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Turkey at the Crossroads 14 janvier 2013

Posted by Acturca in Caucasus / Caucase, Central Asia / Asie Centrale, Energy / Energie, EU / UE, Russia / Russie, Turkey / Turquie.
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The Financial Daily (Pakistan)  Tuesday, January 14, 2013, p. 4

Tahir Bhutta, Air Commodore (Retd)

Energy security has assumed a pivotal role in the economic and energy security agendas of the European Union and the USA. Europe’s gas imports which account for 60% of its total energy requirements, nearly half of this is imported from Russia. Over the next about 20 years, this share is going to rise up to 80%. This indicates Europe’s dependence on Russian supplies. EU is actively pursuing a supply and source diversification agenda besides emphasizing on the efficient use of energy. It wants to ensure that it has a supply system which is resilient enough against disruptive events. EU has therefore, become a strong competitor in the international energy market besides China and India- the other two strong competitors.

According to EIA International Energy Outlook 2008, the world energy demand would increase by 50% by 2030. Most of the demand increase would come from China and India whereas, the demand increases from EU would be modest. According to the same source, the world oil demand would increase from 84 Million Barrel per day (MBP) in 2005 to 113 MBP in 2030. Consumption of natural gas would also witness an increase from 104 Trillion Cubic Feet (tcf) in 2005 to 158 tcf in 2030. Gas consumption dependence of EU alone is expected to jump up to 70% during the same period. The supply of this increased demand of energy would get restricted to a few countries, 70% of this would still be coming from the OPEC countries and out of this 55% would mainly be coming from the five Middle Eastern countries i.e. Saudi Arabia, Iran, Iraq, Kuwait and the UAE and the remaining from Russia and the former Soviet Republics.

As regards the proven gas reserves, both Russia and the Middle East, each hold 1/3 and 2/5 of these shares. Russia and Iran jointly hold 42.5% of Worlds proven gas reserves. The natural gas market is largely regional in nature as compared to the oil market which is international. Russia is the main supplier of energy to Europe, providing about 33% of the oil requirements and 42% of the gas requirements of Europe. This makes Europe heavily reliant upon Russian supply of energy in the form of price hikes and supply interruptions.

The 2009 European energy crises triggered by Russia has forced EU to reduce its dependence upon Russia and explore new sources of energy to meet its growing energy demand. Energy supplies from Middle East through tankers have become risky due to the ongoing nuclear tussle between USA and Iran. Russia which supplied natural gas to Europe through Ukraine lost the confidence of Europe after it closed the supplies in 2009 on the issue of price hike. Most of the Russian pipelines pass through countries with which Russia has conflicts. That means supply of gas to European countries is hostage to Russian relations with the government in these states. This makes Russia an un-reliable partner in the eyes of the West European states.

Central Asia and the Caucasus with their proven and untapped reserves of oil and gas have now attracted the attention of European and US oil and gas companies. However, the area is land locked and totally dependent upon Russia for the exploration and transportation of its energy resources to the outside world. After the breakup of the former Soviet Union, American and the European companies rushed into the area for winning the oil and gas exploration contracts. They were however, faced with the problem of transporting their discovered resources to Europe and finally decided to go overland and use pipelines.

EU as part of its new ‘Energy Policy’ is attaching great significance to the Black Sea region for the secure supply of energy and wants to reduce its dependence on the East from where it was meeting 53% of its energy needs by the end of 2008. Un interrupted supply of Middle energy is very vital for the running of European economies and maintenance of their social order and welfare of their people. However, it is expected to take quite some time to develop the new transportation routes of energy due to conflicting claims to ownership of the routes and the prices of energy products. The ongoing separatist conflicts and disturbances in Abkhazia and South Ossetia in Georgia and Nagorno Karabakh in Azerbaijan are sources of concern for the Europe as the ongoing conflicts are a source of threat to the new projects and no western company would like to invest in such projects till the time it is satisfied with the security situation around these routes.

The European Union in its new « Strategy for Central Asia 2006 » promises to develop the « Inter State Oil and Gas Transport to Europe (INGATE) and the « Transport Corridor Europe-Caucasus-Asia (TRACECA). This indicates the importance EU is giving to ensuring safe and guaranteed supply of energy to the EU countries.

Caspian Sea region is an area of great significance and of strategic importance since centuries because of the oil reserves that it contains. The region is known to have oil and gas since the middle ages when the Zoroastrians used to come on pilgrimage to the Apsheron peninsula for worshiping the sacred flames from the ground which even today burst out of the ground. The new Great Game of today focuses on the same great energy reserves in the Caspian Sea area. According to an estimate Caspian Sea contains the world’s biggest fuel reserves. It is assumed that Caspian Sea may contain from 50 to 110 billion barrels of oil and from 170 to 463 trillion cubic feet of natural gas. The estimated potential of Azerbaijan and Kazakhstan hydro carbon reserves is around 130 billion barrels. There is a great rush of American and European oil companies vying for the contracts. An estimated 30 billion dollars have already been invested by these companies in establishing infrastructure alone. The US Energy Security policy during Bush the senior era termed « Caspian Basin as a rapidly growing new area of supply of the hydro carbons ». The report recommended establishing strong commercial interaction with Azerbaijan and Kazakhstan.

USA and Europe want to break Russian monopoly on the oil and gas supplies to Europe. They want their energy supplies to become free from Russian control. They do not want Russian control on central Asian and Caspian oil and gas reserves either. US efforts to break Russian monopoly on Caspian reserves resulted in lying of the huge Baku-Tbilisi- Ceyhan (BTC) gas pipeline. USA at the same time does not want any pipeline carrying Central Asian oil and gas to pass through Iran either because of its lingering political and nuclear dispute with USA and the West. The only other country in the region which can act as a hub for the network of pipelines to pass through its territory for reaching Europe and beyond is Turkey.

Turkey is the only Eurasian country in this area which does not have any hydro carbon reserves and is therefore, heavily dependent upon energy supplies from abroad. It meets 92% of its oil demand and 98% of its natural gas requirements through imports from regional countries mostly Russia.

Turkey is located in a region which can acts as the energy hub and a bridge for the transportation of Middle Eastern, Central Asian, Caucasian and the Iranian oil and gas to the energy thirsty markets of Europe. Around 3 Million Barrel per Day (mbd) of oil passes through Turkish straits of Bosporus and Dardanelles. The amount of oil transported through these Straits by the oil tankers was estimated to have reached to a figure of around 4 mbd by 2010. Turkey faces environmental threats due to extensive tanker traffic through the two straits as any accident in the straits can cause disaster for the city of Istanbul and the environment around it besides disrupting the tanker traffic indefinitely causing huge losses to the transportation companies and the Turkish government.

Turkey occupying a strategic location and acting as a bridge between Europe, Middle East and the Central Asia came up as a natural choice for Europe. Turkey occupies a region around which almost half of the world oil and gas supplies are produced. It therefore, can provide a safe, efficient and reliable conduit for transportation of Middle Eastern, Caspian, Central Asian, Caucasian and the Russian energy supplies to the world. However, these energy projects have increased friction and competition between Turkey and other powers in the region which include Russia and Iran. The competition for having control on the transportation of energy routes to the Europe has generated rivalries amongst the regional players resulting in delays in completion of some economically viable projects.

The increasing oil and gas traffic through Turkey enhances its role in energy security of the world. The development of « East West Corridor », a network of integrated system of oil and gas pipelines delivering energy supplies from Central Asia and Russia to Europe through Turkey has further enhanced Turkey’s role as a safe and reliable hub and route. This network of pipe lines includes the already commissioned Russia- Turkey Blue Stream, Azerbaijan-Turkey BTC, the Iraq- Turkey oil line, Iran- Turkey natural gas pipeline, and an Azerbaijan- Turkey natural gas pipeline. In addition to these, a « North- South Corridor » and several « Straits Bypass » pipeline projects are under consideration. These pipeline projects have enhanced Turkey’s geo-political importance to the world and increased its significance as an important, safe and efficient energy transportation hub besides providing it revenues in the shape of transportation fees.

In early 2011 Turkey’s regional role and as energy transportation hub became more important with the NATO’s military intervention in Libya. Turkey enjoys a unique position whereby it can act as energy hub for transportation of energy not only from Central Asia and Caucasian sources but also from Russian and Iranian sources to Europe and the Middle East even. This elevates its position as a secure energy route for world energy market.

Turkey too is however, dependent for most of its energy needs on Russia and does not want to annoy it, but at the same time wants to take advantage of the opportunity being extended to it by the EU and the USA. Turkey has so far played a balanced role by keeping Russian engaged in some of the pipeline projects passing through its territory and has also offered its territory for the passage of Russian pipelines to Europe to reduce tanker traffic through the Straits of Bosporus. Russia however, does not want to lose its hold on supply of energy to European markets. It is interesting to find how Turkey maintains a balance of interest between Russia and Europe in this new pipeline politics.

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