Analyst İşeri: Not enough gas to go through both South Stream and Nabucco

“Moscow has been utilizing each and every political channel to undermine prospects for non-Russian routes to transport non-Russia sources,” has said Emre İşeri.

The deal will allow Russia to construct part of the South Stream pipeline beneath Turkish waters in the Black Sea. The South Stream pipeline is to run from Russia to Bulgaria, delivering natural gas to Europe. The $21.5 billion pipeline project will transport up to 63 billion cubic meters of gas starting in 2015, if completed according to plan. Russian energy giant Gazprom has a 50 percent stake in the project, Italy's Eni 20 percent, and France's EDF and Germany's Wintershall 15 percent each.

Turkey is a partner in South Stream's competition, the $10.8 billion Nabucco project, which aims to transport Caspian and Middle Eastern gas to Europe.

Answering our questions, İşeri elaborated on the agreement between Turkey and Russia that was signed in Moscow in December by the heads of the state-owned Turkish Pipeline Corporation (BOTAŞ) and Gazprom.

Both Gazprom's CEO Alexei Miller and Russian Prime Minister Vladimir Putin described the agreement with Turkey regarding the South Stream pipeline project as a New Year's gift for Russia. Could you explain the reasons for their joy?

As a net energy exporter, Russia would like to maintain its monopoly over the European market. In order to avert any potential gas crisis, Russia prefers to diversify its export routes to Europe. Therefore, Moscow calculates that it will boost its reliability in the eyes of Europeans. In addition, it will gain an upper hand in its rivalry with the East-West energy corridor, such as the prospective Nabucco natural gas pipeline.

Turkey has a policy of diversifying both its energy resources and its suppliers. Isn't this deal making Turkey more dependent on Russia -- considering that there is also a Turkish-Russian agreement to build Turkey's first nuclear power facility -- against its policy of diversification.

Diversification of energy sources and suppliers are the two main principles of energy security. From this perspective, as a net energy importer, Turkey has been acting against those principles by relying heavily on Russian resources. Just to give you a note, the EU puts a 30 percent energy import dependency rate restriction on non-EU members. However, Turkey's dependency rate on Russia, which was 63 percent in 2008, is currently about 50-55 percent.

Could you talk about the foreign policy implications of this choice?

Turkey is restricting its foreign policy options with over-dependency. If you rely too much on Russia to meet your growing energy needs, this means you cannot act against Russian interests in your neighborhood. For instance, you cannot solve the Nagorno-Karabakh issue, and you will have limited say on the future of Syria, Cyprus, Armenian genocide allegations, etc.

Turkish officials describe the agreement as a success and say the gas security of Europe hinges on Turkey and that this geopolitical position of Turkey brings economic benefits to it. Could you talk about the economic benefits of the South Stream project for Turkey?

When you are a transit country, you earn transit fees from that. But the problem is, as an emerging regional power, Turkey should aim to become an energy hub or center rather than remaining just an energy corridor. This requires Ankara to have a sustainable energy resources mix and huge energy infrastructure investments to re-export imported energy. It is for sure that Russia does not want to see Turkey turn out be a hub or center and re-export non-Russian resources to Europe.

Turkey's energy production meets only 20 percent of its energy consumption

Are you saying that Turkey's dream of becoming an energy hub is not going to come true?

It seems that Ankara does not give priority to reaching a sustainable energy resource mix. At the moment, Turkey's dependency rate on imported energy resources -- fossil fuels -- is around 80 percent. In other words, Turkey's energy production meets only 20 percent of its energy consumption. The bill for this over-dependency on the Turkish economy accounted for $48.2 billion in 2009. Clearly, this energy profile is not sustainable. Without achieving an ideal energy resource mix, you cannot be an energy hub. At that point, by utilizing environmentally friendly energy technologies, Turkey needs to exploit all domestic energy sources, including hydrocarbons and renewable energy resources and maybe also build a nuclear power plant in order to reach that goal of becoming an energy hub. Turkey has really good renewable energy resources; for example, it has a great wind energy production capacity. According to Turkey Wind Atlas, wind potential in the country is 48,000 MW; there is 333 MWe [megawatt electric] installed capacity that generated 355 GWh [gigawatt hour] of energy in 2007. In addition, Turkey is geographically well located with respect to solar energy potential. Turkey's proven geothermal electricity capacity is 550 MWe, while only 29 MW of it has been installed. Utilizing those resources would bring economic and strategic advantages for Turkey and bolster Turkey's regional influence.

Do you expect that those capacities will be increased? What are the plans in that regard?

According to Energy Minister Taner Yıldız, the latest renewable energy law provides the required framework for the private sector to make sufficient investments. However, I am not familiar with any scientific articles in regards to the feasibility of this projection.

Turkish officials also say that other pipeline projects with which Turkey is involved do not compete with South Stream but rather complement it. Do you agree?

From the European perspective, this could be true. However, I do not think Russia would like to see alternative routes around to transport non-Russian resources to Europe. The low profile Trans-Anatolian is the lowest common denominator at this point.

‘Politics, not economics, determines the outcome of energy projects'

Do you think Russia would try to prevent realization of some alternative routes?

We know that up until now, directly or indirectly -- leaving aside BTC [Baku-Tbilisi-Ceyhan] and BTE [Baku-Tbilisi-Erzurum] -- Russian energy diplomacy has achieved success in drawing the pipeline map in the region. Given that energy policy is synonymous with foreign policy in the Russian lexicon, Moscow has been utilizing each and every political channel to undermine prospects for non-Russian routes to transport non-Russia sources. For instance, with its war in Georgia in August 2008, Moscow revealed to foreign energy investors that proposed non-Russian routes are not secure. It is possible to include Russian energy lobbies in Ankara as tools of Moscow. Apart from these, I am sure Russia is using its lucrative market, tourist potential and Ankara-favored Samsun-Ceyhan project as a bargaining chip in their energy negotiations with Ankara. And lastly, Moscow has a strong hand over the regimes in energy-rich Caspian littoral states.

The Nabucco pipeline project, which is seen as a rival to South Stream, is strongly backed by the European Union and the United States. Russia argues that both South Stream and Nabucco will be needed to carry gas from the Caspian to the European market; so does Turkey. What is your opinion?

Moscow knows very well that two pipelines cannot go online at the same time, but Ankara does not want to admit it. According to many energy experts, there is not enough gas for both to go online. To support this position, now China is a major player in the region to import energy resources from Kazakhstan and Turkmenistan.

South Stream has European partners, just like Nabucco, but why do you think the Nabucco pipeline cannot be realized despite the fact that it is less expensive than South Stream?

Politics, not economics, determines the outcome of energy projects. Russia is willing to pay for South Stream, but Europeans have neither the political will nor enough money at a time of euro crisis to support Nabucco.

‘Turkey, Azerbaijan have intense energy relations'

At the end of last year, Turkey signed another deal, and it was with Azerbaijan for a new Trans-Anatolian natural gas pipeline. The 2,400-mile, $5 billion pipeline would transport natural gas from Azerbaijan's Shah Deniz II field in the Caspian Sea across Turkey and would become part of a new Southern Corridor gas route to European markets. The stand-alone pipeline could also be connected to the proposed Nabucco pipeline project. With that agreement, do you think Turkey's dependence on Russia could be reduced?

Turkey will get 6 bcm annually from Azerbaijan, but I am not sure if it will make a significant impact on decreasing Turkish reliance on Russian imports. Trans-Anatolia with its limited capacity means that Nabucco will not be realized in the foreseeable future. By considering materialization of the Ankara-favored Samsun-Ceyhan pipeline project, several energy experts have proposed that the long-expected oil resources to the Baku-Tbilisi-Ceyhan oil pipeline from Kazakhstan would not be available, but flow through the Samsun-Ceyhan.

Do you think a development in Turkey's relations with Armenia could influence the future of that cooperation?

Following the signing of the agreement in İzmir on Oct. 25 between Azerbaijan and Turkey on the delivery and transit of Azerbaijani gas to Turkey and onward to European Union territory, I do not think Turkey's position will likely change on Armenia in a manner to undermine its intensified energy relations with Azerbaijan.

‘Turkey depends on imported fossil fuels'

What should we expect in the next 10 to 20 years in regards to Turkey's energy requirements?

If Ankara makes a radical decision and catches the train of the new energy revolution based on sustainable energy resources, Turkey's dependence on imported fossil fuels for its own consumption is likely to decline.

Can we rely on BOTAŞ's forecasts to get a clear picture of Turkey's forecasted energy consumption figures since the organization tended to exaggerate those figures, especially in the 1997-1998 period?

Because I do not know which factors made the biggest impact on these exaggerated figures showing us as dependent on Russian natural gas to generate our electricity as the worst method in terms of efficiency/feasibility, I do not know which political factors will be at play. Apart from this, the price of natural gas and the extent of natural gas market liberalization will likely play their roles in demand. As a last point, there is always the possibility of independent variables coming into the picture -- such as economic crises, natural disasters, etc. -- and making dramatic changes in projections.

PROFILE

Emre İşeri, Ph.D.

He currently works as an assistant professor of international relations in the department of international relations at Kadir Has University. He received his undergraduate degree in 2002 from the department of political science at Bilkent University. With his thesis titled “The US Policy towards European Integration: The Case of Turkey's Accession to the EU,” he was awarded a master's degree from the department of EU politics and international relations at the EU Institute -- Marmara University. He wrote another thesis, “Turkey's Security Relations with the US and the EU in the post-September 11 period” at the department of international conflict analysis at the University of Kent in the UK, and he earned his Ph.D. in 2008 from Keele University in England with his dissertation titled “The US Grand Strategy and the Eurasian Heartland in the 21st Century: With Special Reference to the Main Caspian Oil Export Pipeline BTC.” Dr. İşeri also conducted research at the Central Asia-Caucasus Institute & Silk Road Studies Program at Uppsala University. His areas of research include Euro-Asian politics, energy security and Turkish foreign policy. He has published academic articles in numerous books and journals both in Turkey and abroad.