Construction of the 3,200-kilometer-long pipeline, the cost of which is estimated to be around $9 billion, is scheduled to start in 2011 and once completed transport up to 31 billion cubic meters of gas annually from the Caspian and Middle East regions to Southeastern Europe and beyond, which should help decrease reliance on Russia. The target date for gas to start flowing is 2014, which may prove to be too ambitious given that the pipeline has been plagued by holdups and problems since its conception.Since July there has been little progress, which is in part the fault of Turkey. Although Ankara continues to deny it, one of the biggest problems remains Turkey’s failure to reach an agreement with Azerbaijan on a new transit agreement. For the whole project, Turkey has played hardball, using its geostrategic location as leverage to get more than a fair deal for its role as a transit state. This combined with difficulties related to funding and gas sources accounts for a lot of the delay. The participation of Azerbaijan is absolutely necessary in the first stage of the Nabucco project to make it financially viable, and patience is starting to fray over rumors that Turkey is again overplaying its hand.
Azerbaijan is key because for the moment Baku remains the only reliable gas supplier, since Azerbaijan’s gas will be brought on stream in 2014. Negotiations between Ankara and Baku have been going on for months and have not been helped by all the political turmoil over Turkey’s rapprochement with Armenia, which has made many in Azerbaijan think twice about their relationship with Ankara. Azerbaijan has been giving Turkey “mate’s rates” for gas -- way below world market prices -- for years, so it is not that surprising that Baku now feels they should get a better deal. Azerbaijan no longer wants to be viewed as Turkey’s “little brother.” They see themselves as a crucial partner to the West and should be treated accordingly. Baku is keen to get its gas to the reliable and abundant Western market, but at the same time has other options on the table, and threats of selling their gas elsewhere have become more frequent. Furthermore, Baku also represents the “gateway” to Central Asia, which may prove vital for the long-term prospects of Nabucco as long as the West refuses to do any gas business with Iran.
The West also hopes to further seduce Turkmenistan and Uzbekistan as regular tensions between these two states and Russia have deteriorated their relations. Tashkent and Ashgabat would like to have more reliable partners and are increasing efforts to diversify their gas export routes. Following the blasts that took place on a northbound pipeline in April 2009, Ashgabat no longer considers Gazprom a trustworthy partner and is looking for new customers for its gas. In December, two pipeline projects were completed, carrying Turkmen gas to China and Iran. While this is good news for Turkmenistan, it is not necessarily so for the West as it could be seen as a threat to possible Turkmen participation in projects such as Nabucco. No doubt Nabucco will emerge one day, but it may still be a long time coming given that it has become so politicized.
But this may not worry Ankara too much as at the present time it has many energy options on the table. Turkey’s grand plan is to transform itself into the world’s largest energy hub and transportation corridor linking the East and West. This is in line with Turkey’s new and increasingly independent foreign policy, with Turkey doing what is best for Turkey first and foremost. Ankara wants to transport and trade gas with the maximum number of partners, suppliers and customers, whether that is Azerbaijan, Iraq or Russia, where there are increasingly close relations with the Kremlin on several gas and oil pipelines: South Stream, Blue Stream Two, Samsun-Ceyhan and other pipelines through Turkish waters. Or with Iran, where Turkey has finalized a cooperation agreement which foresees the development of bilateral projects in the gas sector. Ankara believes that once the political situation changes -- for example, if Tehran abandons it uranium enrichment program -- Iran would be allowed to start exporting its gas to the West. Turkey will therefore play the long game and prepare the ground for this development even though many in the West remain nervous over Ankara’s increasingly close ties with the clerics.
There can be no doubt that Turkey is using its advantageous location to play the energy game to its best advantage even though some of the projects may rival Nabucco. Rather, Ankara sees all these projects as being complementary to each other and itself as the “key” to supplying the gas-guzzling West with the best possible terms for Turkey. It seems to me that the Putin effect is beginning to take effect in Turkey.
