Turkey, Azerbaijan Getting Closer To First Oil-Pipeline Partnership

Article Summary
Meliha Okur reports that Turkey is nearing an agreement with Azerbaijan over the Trans-Anatolian Pipeline, of which Azerbaijan’s state-owned oil company will own 80%, and Turkey 20%. It will pass through both countries and Georgia before reaching Europe. The agreement will mark Turkey's first partnership in one of its pipelines.

Although Turkish Minister of Energy Taner Yildiz said that the Trans-Anatolian Pipeline (TANAP) agreement will be signed in June, there is still no official word about it. But in Ankara, while both sides are being discreet about partnership shares and prices, the prevailing feeling is that Turkey and Azerbaijan have reached the final phase of negotiations.

Ankara is expected to have a 20% share in the project. There was an upheaval when the ministry initially said that the state-owned BOTAŞ Petroleum Pipeline Corporation would have a 5% share, while its parent company, Turkiye Petrolleri Anonim Ortakligi (TPAO), would receive 15%. This unequal partnership caused many problems between the two, but both parties were ultimately were given equal shares. Although we constantly criticize BOTAS, the pipeline company’s experience should not be ignored. It has to have an active role in the TANAP project, alongside TPAO.

Turkey receives six billion cubic meters of gas per year from the Shah Deniz 1 project. The Shah Deniz 2 project will be producing 16 billion cubic meters. We will be using six billion cubic meters of it, and the remaining 10 billion will move through an 1800-kilometer pipeline that will traverse from one end of Turkey to the other. Its annual capacity will be 24 billion cubic meters.

Azerbaijan’s national oil corporation, SOCAR, will own 80% of TANAP, and it will finance the $7 billion project that will pass through Azerbaijan, Georgia, Turkey and on into Europe.

This will be the first time Turkey becomes a direct partner in a pipeline. Until today, Turkey was only given crumbs by the consortia that owned and operated the pipelines. This situation is changing as we are headed into a strategic cooperation with Azerbaijan. With TANAP, Turkey and Europe will be able to diversify their sources of gas even before Iraqi and Egyptian sources are activated.

TANAP is particularly important for Azerbaijan, as it will be the most important gateway into Europe. An uninterrupted gas supply from Shah Deniz will strengthen Azerbaijan’s hand internationally. If Turkmenistan’s gas is also linked to TANAP, Azerbaijan is bound to become the most critical country in the region.

Why is TANAP so important for Turkey?

It will give Turkey an important share in the gas flow to Europe. Two partners are also thinking of linking the Nabucco or Trans-Adriatic line to the system, but negotiations are still ongoing. In the past, the region only had resources. Now it is becoming a rich market for buyers and sellers, which will lead to more reasonable and stable gas prices. This joint operation could soften Azerbaijan’s uncompromising attitude in its Armenian policy, and thus boost Turkey’s influence over Armenia and the entire Caucusus.

Found in: turkey gas pipeline, turkey, tanap pipeline, sahdeniz gas projects, gas, azerbaijan gas

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