingly for the government, the opening of the bids at 14.30 on September 24 was carried live on national television. Although officials from the tender commission reported that they had received six responses, it soon became clear from the five slim envelopes and single large parcel sitting on the desk in front of them that they had received only one bid. The five slim envelopes contained letters thanking the commission for its time and politely declining to submit an offer. The sole bidder was a joint venture between the state-owned Atomstroyexport of Russia and the Turkish Ciner Group (NTV, CNNTurk, CNBC, September 24).

    What happens now remains unclear. In theory, the tender process consists of three stages. In the first, the consortium presents the commission with a sealed envelope indicating an intention to bid. In the second stage, the technical details of the bid are forwarded in a sealed envelope to the Turkish Atomic Energy Authority (TAEK) to be examined for compliance with the project’s safety standards. If TAEK approves the project, a sealed envelope containing the proposed price of the electricity is opened (Referans, Dunya, Anadolu Ajansi, September 25).

    The AKP appears to have assumed that despite all the expressions of concern, several consortia would present bids and the government would be able to choose the cheapest. When asked by a Turkish journalist whether the single bid meant that the tender would now be cancelled, Haci Duran Gokkaya, the general manager of the state-owned Turkish Electricity Trading and Contracting Inc. (TETAS), huffily replied: “The fact that there was a bid means that the competition process is continuing” (NTV, Anadolu Ajansi, September 24). Gokkaya did not specify the identity of the rival with whom the Atomstroyexport-led consortium is now competing.

    The Turkish media is in doubt about why, alone of all the consortia that bought tender documents, it was the one led by a Russian state-owned monopoly that submitted a bid. Turkey currently obtains almost two thirds of its natural gas and approximately one third of its oil from Russia (see EDM, September 9).

    “The reason Russia was interested in the project was because it is the largest supplier of natural gas to Turkey, which gives it extraordinary bargaining power,” noted columnist Metin Munir in the daily Milliyet. “One of the main reasons the other companies kept their distance was concern about payment for the electricity that they would produce. Russia has no such worries. It is confident that all it would have to do would be to give the government a kick in the backside by cutting off the gas for a couple of days in the middle of winter” (Milliyet, September 25).

    Although it has received less coverage in the Turkish media, a decision by the AKP to award the contract to Atomstroyexport would undoubtedly also have political repercussions. Even before the tension sparked by the war between Russia and Georgia in August, the United States would have been unlikely to welcome Turkey’s choosing the same company that has been so heavily involved in Iran’s nuclear program. In the current political climate, awarding the contract to build Turkey’s first nuclear power plant to a Russian company would doubtless be regarded in Washington as not just an economic but also a strategic decision.

    Despite Gokkaya’s comments, the general consensus in Turkey is that the AKP will eventually have to cancel the nuclear power tender. It is currently unclear whether it would simply invite private companies to submit bids in a new tender or whether it would look for some kind of public-private partnership. Although the Nuclear Power Plant Law, which was promulgated in November 2007 (Law No. 5710, published in the Official Gazette, November 21, 2007), provides for the state to build the plant on its own if necessary, the Turkish public sector lacks the expertise to do so.

    Whichever option the AKP decides to take, the result is likely to be a further loss of time and credibility, both of which are already in increasingly short supply. Turkey currently has a total installed electricity production capacity of 40,834 megawatts (MW) (www.tetas.gov.tr); but 13,393 MW is from hydroelectric plants, which can operate only at a limited capacity as the result of declining rainfall. A recent study by the state-owned Turkish Electricity Transmission Company (TEIAS) forecast that, even if the nuclear plant at Akkuyu is completed, Turkey will still face severe electricity shortages over the next decade. The TEIAS study was based on worst case and best case scenarios, taking into account the expected growth in electricity demand over the period from 2008 to 2017. According to the best case scenario, Turkey will add 12,917 MW in installed capacity by 2017. Under the worst case scenario, just 8,599 MW will be added; but the study also found that in order to keep pace with expected demand, the country will need a minimum of 22,000 MW in extra capacity by 2017; and if the economy continues to grow at a reasonable rate, it is more likely to need an additional 34,155 MW.

    “Whatever we do, we face a crisis,” noted Songul Selvi in a commentary on the report in the daily Dunya. “The only question is how bad.” (Dunya, September 25).

  • Baku denies Armenia will host Nabucco

    Baku denies Armenia will host Nabucco

    BAKU, Azerbaijan, Sept. 24 (UPI) — Azerbaijani officials Wednesday said there are no plans to alter the route of the proposed Nabucco pipeline through Armenian territory.

    Turkish media had reported Ankara spoke with officials in Armenia about the possibility of altering the Nabucco route to Europe.

    Construction on the 2,000-mile pipeline from Caspian gas fields to Europe is slated for 2009. Azeri officials, however, denied the plans included Armenia, Trend Capital News reported.

    “The route of Nabucco has already been determined. It will run through territory of Azerbaijan and Georgia, onwards to Turkey, Greece up to Italy,” said Ali Hasanov with the Public Policy Department in Baku.

    Hasanov said Baku “has repeatedly stated” it will not deal with Armenia until it releases territory Azerbaijan claims is under occupation.

    Europe and the United States back development of the Nabucco pipeline as a means of easing Europe’s dependency on Russian energy.