Caspian Report - Issue 06 - Winter 2014

GARETH M. WINROW
26
The priority for Turkish officials is to
ensure that Turkey’s energy needs
are first met. Ambitions to become a
major energy transit and a key energy
hub are important but nevertheless
IF TANAP IS EVENTUALLY UPGRADED TO ACCOMMODATE
60 BCM OF GAS, THE SGC WOULD BECOME AN IMPORTANT
CONDUIT FOR THE TRANSPORTATION OF ENERGY TO
MARKETS IN THE EU.
secondary objectives. The realization
of TANAP will enable Turkey to
increase gas imports from Azerbaijan.
Although Turkmen gas is unlikely to
reach Turkish markets in the foreseeable
future, Turkey could soon be importing
fairly considerable volumes of
gas from Iraqi Kurdistan. This could
enable Ankara to reduce its dependence
on gas imports from Moscow.
According to the International Energy
Agency, in 2012 Turkey imported 45.3
bcm, 27 bcm of which was supplied
by Gazprom.
In order to become an important
gas transit state Turkey will need to
revise its Natural Gas Market Law to
provide for an effective gas transit regime
in line with the EU’s acquis. The
transit agreement concluded with
Azerbaijan for TANAP was in effect an
ad hoc arrangement. Furthermore, in
order to realize its ambitions of becoming
a major energy hub, Turkish
policy-makers will need to build more
pipelines and expand Turkey’s energy
infrastructure and accelerate work on
developing an energy stock exchange
in Istanbul to allow the open trading
of gas.
The realization of the SGC in its initial
format will go some way towards
meeting Turkey’s objectives with regard
to its energy policy. Azerbaijan,
though, will have the ultimate say over
which gas from what sources will be
transported via TANAP. The transportation
of gas to Europe via Turkey from
non-Azerbaijani sources may only
be possible in the longer term, when
TANAP could be greatly expanded.
Turkey’s backing for the South Stream
project is unlikely to endanger the
prospects for the SGC. After fierce
lobbying from Moscow, on December
28, 2011 Ankara finally agreed to the
construction of the offshore section
of the South Stream network through
Turkey’s exclusive economic zone in
the Black Sea. This will enable South
Stream to bypass Ukraine’s exclusive
economic zone. It is important to note,
however, that this agreement between
Turkey and Russia was only reached
after decisions had been taken to go
ahead with TANAP – ie., after important
progress had been made on realizing
the SGC. The official position
of Turkey is that South Stream and
TANAP are complementary rather
than rival projects, and will both help
to meet Europe’s rising energy needs.
CONCLUSION
The final investment decision for
the expansion of work at Shah Deniz
marked a new phase in plans to realize
the SGC. The details of the SGC in
its initial phase of development to
2019 have been significantly clarified.
It remains to be seen how the SGC can
be further developed, assuming that
Europe’s energy needs require the
further expansion of the corridor. Officials
in Baku will be eager to ensure
that Azerbaijan maintains control