Vol. 5, No. 13 (July 01, 2012)

TANAP and the energy security of Europe

Fikrat Sadykhov
Professor of Political Science
Western University, Baku

The inter-governmental agreement on the construction of the Trans-Anatolian Gas Pipeline (TANAP) that Azerbaijan and Turkey have recently signed is important not only from an economic point of view, but has a serious geopolitical connotation as well.  Indeed, one can call the agreement a historic one, including because Azerbaijan, which will contribute 80 percent of the cost of this project, is assuming all the responsibility for the completion of this effort. 

Interest in the project is quite high both from the transit companies and from the European importers involved in the transit of gas to Europe.  TANAP will extend from the Georgian-Turkish border to the Turkish-Bulgarian border and thus provide gas to Central Europe and beyond.  The Trans-Anatolian gas pipeline extending from east to west in Turkey will thus become a constituent element of the South Gas Corridor.  Its minimum throughput capacity will be 16 billion cubic meters a year when the pipeline goes online in 2017.

Beyond any doubt, the project will be profitable considering the route and the low cost of gas to purchasers at the far end of the pipeline.  Indeed, a unique situation is being created, in that over the next 30 to 40 years, the pipeline will be capable of fully accommodating Azerbaijan’s westward gas export.  Indeed, the amounts of gas the pipeline will carry to the west are slated to double by 2025-2030.

The primary source in TANAP’s first stage will be the Shahdeniz-1 field; later, the Shahdeniz-2 field will come into play.  At still a later stage, it is likely that the dominant source will become the deep lying gas supplies of the Azeri-Chirag-Guneshli fields.  The latter is scheduled to be developed under a contract expected by the end of this year.

As far as the countries of the region are concerned, the signing of the accord is unlikely to push Turkmenistan to use the Trans-Anatolian pipeline given that TANAP is connected in the first instance with the interests of Azerbaijan and Turkey and not with any third country, such as Turkmenistan or Russia.  Moreover, Turkmenistan has already indicated that it would prefer selling its gas at its own border rather than developing a broader international pipeline system.  However, according to information on hand, at present, not a single company has expressed a desire to participate in the construction of a gas pipeline there.

As far as the interrelationship of Turkmenistan and Russia are concerned, it would likely become significantly more complicated if Turkmenistan were to join the Trans-Anatolian Gas Pipeline system.  This project is in direct competition with Russia’s Gazprom, which has its own various projects for bringing gas to Europe.  It also stands as a serious irritant for Iran, which finds itself in isolation as a result of sanctions imposed on it by the European Union on July 1.  It is thus understandable that the main task for Azerbaijan is finding new and long-term markets for its own gas. 

The economic side of things is also a matter of interest.  Who stands to benefit more from the completion of TANAP, Azerbaijan or Turkey?  It is obvious that both in a financial and in a strategic sense, the profits of the two sides are practically equal.  Azerbaijan has already emerged as a major gas exporter as a result of its gas fields, such at Shahdeniz, Umid and Absheron.  In future years, we will witness the discovery of new gas fields.  According to international estimates, Azerbaijan’s proved gas reserves equal 2.6 trillion cubic meters.  And this speaks of broad opportunities of the country as far as the diversification of its gas transportation network is concerned. 

All energy projects initiated, financed and realized by Azerbaijan up to now have been successful, a track record that is very important both for us and for our partners.  Azerbaijani gas is a new source of energy for the world community and for Europe.  European markets are very attractive for us, not only because they are so large, but because they are regulated by law and thus more predictable.  And it is here that we approach the important issue of the balance between the interests of the producer and those of the consumer, not forgetting of course the interests of the transit countries.  The coincidence of these interests will make possible the successful realization of future energy projects as well.  Azerbaijan has already recommended itself as a reliable partner from the economic, energy and political point of view.  There is no doubt that the energy sphere of our cooperation will continue to be successful.  However, this is certainly not the only issue involving mutual interests.

The TANAP accord signed in Istanbul on June 26 is a new strategic symbol of the brotherhood and cooperation of Azerbaijan and Turkey.  This project is no less important than the earlier ones.  Today TANAP is understood as the most important long-term project, which our two countries will successfully realize despite the dissatisfaction and resistance of certain forces in the region.  This project stands to guarantee the diversification and transportation of natural gas from the Caspian Basin and Central Asian through Turkey to Europe and by virtue of that will ensure the energy security of European countries, on one hand, and deepen the strategic partnership of Turkey and Azerbaijan, on the other.  As a result, it will promote regional development, as well as the flourishing and strengthening of the role of Azerbaijan in the region.