Turkish Forum

Tag: Nabucco

  • Turkey Has to Develop Large Firms in Order to Become an Active Player in Energy Sector

    Turkey Has to Develop Large Firms in Order to Become an Active Player in Energy Sector

    Turkey Has to Develop Large Firms in Order to Become an Active Player in Energy Sector

    Tuesday, 24 January 2012

    Journal of Turkish Weekly (JTW) conducted an exclusive interview with Saban Kardas. Saban Kardas is assistant professor at TOBB University of Economics and Tecnology in Ankara. He is also assistant editor of Insight Turkey, a quarterly journal in circulation since 1999, which is published by SETA Foundation. 

    Q: Would Turkey not be successful if it pursued its energy policy through TPAO, equipped with specific power and well-designed by the state, rather than extending state aid? In this context, is the Azerbaijan SOCAR (State Oil Company of Azerbaijan Republic) a successful model? Is it possible for Turkey’s energy policy to be changed substantially?

    A: To start with, Turkey and Azerbaijan’s energy policies are different, and will be misleading to start analysis of Turkey’s energy policies with a comparison between them. While as an energy rich producing country Azerbaijan envisions a different set of priorities in its energy policies, Turkey’s energy policy is driven by first and foremost a concern to meet its own needs. Beyond that, Turkey works to assume a role in energy policies as a transit country. The shaping of energy policies in the countries of origin on the one hand and transit countries, i.e., countries that host the transportation routes, on the other, as well as specific institutional structures they devise take place in different settings.

    Going back to the core issue raised in your question: whether Turkey should develop its energy policies by moving to a private-sector driven model or a model based on some form of state control or intervention in the market. Alongside TPAO, BOTAS needs to be mentioned in the context of transit projects. There are market pressures on BOTAS to reduce its market share. There is also a similar expectation from external players, especially the EU. Turkey is responding to these expectations and reducing state involvement but it is difficult to say that it has progressed to an extent that it can satisfy the demands coming from outside. There are different arguments made in support of the opposing models, referring back to your question. As it is sometimes underlined in the ongoing discussions in Turkey, it makes sense to reduce the element of state intervention to the extent possible. From a liberal logic, one can make the argument that a more effective and efficient system can be developed by this approach.

    However, as a counter line of thought argues, in markets regulating strategic commodities, energy being one of them, there are some reasons to adopt some degree of state-control. The key concern in Turkey is that if such a strategic commodity is left to market forces alone, it is hard to develop competitive national players. Such concerns on Turkey’s part have been underlined in the debate taking place in the energy markets. It is widely believed that as it seeks to assert its importance in energy geopolitics, Turkey has to develop large firms in order to become an active player in this field. Firms with big capital need to emerge for global competition. It is not unlikely to occur in free market conditions, but it will be difficult. The best way to do so would be to develop an energy giant with state support. For this reason, Turkey, as in the case of BOTAS, was for some time resisting the pressures to move to a free market-oriented model and retain it as a major player, despite the pressures coming from outside. Recently, as it has been brought to the public’s attention in the context of gas purchase contracts from Russia, Turkey in fact has started to reduce the monopoly over natural gas imports. Similarly, the domestic distribution grid has been privatized to a large extent. Granted, overall, Turkey is heading to a more market-oriented model. Yet, as stated by Energy Minister Taner Yıldız on several occasions, despite a market-oriented model, Turkey wants to retain a decisive capacity for the state to make critical interventions in the operation of market. This appears to be the official prognosis for the future of the state in energy market.

    Going back to the question on the SOCAR (State Oil Company of Azerbaijan Republic) model, it is early to answer this question, in the sense that the process of SOCAR’s consolidation in the market has yet to be finalized. In this context, what SOCAR is trying to do is in essence to replicate GAZPROM model of Russia, i.e., using its position as a major producer to develop projects aiming to penetrate into downstream markets and gain control over transportation and distribution networks, so that it can maximize profits. The Trans-Anatolia agreement is the most obvious example for SOCAR’s quest to play such a prominent role. Seen from that perspective, this model is not applicable to Turkey, given that Turkey does not stand a chance to become a player in the chain running from the source or producing nations to the distribution networks. So, it is hard to compare Turkey’s energy sector to SOCAR model, given the structural differences.

    Since the SOCAR model is still in the making, one has to wait and see how it will come into full fruition and whether it will accomplish its objectives. It is early to make a realistic assessment. But so far, Azerbaijan is exporting oil and gas and in addition to that it has undertaken major investments in Turkey’s energy sector. So, one can safely say that it has accomplished some progress in downstream markets as well. To sum up, in Azerbaijan, one might expect the emergence of a structure similar to the one in Russia and it has recorded some progress in that regards.

    At this point, one has to note some problems with the GAZPROM model, assuming that SOCAR also pursues a similar approach. In this model, there are debates as to the fusion of the state and business interests; i.e., political authorities shaping the economic decisions or economics dominating political decisions, all the while GAZPROM and other energy giants being at the center of these intermingling relations. If SOCAR follows a similar route to the Russian model, in the mid- to long-term, how the relationship between politics and economics will be forged and whether interest groups formed around energy industry may eventually hinder democratization and good governance are issues that beg closer inspection. If Azerbaijan might be opting for this model, such questions also need to be discussed more candidly.

    Finally, Turkey will unlikely to follow these models. As underlined, while moving toward a market-oriented model, Turkey will develop a structure that enables effective state interventions into the market, through the control of a critical share by the state.

    Q: The signing of the agreement regarding the Trans-Anatolian pipeline, which included Azerbaijan and Turkey, can be considered a blow to Nabucco on the one hand, and giving permission to South Stream might make Europe more dependent on Russia on the other. Was it a reaction against France because of the political air in recent months?

    A: Personally, I do not think the recent developments regarding pipeline projects are directly related to the Armenian allegations. For instance, France has not been particularly supportive of Nabucco. On the contrary, the French are somehow involved in South Stream, having overtaken some of the shares in the project. So, it is difficult to argue that Turkey wanted to hurt France by thwarting Nabucco. There is no such direct connection, and Turkey’s decision(s) are not intended to convey a message to Europe. Both the Trans-Anatolian and the South Stream pipelines should be assessed based on their particular conditions, as well as from Turkey’s own perspective, and how Turkey sees them in line with its priorities in energy policies.

    I don’t think Trans-Anatolia is a blow to Nabucco. Turkey is a country that has always supported the Nabucco as a strategic project and clearly has expressed its commitment. Nabucco continues to play a key role in Turkey’s objectives to become an energy hub. But there are certain structural problems in the Nabucco project itself, and unfortunately, they have not been clearly resolved so far. As is well known, uncertainty over dedicated supplies, lack of financing and lack of unequivocal purchase commitments are other major hurdles. Previously, there used to be uncertainty over the transit regime which occasionally led to crises between Turkey and the EU. Through an understanding Turkey reached with the Europeans earlier, it eliminated those problems.

    One of the drivers of the Trans-Anatolian pipeline is Azerbaijan’s quest for an independent role in energy markets, which I underlined earlier. Turkey has taken a step in support of Azerbaijan’s role. But while providing this support, Turkey also reiterated the fundamental rationale of the Nabucco, i.e., giving approval to a direct corridor from the Caspian basin to European markets traversing Turkey. Turkey hereby sent a signal and reiterated its earlier position that it will not be an obstacle to the so-called Southern corridor. There were some uncertainties regarding the future of the Nabucco project as originally envisaged, which obviously delayed its realization. There had been concerns that the original design might be overambitious and aim at unrealistically high capacity. The joint Azerbaijani-Turkish initiative now enables a reconfiguration of Nabucco in more manageable scales. It is difficult to say that this route is altogether dead, as the rationale underpinning it also is at the core of the Trans-Anatolia.

    Turkey’s support for South Stream is a separate debate, because there is a direct competition with Nabucco there. Turkey has taken similar complementary steps in the past as well. After supporting Nabucco, Turkey demonstrated that it would not be the country that prevents South Stream. In that regards, we can say Turkey has not adopted a new position. The recent moves towards Trans-Anatolia and South Stream is a continuation of the previous position in the recent context.

    Q: The energy agreement signed by Turkey in recent weeks further brought Azerbaijan and Turkey together. In the coming years, will Ankara develop an Azerbaijan-oriented policy despite Yerevan, or create its own policy regarding energy?

    A: Based on the previous discussions, it is worth emphasizing a few points. Firstly, it is difficult for Turkey to develop independent energy policies under the current conditions. If we are talking about supply security in this context, it has different implications. If we are discussing this question in the context of Turkey’s goal of becoming an energy transit corridor, it needs to be handled differently.

    If we try to answer your question in this second dimension, i.e., energy transportation, it is difficult for Turkey to develop energy policies independent of Azerbaijan in the short to medium term. For Turkey to emerge a transit corridor and develop major transit routes, the producers of oil and gas have to give their approval. Azerbaijan is the first and only viable option at this point. In this sense, the Trans-Anatolian agreement signed with Azerbaijan, and the earlier agreements signed at the High Level Strategic Cooperation Council summit between Prime Minister Recep Tayyip Erdogan and President Ilham Aliyev, finalized Turkey’s first real transit agreement in natural gas markets. Although we have been proud of becoming a hub country, so far it remained at the rhetorical level and has yet to be realized. The compromise reached subsequent to the treaty signed with Azerbaijan allows Turkey to become a natural gas transit route for the first time. In this context, it is difficult for Turkey to develop a policy completely independent of Azerbaijan.

    Apart from this, which alternative players are there? Exporting natural gas reserves in northern Iraq through Turkey has been on the agenda of the northern Iraqi leaders. However, there are problems between Baghdad and provinces as to how to use the natural resources of Iraq. The other option is obviously Iran. Tehran’s strained relations with America, among other factors, limit the ability of Iran to emerge as a major alternative for Turkey’s ambitious to become a transit hub. On the other hand, Russia does not want to market its natural gas through Turkey.

    However, it can be said that Turkey has a growing role at present regarding the oil transportation. The Yumurtalik–Kirkuk pipeline, the Baku–Tbilisi–Ceyhan pipelines or tankers through the sea lanes play an important role in the transportation corridors controlled by Turkey. Beyond these developments, Turkey also has achieved limited progress in terms of reaching its ambitions. Especially, concerning the transport of Kazakh and Russian oil through Turkey, major issues remain. In short, as of now, talking about a role independent of Azerbaijan is difficult.

    Going back to the other issues raised in the question, yes, there has been a rapprochement between Turkey and Azerbaijan. Particularly, the current government’s policy is in favor of close relations with Azerbaijan and we might expect the continuation of this policy. There is no reason for Turkey to give up its Azerbaijan-oriented policy in the upcoming years, especially if the economic partnership continues to deepen between them, as is the case currently. These ties between Turkey and Azerbaijan, in a sense, create disincentives for a possible rapprochement between Armenia and Turkey. For Turkey to be drawn into normalization process, the Armenian side, in its approach towards Turkey, has to understand that there is not only an emotional dimension in the Turkish-Azerbaijani relationship, or a strategic dimension, but there is also a very strong economic dimension. It would be advisable for Armenia to consider its position on Turkey by taking into account these various angles.

    Tuesday, 24 January 2012

    Journal of Turkish Weekly

  • Turkey to gain in Europe gas pipeline race

    Turkey to gain in Europe gas pipeline race

    Turkey to gain in Europe gas pipeline race

    By REUTERS

    Published: Jan 13, 2012 01:44 Updated: Jan 13, 2012 01:44

    LONDON: Turkey stands to gain most from major movements in Europe’s gas supply infrastructure expected in 2012 as both Russia and Azerbaijan negotiate pipeline contracts to ship gas to the European Union through the Bosporus.

    BP and Statoil lead Azerbaijan’s Shah Deniz II gas project which is expected to declare a winner in April to transport its 10 billion cubic meters (bcm) of gas per year to Europe.

    The three projects competing for the contract are Nabucco, TAP, and ITGI.

    At the same time, Russia’s Gazprom is pushing ahead with its huge South Stream gas pipeline project that aims to pump over 60 bcm of gas a year to Italy.

    Whatever the outcome of these developments, Turkey stands to gain as all projects would pass through it, offering prospects of healthy transit fees and new gas supply sources.

    Analysts say that Turkey has positioned itself well at the negotiating table with Russia, Europe and Azerbaijan, and that its decisions would likely make or break projects.

    “Turkey is probably playing its gas hand very well. It picks the winners and knows when to decide whether they’re going to go forward with something. I would think they have decided South Stream is going to be more viable,” said Steven Wardlaw, a partner at law firm Baker Botts, which advises the gas marketing entity for participants in the Shah Deniz project.

    “We always thought that Nabucco was going to be a fairly marginal project. It’s a pipeline designed by people who want the gas, rather than South Stream, which is designed by people who have the gas,” he added.

    Turkey gave Russia permission last December to build the South Stream pipeline through its territory, supplying the missing piece needed by Moscow to secure markets for its gas in Europe, possibly at the expense of the Brussels-backed Nabucco project. The South Stream pipeline plans to transport 63 bcm of Russian gas a year into Europe by crossing the Black Sea and Turkey.

    This is equivalent to about 15 percent of the European Union’s annual gas consumption.

    While South Stream’s prospects improve, support for Nabucco is waning.

    The pipeline project, led by Austria’s OMV and Germany’s RWE, plans to ship gas from Central Asia through Turkey and southeastern Europe into Austria.

    Its critics say that its costs of over $12 billion have risen too high and that there is not enough gas available to fill such a big pipeline with non-Russian supplies.

    As a result, the tone in Brussels and with some of the project’s major partners is changing.

    Asked in an interview in late 2011 whether he was confident Nabucco would go ahead, EU Energy Commissioner Guenther Oettinger would say only that he was confident the Southern Corridor would open.

    “I’m confident of opening the Southern Corridor, but it’s primarily up to the Shah Deniz Consortium to decide to whom they want to sell their gas,” he said.

    Sources at RWE and OMV have also suggested that their impression was now that Nabucco would not be built in its original form.

    “We’re looking for easier and cheaper alternatives to secure our future gas needs than from the ever more expensive Nabucco,” one source at RWE said. “Given that we haven’t spent much money on Nabucco yet, it would be easy to get out of it.”

    Instead of one of the three single pipeline projects getting the heads-up from Azerbaijan, it seems more likely that a system of regional existing and future pipeline infrastructure could ship the gas to Europe.

    “The Shah Deniz project team are evaluating a fourth potential export option which would transport gas to markets in South-Eastern Europe through a system of regional existing and future interconnector infrastructure,” the consortium said.

    The pros and cons of each project mean that analysts think a merger is the only viable solution.

    “We might see a consolidation of projects before any single route is decided upon,” energy consultants JBC Energy said.

    TAP said it would be open to such consolidation talks.

    This could also mean that Nabucco is downsized and merged with other projects in order to create a complex Southern Gas Corridor system of pipelines, with Turkey at its centre.

    Sources in Brussels said this was the European Commission’s preferred option as it would mean it could save face by not having to officially kill off Nabucco, but instead present a coherent Southern Gas Corridor that would offer Europe diversification of supplies.

    These pipeline projects running through Turkey add to plans in Ankara to exploit recent gas discoveries in the eastern Mediterranean Sea.

    Although most discoveries have so far been made in Greek Cypriot or Israeli waters, Cyprus has said it is willing to share the revenues from any gas find with Turkish Cypriots.

    But whichever pipelines get built, and even if Turkey gets some proceeds from Cypriot gas, non-Russian gas supplies to Europe will still be dwarfed by Russia’s gas flows.

    Russian exports currently around 150 bcm a year could reach a maximum of 230 bcm by 2017, a report from the Oxford Institute for Energy Studies said in January. In its lowest scenario, Russian exports to Europe would still be around 100 bcm a year.

    This compares with a maximum of less than 30 bcm a year which Europe is likely to receive from Azerbaijan and the Caspian region, according to the Oxford Institute.

    via Turkey to gain in Europe gas pipeline race – Arab News.

  • Turkey Reiterates Commitment to Southern Corridor with Trans-Anatolia Pipeline

    Turkey Reiterates Commitment to Southern Corridor with Trans-Anatolia Pipeline

    Turkey Reiterates Commitment to Southern Corridor with Trans-Anatolia Pipeline

    Publication: Eurasia Daily Monitor Volume: 9 Issue: 1
    January 3, 2012
    By: Saban Kardas
    Turkey and Azerbaijan signed a memorandum of understanding that will facilitate the transit of Azerbaijani natural gas to Europe, changing the calculations over the EU-backed Southern Corridor concept. In October 2011, the two countries signed numerous agreements regulating the volume and price for Turkey’s gas imports from Azerbaijan as well as the transit terms for Azerbaijani gas exports to Europe through Turkish territory (EDM, November 1, 2011). Among these documents they agreed to work on a dedicated pipeline that will transport gas from the second phase of the Shah Deniz gas field through a pipeline from Turkey’s eastern frontier to its western border, in addition to using the existing Turkish grid for transiting Azerbaijani gas.

    On December 26, 2011, Turkey’s Energy Minister Taner Yildiz and his Azerbaijani counterpart, Natig Aliyev, signed a memorandum of understanding on the construction of the Trans-Anadolu natural gas pipeline. The Trans-Anadolu consortium will be formed by the State Oil and Gas Company (SOCAR) and Turkey’s BOTAS and TPAO. While the Azerbaijani side will hold 80 percent of the shares, the Turkish participants will control the remaining 20 percent, but the stakes might change over time, as the consortium will be open to participation by other international energy companies. The construction work is scheduled to start in 2012 and be completed in 2017, when the Shah Deniz-II is also expected to become operational. The pipeline will have an initial annual capacity of 16 billion cubic meters (bcm), which could be increased to 24 bcm. The 6 bcm capacity will be used for consumption in Turkey’s western regions, while the rest of the throughput will constitute Azerbaijan’s exports to Europe. Since Turkey will retain the re-export rights for its imports from Azerbaijan, the total volume of gas available for European markets could increase depending on the market conditions. Though the construction costs will be determined after feasibility studies, Yildiz estimated these costs at around $5 billion (Anadolu Ajansi, December 26, 2011).

    This development raises many interrelated issues about the future of bilateral relations, as well as the EU’s Southern Corridor project seeking to diversify European natural gas supplies tapping into Caspian basin reserves.

    With this decision, Turkey and Azerbaijan took another step to cement their evolving strategic partnership, while Ankara also reconfirmed its Baku-centered South Caucasus policy. Energy occupies a major place in both countries’ ambitious foreign policy agendas. While Azerbaijan is eager to capitalize on its developing hydrocarbon reserves to emerge as a major regional actor in the South Caucasus, Turkey has sought to use its geographic location as an asset to establish itself as a major transportation corridor for oil and gas from the Caspian basin and Central Asia as well as the Middle East.

    Given Azerbaijan’s need for a reliable export route and Turkey’s interest in sustainable throughput to feed its ambitions to become an energy hub, there are economic and strategic imperatives forcing the two countries to forge a closer partnership in the energy sector, which is further strengthened by overlapping perspectives on regional issues. Such a shared vision led to the construction of the Baku-Tbilisi-Ceyhan pipeline marketing Azerbaijani oil globally and the Baku-Tbilisi-Erzurum pipeline exporting Azerbaijani gas to Turkey, part of which is re-exported to Greece by using the Turkish grid. With the successive energy deals signed in recent years, including a rising volume of Azerbaijani investments in Turkey’s energy sector, and deepening political dialogue such as the establishment of a high level strategic cooperation council, the two countries are healing the frictions caused by Turkey’s thwarted normalization efforts with Armenia.

    Currently, there seems to be a strong determination to develop joint energy projects and turn this partnership into a solid axis in the South Caucasus and beyond. Natig Aliyev’s remarks that with the trans-Anatolia project the two countries will work in European energy markets together reflected this shared vision (www.ntvmsnbc.com, December 26, 2011).

    Moreover, the implications of this development for the EU-backed Southern corridor remain a matter of controversy. The competing projects including Nabucco, Interconnector Turkey-Greece-Italy (ITGI) and Trans-Adriatic Pipeline (TAP) submitted their bids to the BP-led consortium operating the Shah Deniz field in October 2011. While Azerbaijan and the consortium were expected to make their decision, the trans-Anatolian project has altered the equation in the ongoing competition to secure access to Azerbaijan’s export volumes.

    To complicate these calculations even further, Turkey also moved to sign an accord with Russia by the end of 2011. An agreement finalizing Turkey’s approval for the construction of South Stream in its territorial waters in the Black Sea was signed in Moscow by the heads of BOTAS and Gazprom, overseen by Yildiz and Prime Minister Vladimir Putin. With this decision, which Russia had been expecting for over one year, Turkey removed its objections to the South Stream project, which Russian sources expect to be completed by 2015. In return, Yildiz claimed that he secured guarantees from the Russian side to resolve the dispute over the western pipeline in terms favorable to Turkey, especially including a reduction in the price for gas imports from Russia (Anadolu Ajansi, December 29, 2011).

    The Turkish government has faced the criticism that by taking these controversial steps it is effectively killing the Nabucco project, which it claimed to have deemed as a strategic priority (Hurriyet, December 31, 2011). For its part, the Turkish government has been arguing that the trans-Anatolian project was in fact complementary to Nabucco and Southern corridor projects, as it will reduce the costs of the other projects (Anadolu Ajansi, December 26, 2011; Yeni Safak, November 19, 2011).

    Ankara considers that it has fulfilled its responsibilities towards the Nabucco project by granting the necessary permissions earlier for its construction on its territory. The recent deal on the trans-Anatolian project in that context reiterates that Turkey would not be the deal-breaker in Southern corridor projects, as it effectively resolves issues pertaining to the transit of Azerbaijani gas. More importantly, the willingness of the BP-led Shah Deniz consortium, for Azerbaijan and Turkey to undertake a major portion of the transportation corridor might allow Nabucco and other projects to redesign themselves on scalable terms. Now it will be up to other Nabucco partners to do their part, readjust to the new conditions, and find a supply source, which remains the main obstacle before the project.

    https://jamestown.org/program/turkey-reiterates-commitment-to-southern-corridor-with-trans-anatolia-pipeline/
  • Bulgaria Gives Up on Trying to Make Gas Pipe to Turkey Part of Nabucco

    Bulgaria Gives Up on Trying to Make Gas Pipe to Turkey Part of Nabucco

    The Bulgarian government is no longer trying to make the future gas interconnection between Bulgaria and Turkey a section of the EU-sponsored gas transit pipeline Nabucco, Economy Minister Traikov announced.

    photo verybig 129614

    The gas pipeline connecting the natural gas networks of Bulgaria and Turkey could be ready by 2014, and through which Bulgaria could be receiving up to 5 billion cubic meters of natural gas per year, Bulgaria’s Minister of Economy, Energy, and Tourism Traicho Traikov told the Members of Parliament on Friday.

    Back in 2010, Traikov was convinced that the future Bulgaria-Turkey gas interconnection would become “the first operational section” of the Nabucco pipeline. The idea was endorsed in the fall of 2010 by the Prime Ministers of Bulgaria and Turkey Boyko Borisov and Recep Tayyip Erdogan, the rationale being that the two countries could thus be entitled to use EU funds for the missing gas network link.

    On Friday, however, Traikov admitted that the Bulgarian Economy Ministry is no longer pursuing this project – which means that the Bulgaria-Turkey gas interconnection will not coincide with Nabucco’s pipe – because this would make the launching of the Bulgaria-Turkey pipe “expensive and slow.”

    Bulgaria’s decision to give up on merging of Nabucco and the Bulgaria-Turkey pipeline comes after in May 2011, Nabucco Gas Pipeline International GmbH pushed back the start of construction of its EUR 7.9 B pipeline to carry Caspian natural gas to Europe to 2013; thus, Nabucco is now expected to start operations in 2017 instead of 2015, as previously expected.

    Traikov’s announcement about the gas interconnection with Turkey comes a day after his meeting with his counterpart from Azerbaijan Natiq Aliyev, who confirmed that Azerbaijan can start shipping to Bulgaria about 1 billion cubic meters of natural gas per year as soon as the gas links between Bulgaria and Turkey, and Bulgaria and Greece are completed.

    On Thursday, Bulgaria’s state-owned gas company Bulgargaz replaced the CEO of its subsidiary Bulgartransgaz, one of the major arguments for the change being the need to speed up the construction of the Bulgaria-Turkey gas pipe.

    The working group of the Bulgarian government has concluded that the best option for the Bulgaria-Turkey gas interconnection would be if it is built by Bulgartransgaz and Turkey’s state company Botas.

    via Bulgaria: Bulgaria Gives Up on Trying to Make Gas Pipe to Turkey Part of Nabucco – Novinite.com – Sofia News Agency.

  • Bulgaria: Bulgaria to Sign on Nabucco Pipeline in Turkey on June 6

    Bulgaria: Bulgaria to Sign on Nabucco Pipeline in Turkey on June 6

    nabuccoBulgaria’s Bulgargaz, a subsidiary of the Bulgarian Energy Holding, will participate in the official signing of an agreement on the Nabucco gas transit pipeline in Turkey on June 6, 2011.

    Besides the Bulgarian company, the shareholders which will sign the agreement are OMV (Austria), BOTAS (Turkey), Transgaz (Romania), Mol Natural Gas (Hungary) and RWE (Germany)

    Each shareholder holds an equal share of 16.67% of Nabucco Gas Pipeline International GmbH. Nabucco is estimated to cost EUR 8 B, and Bulgaria, as a partner with 1/6 of the shares, will be expected to provide 1/6 of the total sum, or about EUR 1.3 B, rather than finance just the section on its territory. Bulgaria plans to finance its share in Nabucco with a EUR 1.2 B loan from the European Investment Bank.

    The sides engaged in the project are waiting for a decisive answer from Azerbaijan on its possible participation.

    “If Azerbaijan’s response will be negative, we’ll contact with Turkmenistan, Iraq and Iran. This project has a great importance for both of us and Europe. That’s why we can not lose time and we’ll use all of the options,” Taner Yildiz commented on Azerbaijan’s possible participation I the project, as cited by the Azarbaijani APA agency.

    Nabucco Gas Pipeline International GmbH, the Vienna-based project company, has been involved in talks with the European Bank for Reconstruction and Development, the European Investment Bank, and the International Finance Corporation, a member of the World Bank Group, asking for an EUR 4 B loan. These negotiations are expected to be completed in 2011.

    The Nabucco gas pipeline is supposed to reduce EU’s energy dependence on Russia by bringing in natural gas from the Caspian region, Central Asia, and the Middle East.

    The direct investments in the Bulgarian economy from the construction of Nabucco will be about EUR 400 M and a few hundred jobs. Another about 1000 jobs will be created indirectly by the project.

    At the beginning of May, it was announced that the Nabucco project company has pushed back the start of construction of the pipeline to 2013; thus, Nabucco is now expected to start operations in 2017 instead of 2015, as previously expected.

    via Bulgaria: Bulgaria to Sign on Nabucco Pipeline in Turkey on June 6 – Novinite.com – Sofia News Agency.

  • The burgeoning Turkey-Ukraine relationship

    The burgeoning Turkey-Ukraine relationship

    Ahmet Davutoğlu, Turkish foreign secretary
    Ahmet Davutoğlu, Turkish foreign secretary

    The end of the Cold War era and the removal of the Soviet threat have opened up the path to significant changes in Turkey’s geopolitical position.

    At the same time, these changes now mean that Turkey must adopt different positions in relation to the Balkans, the Black Sea region, the Caucasus, the Baltic nations and the Middle East. Until recently, however, Turkish foreign policy approaches did not reflect these changes sufficiently — not until Ahmet Davutoğlu became foreign minister did this knot in Turkish foreign policy begin to get untangled.

    With Davutoğlu at the helm of its Foreign Ministry, Turkey has now embarked on a foreign policy of “strategic depth.” An important leg of this approach in foreign policy is the creation of new cooperative efforts with the nations that border the Black Sea. And thus, one of the most significant results of this foreign policy approach is that Turkish-Ukrainian relations are currently experiencing one of their strongest periods ever. While Ukraine is a new trade target for Turkey, Turkey is a focal country for Ukraine’s own energy initiatives.

    The strengthening and deepening of relations between Turkey and Ukraine during this period, in which both nations are making strides in their respective economies, is also a positive factor in the economic development of both countries. If we keep in mind that both nations have a need for new markets, it is evident that Turkey and Ukraine are clearly ever more important to one another. For Turkey, Ukraine — with its market capacity, central geographic position, open economy and labor market — is an attractive country in terms of both investment and the bettering of regional relations.

    As for Ukraine, which has focused on making some strong alliances by entering into a group of independent nations, it sees Turkey as an important strategic partner. One concrete sign of this is the “High-Level Strategic Cooperation Council Joint Declaration,” signed in May by both Ukraine and Turkey. It appears that this declaration is now to be followed up by plans to cooperate in the arenas of the economy, trade, energy and transportation. In essence, relations that develop between Ukraine and Turkey are very valuable in terms of their contribution to a stable and rich global economy. To wit, both of these nations possess the potential to become the driving engines in the economies of their regions.

    From energy diplomacy to cooperation on immigration

    The role played by energy diplomacy in the great strides in relations between Ukraine and Turkey is significant. At the head of this diplomacy is the Nabucco pipeline, which will open a southern corridor between the Caspian Sea, Central Asia, northern Iraq and Europe. For Europe, the Nabucco project, which aims to rescue the region from dependence on Russia as its energy provider, is of vital importance. This importance was most underscored when Russia cut off its natural gas in January 2009. Turkey and Ukraine are both key countries in the Nabucco project, which, in addition to eliminating the EU’s dependence on Russia for energy, will open up a southern energy corridor and accelerate the development of a European energy market. When the Nabucco pipeline finally comes into being, just as both of these countries will play significant roles in the energy transit route, they will also help make the acquisition of natural gas cheaper. In addition to the advantages from having both Ukraine and Turkey as parts of the transit routes for Nabucco, it will also mean the effects of changes in Russia and the capricious behavior by Iran will be less severe.

    In contrast to all of the above, Russia’s “South Stream Project,” on which it is spending billions of dollars in order to increase international dependence on Russian energy products, appears to be hold fewer comparative advantages than Nabucco. As is visible already, the fate of the Nabucco project is very important and a sensitive matter to both Ukraine and Turkey.

    In order for Ukraine and Turkey to continue supporting each other in their respective quests to grow and prosper, it is an absolute precondition that there be a strengthened network of mutual relations between the two nations. In order to speed up and open the way towards increased and strengthened relations with Ukraine, especially during this period of moves being made on the Turkish foreign policy front, it is critical that barriers blocking investment be lifted. And to this end, it is important that visa requirements must be reciprocally lifted between these two nations. Just as the trade network and developing relations between Ukraine and Turkey have made the lifting of visa requirements necessary, the citizens who heavily circulate between the two nations will be positively affected by this move. The lifting of visa requirements between Turkey and Ukraine ought to be the crowning gesture of the developing relations between these two nations.

    The lifting of visa requirements will necessitate cooperative efforts in immigration and human movement. Ukraine, like Turkey, is in a key geographic position for immigration routes chosen by people coming from numerous countries. Ukraine serves as a doorway to Europe; if Greece takes further precautions in increasing its own border security, then Ukraine’s importance to immigration routes will only increase. In the end, both Turkey and Ukraine share needs for modernization and development. At the same time, it is critical for both of these nations to stay true friends and mitigate any sources of tension between them. A strong Ukrainian-Turkish friendship and alliance will make their shared Black Sea-Caucasus goals undisputed, and instead put them onto the road towards finding solutions.

    Bringing this to a close, it is impossible not to mention the Ukrainian ambassador to Turkey, Sergiy Korsunsky. Korsunsky has played the important role of being an extremely effective catalyst in the development of relations between these two nations.