Kate Mackenzie Turkey’s Nabucco stance: Satisfying energy needs, or ambition?

Delphine Strauss writes:

EU Energy Commissioner Andris Piebalgs was quoted today by the Russian Interfax agency as saying “We are close to signing the Nabucco deal, in late June or early July”.

He is not the only one to sound an optimistic note: everyone with an interest in the Nabucco project is publicly optimistic European governments will soon reach a deal to bring the pipeline closer to reality.

Noone seems quite so sure how that is going to happen.

Turkey’s energy minister Taner Yildiz said last week that it had not dropped its demand to use 15 per cent of the gas flowing through the pipeline for domestic consumption. This confounded EU officials who just weeks earlier thought the main obstacle to a deal was overcome.

An agreement on transit terms between the European Commission and the countries Nabucco would run through is a prerequisite for tackling the much bigger challenges of finding gas to fill the 31 bcm pipeline and financing to build it.

Turkish diplomats blame the EU, saying progress would have been much faster if Turkey had harmonised its legislation on energy with EU norms – an area of its membership negotiations still blocked because of Cypriot objections.  They protest that the 15 per cent netback idea has never been part of Ankara’s official negotiating position – merely one idea to ensure the country did not itself suffer energy shortages.

Richard Morningstar, US energy envoy, listed other ways to achieve that at a recent briefing in Ankara: Turkey could secure gas supplies from Azerbaijan or, eventually, Iraq; or there could be provisions in the agreement that would allow gas to be taken offline or even pumped back to Turkey from the west if shortages were imminent.

Turkey’s ongoing bilateral negotiations over the price and quantity of the gas it buys from Azerbaijan will certainly influence its stance on Nabucco – which could soften if it secures its own share of gas to be pumped from Azerbaijan’s Shah Deniz field.

But analysts say the stubborn negotiating tactics are less about supply concerns and more about Turkey’s ambition of becoming an energy hub, not just a transit country. Turkey is already able to re-export gas it buys from Azerbaijan and is seeking the same right from Russia.

Mr Morningstar puts it differently, saying “Turkey does have to satisfy internal gas demand but it also has a strategic vision – I believe it wants to play a major role in the Caucasus and Central Asia and this project is a way to do it.”

One thing is clear: Ankara is determined to exploit its strong negotiating hand to the full and extract as much benefit as it can before it makes any concessions.

Related stories:

Another Nabucco agreement; but where were Kazakhstan and Turkmenistan? (FT Energy Source, 11/05/09)