‘Turkey key player in realizing of Nabucco’

Sinan Oğan, director of the Turkish Center for International Relations and Strategic Analysis (TÜRKSAM), has said Turkey has a greater role to play in the creation of the Nabucco pipeline project, which is to bring gas from the Caspian region to gas-hungr

“The Nabucco pipeline can initially work with 8 billion cubic meters of natural gas a year but, looking ahead, it will need around 30 billion cubic meters of natural gas.

Judging by current conditions, this is not that easy, and thus natural gas supplies from Iran and Iraq are indispensable,” Oğan said, adding that Turkey’s strength in this project is its dialogue with the various Turkic republics, Iran, Iraq and Egypt.  

The Nabucco pipeline, about 3,300 kilometers in length, will start at the eastern border of Turkey, running through Bulgaria, Romania and Hungary to end in Baumgarten, close to Vienna. Construction is supposed to start in 2011 and it is hoped to be operational in 2014. The estimated construction cost is around 7.9 billion euros.

Oğan said it is not realistic to expect that the foundations for this project will be set by the first half of 2009. Even just the signing of agreements for Nabucco this year will be an “enormous success” considering that the Nabucco meeting in Hungary last week did not draw as many heads of state as expected.

He recently shared his thoughts on this issue with Monday Talk.

In the wake of the tensions over natural gas that have threatened relations between Russia and the Ukraine, as well as many European countries and Turkey, there was a summit held on Jan. 27 in Hungary. Is the only real factor driving the Nabucco project the threat to European countries arising from their inability to come to an agreement with Russia on the question of natural gas?

Sinan Oğan, expert on Eurasia and the Middle East     

He is the director and founder of the Turkish Center for International Relations and Strategic Analysis (TÜRKSAM) and expert on Eurasia and the Middle East. He worked as a lecturer at Marmara University and as a dean and economics lecturer at the University of Azerbaijan. He was the coordinator for the Turkish Cooperation and Development Agency (TİKA) in Azerbaijan. He has served as a researcher on energy and foreign politics regarding Eurasia and the Middle East for several institutions, including the Eurasian Strategic Research Center (ASAM), where he was the head of the Caucasian, Russian and Ukrainian department from 2001 to 2006.

Among his books are “Turuncu Devrimler” (Orange Revolutions, 2006), “Rusya’da Politika ve Oligarşi” (Politics and Oligarchy in Russia, 2003), and “Azerbaycan” (Azerbaijan, 1992).

No, this is not the only influential factor, though we could say that this is currently at the forefront of other factors. In terms of the mid and long term, the need for natural gas in the European Union will increase dramatically. And as the EU’s own consumption levels rise, its petrol and natural gas reserves are quickly being used up. If the production and consumption trends continue along current lines, all of the resources will be used up in less than 15 years from now, and the EU will be much more dependent on Russia, the Middle East, Algeria and Norway. In 2007 the EU imported 61.5 percent of the natural gas it consumed and put into storage for itself.

What is the anticipated share of Russian natural gas in future EU imports?

By the year 2030, the EU will be importing up to 80 percent of the natural gas it uses from non-EU nations, and the share held by Russia in this amount — which is currently 25 percent — will rise to 30 percent. So Russia is actually quite far from being able to fulfill on its own all of the EU’s natural gas needs; even if it wanted to, it couldn’t. Russia’s own consumption levels are rising and, in the meantime, it is also looking to sell to China and Japan. These are some of the other factors currently at work. In any case, the clashes experienced between Russia and Ukraine over the past few years, as well as the war that took place between Russia and Georgia and, of course, the fact that Russia is generally using its natural gas supplies as an effective vehicle for foreign policy, all of this is working to push the EU to find alternative sources for energy.

The Nabucco project has been on the agenda since 2002, but as of yet there hasn’t been any success in implementing it. What are the factors keeping this project from starting up?

The first work in regard to the Nabucco project goes back to February 2002, when Turkey’s BOTAŞ [state-owned Turkish Pipeline Corporation] had talks with Bulgargaz [Bulgaria], Transgaz [Romania] and OMV Erdgas [Austria], which in turn led to the signing of the Oct. 11, 2002 cooperation agreement. In February 2008, the German RWE company joined up as the sixth equal partner in this endeavor. There are many reasons that all this has not yet led to results. One of these reasons is the lack of a clear and shared energy policy in the EU. While the EU is saying that the Nabucco project should go ahead, there are also many EU nations that have gotten in line to make all sorts of contracts and agreements with Russia, which does not want to see Nabucco happen. In fact, some EU nations even want to become partners in the Nabucco project’s greatest competitor, the South Stream project, which originates from the Russian Black Sea. So the EU stance is in itself problematic.

Another problematic aspect of the Nabucco project is the securing of natural gas, is it not?

There are long-term agreements that exist between Russia and Turkmenistan and Kazakhstan –both of which could be important resources for this project. The fact that the EU does not count Uzbekistan, despite its rich natural gas resources, as a nation from which it can procure natural gas, the status of the Caspian Sea and attractive offers made by Russia to Azerbaijan all work to bring up the important question of where we will get the natural gas that is to run through this pipeline.

‘Turkey’s strength in this project is its dialogue with the various Turkic republics, Iran, Iraq and Egypt, as well as its geographic position. Turkey may well inspire these nations to participate in the Nabucco project’

How crucial is the involvement of Iranian and Iraqi natural gas in the project?

In order for the Nabucco project to be realized, first and foremost there need to be investments made in the natural gas fields of Turkmenistan, Kazakhstan, Uzbekistan and Azerbaijan by Turkey, EU nations and the US. But these countries have also sold their ready gas supplies through contracts with Russia, China and Iran. Following Russia, the country with the next largest supply of natural gas is Iran. For now, though, Iran is being kept from supplying its natural gas to pipelines running to the west; however, with new US President Barack Obama’s recent moves on the Iran front, and especially if a reformist wins in the upcoming elections in Iran, we might just see Iran-US relations at a point we might have never guessed at. Iranian natural gas must, in any case, be a part of the Nabucco project. The same goes for Iraqi natural gas. If stability finally comes to Iraq, Iraqi natural gas should be fed into the Nabucco pipeline. The Nabucco pipeline can work initially with 8 billion cubic meters of natural gas a year but, looking ahead, it will need around 30 billion cubic meters of natural gas each year. Judging by current conditions, this is not that easy, and thus natural gas supplies from Iran and Iraq are indispensable.

Turkey has made attempts to include Russia in the Nabucco project, but do you think that’s really acceptable to the EU nations, which want to reduce their reliance on Russia?

There is little doubt that Nabucco won’t have a great chance at success without the participation of Russia and Iran. As it is, the Russian ambassador to Ankara, Vladimir Ivanovsky, expressed this same thought clearly at a panel entitled “Multi-dimensioned Relations in the Energy Arena Between Russia and Turkey.” The panel took place last Thursday and was sponsored by TÜRKSAM. Nevertheless, Nabucco was imagined as an alternative to Russia’s pipelines. I would like to reiterate a proposal that has been made in the past by TÜRKSAM. Russia should bring into action the second Blue Stream pipeline project that it had worked on before and combine this pipeline with the Nabucco line to send natural gas to Europe in a larger capacity pipeline. With this, not only would it end the need for the South Stream line that Russia was planning to build, but it would be bringing about cooperation rather than competition. And since Russia’s simply being a part of Nabucco wouldn’t mean that it would have final authority over the project, this would still be good for Europe. 

Ambassador Ivanovsky reportedly said at the panel that Russia would not be a part of the Nabucco project. Were you expecting this announcement?

The stance taken by Russia on Nabucco thus far has been one of “belittling” the project by implying that no matter how much pipeline was laid, that it would be of no use if there was no natural gas to fill it with. In fact, there have been several top-level statements made along these lines. And despite the fact that the global financial crisis has deeply affected Russia, Russia has still announced that it is not going to give up on its South Stream project. Actually, we had recently believed that there was a slight chance that Russia could become a partner in Nabucco. But since the person who will have the last word on this subject is Prime Minister Vladimir Putin, I still think it is possible that Russia will alter its stance in the coming days and Russia will once again bring the proposal for the second Blue Stream to the agenda.

In the meantime, Georgia appears to believe that the Nabucco project will strengthen its own ties to European countries, and thus wants to see this project realized. Does this bother Russia?

We must not ignore the fact that Nabucco may well pass both through Georgia and Armenia. In fact, if Turkey’s new moves on the Armenia front are not derailed by the Obama administration’s recognition in April of the events of 1915 as “genocide,” there is actually quite a high chance that this pipeline could run through Armenia. At this stage, due to Russia’s general display of opposition to the project, it is not really important whether this pipeline runs through Georgia or Armenia.

You have argued that the subject of the deepening partnership between OMV and Gazprom is something that needs to be examined. Why?

Austria, which has been appointed as a project coordinator for Nabucco, and the Austrian company OMV have a passive stance on this subject. There have been some serious attempts at partnership between OMV and Gazprom. So one of the most unfortunate aspects of this project was seeing Austria appointed coordinator for it rather than Turkey, because neither Austria nor OMV are going to contribute to making it a reality. In fact, the very partnership between OMV and Gazprom is a signal of just how little initiative OMV is going to take in the Nabucco project. Only a few weeks ago, OMV agreed with Gazprom in terms of Gazprom buying a 50 percent share in the Central European Gas Hub, and in terms of new distribution and stock facilities.

To what do you tie the fact that European nations only want to see Turkey take its place as a transit country within the Nabucco project?

One of the biggest points of disagreement between Turkey and the EU these days is the question of whether Turkey is to be only a transit country, or whether it will have a say in this project. BOTAŞ currently has an equal amount of shares — 16.67 percent — in Nabucco Gas Pipeline International. The Nabucco project is one in which BOTAŞ has played a leading role. In addition, Turkey wants to meet some of its own natural gas needs with this pipeline and wants to purchase this gas at more reasonable prices than will be charged once the gas reaches Austrian borders.

The president of the European Commission, Jose Manuel Barroso, has said there should be no ties made between Turkey’s accession talks and energy security. Does Turkey use natural gas as a trump card?

Actually, the Nabucco project is not economically to Turkey’s advantage. In fact, Turkey could build another line altogether and procure its own gas needs from Central Asian republics. But this line has strategic importance. Many nations, led by Russia, of course, are these days using natural gas as a foreign policy tool. In his meetings with the EU, Erdoğan has for this reason put stress on the Nabucco project, indicating that this was a possibility for Turkey, too. In fact, the Nabucco project represents one of the most important trump cards held by Turkey in the face of the EU.

What can Turkey do in order to achieve what it wants regarding this project?

Turkey’s strength in this project is its dialogue with the various Turkic republics, Iran, Iraq and Egypt, as well as its geographic position. Turkey may well inspire these nations to participate in the Nabucco project. But not everything depends on Nabucco, and Turkey always needs to keep alternative plans alive. Turkey also needs to look at renewable energy sources and make investments in this area. You see from Obama’s appointments for energy-related posts that the new administration in the US is placing high importance on this factor, too. This is true all over the world.


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