4 February 2010

Regional and Global Cooperation in the Context of Turkey’s Energy Corridor and Terminal Concept

Improving the investment environment for sustaining energy supply security paves the way for establishment of a competitive and transparent market. The deepening of international, bilateral and multilateral relationships in the energy sector increases the importance of energy connections and regional cooperation processes that operate in an economy of scale.

In today’s energy sector, the diversity of export routes for producer nations is as important as the diversity of resources for consumer nations.

This means that Turkey is very important to producer nations currently implementing policies seeking to diversify their oil and natural gas export routes.

Turkey, given its unique geostrategic position, can facilitate the transport of Caspian, Middle Eastern and Central Asian energy resources to Europe and the world market by routes that are secure, economic and respectful to nature. From this perspective we see that Turkey is already the natural and de facto bridge and intersection between Asia, Europe and the Middle East. Turkey’s physical location is an “advantage” and a “value” both for energy resource producer nations and for market nations.

Turkey already has the potential and the ability to meet its own needs with any one or several of its neighbors.

Turkey’s real goal is to increase the diversity of its oil and natural gas resources so that in the future, it could serve to market a broad range of products, and permit prices to be determined by the market, rather than by monopolist arrangement.

Turkey directs its efforts toward keeping the doors open to “sustainable long term” and solid partnerships.

The sustainability of energy supply security can be achieved along the whole chain of transit partners by using win-win strategies and integrated cooperation mechanisms that should be established collectively. This is why the goals of energy market integration and the improvement and development of electric, gas and oil conduits should be primary strategic concerns for every nation.

Every pipeline from Turkey to Europe, both extant and prospective, will integrate Turkey and Europe and will affect Euro-Atlantic institutions and values by bridging the gap between connected geographies.

This integrated structure includes full membership in the EU, a strategic future with the EU, and, in every sense of the word, a partnership based on “full trust.” Turkey and the EU are energy security partners and they work together for an inseparable future. In such a future, blocking Turkey’s EU membership seems like an act of ignorance.

From this point of view, it is impossible to understand why, with no obstacles in the way, “energy chapter” negotiations have yet to get underway.

In Turkey’s search for energy security, there is nothing more natural than continuous cooperation with Turkey’s neighbors in the future.

Turkey is equidistant to all the energy resource nations and it is eager and avid to work constructively with all of them to procure gas.

Certainly, like the EU, Turkey’s main medium term goal is to achieve more balanced procurement levels from all these suppliers and to avoid relying on a single supplier.

Turkey’s efforts to this end are not the result of Turkey’s political affinity with a given nation or region, nor a shift of axis. Likewise, it does not involve political opposition to or alliance with any nation. This approach is the function of plain realism in the context of trade and economic security alone.

The orientation of Turkish foreign policy is based on three pillars. These are:

Relations with transatlantic organizations and allies, including the United States
Relations with the EU and the goal of full membership
Relations with close neighbors and regions

These elements do not exclude one another. It should be made clear that choosing one does not mean abandoning the others. Turkey’s true friends are mature and knowledgeable enough, and their connections to Turkey are deep enough for them not to perceive Turkey’s multilateral and multidirectional relations, no matter what tests they may face, as contradictory.

Consequently, Turkey actively pursues multidirectional energy policies for the purpose of maintaining energy supply security for both itself and its partners. We believe that Turkey’s importance lies in its capability and desire to develop main transit oil and natural gas pipelines. This is why Turkey is realizing east-west and, presently, north-south energy corridors.

With this idea our relations with Eurasia, the Middle East and North Africa nations are strengthened and made necessary. The completed Baku-Tbilisi-Ceyhan crude oil pipeline, the Baku-Tbilisi-Erzurum natural gas pipeline and the Turkey-Greece interconnector illustrate Turkey’s contribution to stability and cooperation in its vicinity.

By creating the “Central Asia-South Caucasus-Europe” corridor in our common interest we are intensifying our energy dialogue with the EU, and diversification projects like Nabucco have strategic importance, since they make it possible to export energy resources directly to Europe, and not only to Europe, but also to Central Asia and the Caspian Sea Region.

Two important projects in the East-West energy corridor are completed. The Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline was operationalized in 2006. The BTC pipeline accounts for 1.5% of global total oil consumption. While successfully managing the pipeline, we were honored to ship the thousandth tanker from Ceyhan to the global market on December 21, 2009. Simultaneously, we are considering an increase of the pipeline’s capacity from 1 million barrels to 1.2 million barrels, and in the future, another increase to 1.6 million barrels. Since October 2008, the BTC has been transporting oil produced in Kazakhstan’s Tengiz field to the global market. On this occasion, I would like to extend my gratitude to Kazakhstan’s president, Mr. Nazarbayev.

Parallel to the BTC project, the Caspian-Turkey-Europe natural gas pipeline project, which envisions the transport of natural gas produced in the nations of the Caspian region to Turkey, and then to European nations, has an important place in our East-West energy corridor policy. In this context, the Baku-Tbilisi-Erzurum (BTE) natural gas pipeline was completed, and natural gas has been flowing through this pipeline since July 2007. The BTE natural gas pipeline, with its annual 20 billion cubic meters capacity, is not only important for meeting Turkey’s domestic gas demand, but also for meeting some of the EU’s rising demand for natural gas. The pipeline shipped 3.66 billion cubic meters of natural gas between January and September 2009, and has already shipped a total of 9.63 billion cubic meters.

With the commissioning of the Turkey-Greece natural gas pipeline in November 2007, the first stage of the South Europe Gas Ring project was completed. Thus, the integration of Turkey’s natural gas transit network with the infrastructure of its neighbor states was realized and Turkey have become bridge procurer in natural gas. The next stage of the South Europe Gas Ring will be the extension of the Turkey-Greece natural gas pipeline to Italy through a new line under the Adriatic Sea. With the Trans Adriatic pipeline, we plan to ship a total of approximately 12 billion cubic meters of gas every year: 3.6 billion cubic meters to Greece and 8 billion cubic meters to Italy. The intergovernmental agreement establishing a natural gas transportation corridor between these three nations was signed July 26, 2007. Adriatic Sea pass that would connect Greece and Italy is planned to be commissioned in 2013.

Nabucco is another natural gas route to Europe. This pipeline project, with its maximum capacity of 31 billion cubic meters per year, will significantly expand Europe’s access to energy resources and diversify its supply routes. The intergovernmental agreement on Nabucco was signed in Ankara on July 13, 2009. The plan is to make the project operational in 2014.

Turkey greatly values Central Asian nations’ support for the Nabucco project.

Since July 2008, Syria has been receiving natural gas from Egypt as part of the Arab Natural Gas Pipeline Project, which plans to transport Egyptian natural gas to Europe via Jordan, Syria and Turkey. Currently, the pipeline has reaches as far as the Syrian city, Humus, and with the completion of 230 more kilometers it will reach the Turkish border, and the natural gas networks of these two nations will be connected. The memorandum of understanding signed between Turkey and Syria on August 20, 2009 establishes a joint working group for connecting the nations’ gas networks. The memorandum of understanding also plans for the sale of natural gas from Turkey to Syria, the transportation of Egyptian natural gas to Turkey through Syria, shipping from Turkey to other Arab nations, from Turkey to Syria and, in the future, transportation of Syrian gas to Turkey.

On October 15, 2009, a memorandum of understanding was signed regarding the development of the Iraq-Turkey Natural Gas pipeline. It considers the potential of Iraqi natural gas as a source for projects that will supply gas to Turkey and Europe.

On the other hand, in a few years the Turkish Straits will be unable to provide a secure passage for the oil transported from Black Sea. Already, 150 million tons of dangerous freight annually pass through the Straits. The Samsun-Ceyhan Crude Oil Pipeline aims to reduce this traffic of dangerous freight, and was planned as a main component of the North-South Energy Corridor. The project’s groundbreaking ceremony was held in Ceyhan on April 24, 2007.

On August 6, 2009, Turkey and Russia signed protocols on oil and gas cooperation. The oil protocol includes support for joint ventures involving Turkish and Russian oil companies and guarantee the necessary oil supply for the realization of Samsun-Ceyhan Crude Oil Pipeline project. Furthermore, Turkey, Italy and Russia signed an unofficial agreement on the Samsun-Ceyhan Pipeline project in Milan on October 18, 2009.

The gas protocol signed between Turkey and Russia on August 6, 2009, extends the “February 14, 1986 Procurement and Selling Agreement,” expanding existing pipelines for the transportation of Russian natural gas to Turkey and through Turkey to other nations, and providing for a feasibility assessment regarding the construction of new pipelines. Furthermore, Turkey agreed to do exploration and environmental research for the construction of the South Stream Natural Gas Pipeline in the Black Sea economic region.

Another important issue is the memorandum of understanding on procurement of liquified natural gas (LNG) signed with Qatar, which has important natural gas reserves, in Doha on October 6, 2009. Furthermore, ongoing bilateral negotiations with Qatar concern the construction of a new pipeline passing through Saudi Arabia, Jordan and Syria on its way to Turkey.

On October 28, 2009, we signed a natural gas agreement with Iran. According to this agreement, the Turkish Petroleum Corporation (Türkiye Petrollerı Anonim Ortaklığı, or TPAO) may prospect for natural gas in various fields in Iran’s South Pars region without bidding for a contract. Iranian natural gas may also be shipped to Europe through Turkey, while Turkmenistan’s natural gas may be shipped to Turkey through Iran.

Taner Yıldız

Minister of Energy and Natural Resources of the Republic of Turkey

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