Turkey: Gas Transit Deal with Azerbaijan Shakes Up Regional Energy Politics
That high drama production known as Turkey-Azerbaijan relations has delivered a new plot twist, with the recent signing of a deal that allows for the transit of Azeri gas across Turkish soil and into Europe, making it the first tangible step towards creating a southern corridor for the delivery to Europe of non-Russian gas.Ankara and Baku like to boast of their "brotherly relations" but their ties have frequently been strained over the last few years. As we learned from Wikileaks, Azeri President Ilham Aliyev has less than brotherly feelings towards Turkish Prime Minister Recep Tayyip Erdogan. And when Turkey signed a 2009 deal with Armenia to restore relations, Azerbaijan quickly reacted by taking down Turkish flags in Baku and hinting that other actions could be in store if the deal goes through (which it didn't).The tension between the two countries was only exacerbated by the tough negotiations that they were conducting over the terms of the transit of Azeri gas over Turkish soil. So it came as something of a surprise that Ankara and Baku, with little fanfare, inked a deal on October 25 that provides for Azeri gas to transit into Europe through Turkey. From RFE/RL's report on the deal:
Turkey and Azerbaijan have signed a long-awaited agreement on Caspian natural-gas supplies and transit to Europe, providing a boost to the EU's efforts to diversify energy supplies and setting up a bidding war for three key pipeline projects.
The agreement, signed in the Turkish city of Izmir on October 25, opens the door to shipments of Azerbaijani, and possibly Turkmen, gas to European customers.
Under the deal, Turkey is to buy gas from Azerbaijan's Shah Deniz-2 field and transport the gas through its territory to Europe. The lack of an agreement on transiting supplies across Turkey has long been the major obstacle to the EU's Southern Corridor energy project, which aims to develop routes that bypass Russian or Iranian territory .
Now all that remains is for Azerbaijan to select from three proposed pipelines -- the Interconnector Turkey-Greece-Italy (ITGI) pipeline; the Trans Adriatic Pipeline (TAP); and the EU's flagship project, the Nabucco pipeline. Earlier this month, Azerbaijani President Ilham Aliyev said that the bid "most acceptable for both Azerbaijan and our partners" would be the winner.
Representatives of the three projects made their cases at a separate meeting on October 25 in Istanbul.
But it appears now that Turkey and Azerbaijan have gone further than simply agreeing on transit terms and will work together to get the gas to Europe before any of the three proposed southern corridor pipelines are built. From Reuters:
Azerbaijan and Turkey have started work on a trans-Anatolian gas pipeline project costing some $5-6 billion, Azeri state energy company SOCAR said on Thursday, adding to an array of planned energy projects crossing Turkey.
Azerbaijan has been receptive to overtures from proponents of a so-called "southern corridor", promising to help diversify energy sales away from Russia and options are proliferating.
The latest project, led by Socar and with a Turkish partner to be named later, is planned to have a capacity of 16-17 billion cubic metres (bcm), a SOCAR official, who declined to be named, told Reuters. It could also be open to other partners.
"Azerbaijan and Turkey have started work on a Trans-Anatolian gas pipeline project from Anatolia's eastern border to its western border," SOCAR President Rovnag Abdullayev said at a conference on Thursday.
Mert Bilgin, an expert on Turkish energy politics at Istanbul's Bahcesehir University, says the Azeri gas could very well go to Europe even through existing pipelines. "Renovation of existing pipelines (with additional pumping stations) will enable Azeri gas reach Greece and/or Bulgaria. This is a practical and a very feasible option," he says. "The gas may also be transported to Albania and Italy if Azerbaijan agrees with ITGI or TAP consortia. So it is not going to be a brand new pipeline for the next 6-10 years. A new pipeline may or may not emerge in this period depending on the market conditions in Europe." (This approach appears to have Washington's support, with Amb. Richard Morningstar, the United States' special envoy for Eurasian energy, recently telling an audience in Baku that the best way to start getting Azeri gas to Europe could be through the use of a smaller pipeline, rather than with the more ambitious Nabucco. More on that from Reuters.)In an analysis for the German Marshall Fund, Fariz Ismailzade, executive vice rector of the Azerbaijan Diplomatic Academy, suggests that the transit deal indicates that after their various spats of the last few years, Turkey and Azerbaijan are returning to their strategic senses. From his GMF piece:
It is clear that the agreements between Azerbaijan and Turkey once again moved bilateral relations to a strategic level, brought a visionary approach to regional energy projects, and put aside tactical differences for the sake of bigger gains on the political and economic map of the region. Turkey and Azerbaijan showed an understanding of the importance of this project and a willingness to cut a deal despite previous disagreements and a chill in bilateral relations.
Conversely, it's probably safe to say that this new deal between Turkey and Azerbaijan puts perhaps a final nail in the coffin of the frozen rapprochement deal signed between Ankara and Yerevan in 2009, which has since been stalled over the question of the disputed territory of Nagorno-Karabakh. At the signing of the transit deal, PM Erdogan made it clear that his country and Azerbaijan were back to being "brothers." Turkey will “fight shoulder to shoulder with Azerbaijan until the occupation of Karabakh comes to an end,” Erdogan said at the opening ceremony, which took place at an oil refinery in İzmir. “The occupation of Karabakh saddens Turkish nationals as it does Azerbaijani brothers."