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first commercial gas reached Turkey later the same month. “Today TANAP is ready to supply natural gas to Europe and we are expecting the work on TAP pipeline to be completed,” commented Rovnag Abdullayev, president of Socar, in a July 1 statement. Abdullayev also stressed the cost savings during the major construction project: in contrast to the cost-overruns at many major infrastructure projects, the initial estimated cost of $11.7bn was later revised down to under $7bn. “Azerbaijan has demonstrated to the world that we are more than capable of delivering complex transnational projects both at home and abroad in a timely fashion with high efficiency. During the implementation of TANAP, SOCAR and its partners saved about $5 billion, reducing the overall cost of the project by 40%. This is a great achievement of the Azerbaijani and Turkish people,” Abdullayev said according to a press release from Socar.
Decades in the making. A primary goal of the Southern Gas Corridor is to reduce Europe’s dependence on gas imports from Russia, so parts of the continent would no longer be vulnerable to Moscow’s “energy diplomacy”. This became more urgent with the “gas wars” of the mid 2000s, when Gazprom sporadically turned off the taps, mainly to punish Ukraine. Russia’s annexation of Crimea in 2014 cemented the antagonistic relationship between Russia and Ukraine, and led to tit-for-tat sanctions imposed by Russia and western nations. It was actually Turkmenistan, the desert Central Asian nation estimated to have the world’s fourth largest gas reserves, that was initially seen as the main supplier of the Southern Gas Corridor when the concept was first sketched. Since then, however, China has moved into Central Asia in a big way, building a huge network of pipelines spanning the region. Turkmenistan is also in talks with Russia’s Gazprom on a possible medium-term gas supply deal, while Ashgabat is pursuing the longer-range goal of building the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. In the meantime, plans for a subsea pipeline across the Caspian Sea from Turkmenistan to Azerbaijan have been bogged down in the failure so far to share out influence in the Caspian among the five littoral states. Instead, Azerbaijan is set to start exporting to Europe within the next year, once TAP is completed. The gas will come from the second phase of the giant offshore Shah Deniz field being developed by an international consortium led by BP. “The completion of #TANAP serves as an important component of the southern gas corridor, which aims to transport energy supplies from #Azerbaijan to Europe via #Turkey, circumventing #Russia," commented Stratfor analyst Eugene Chausovsky in a tweet.
Diversifying supplies. The Southern Gas Corridor is not the only project being pursued by European states keen to wean themselves off Russian gas. EU member Romania is developing its offshore oil and gas resources in the Black Sea, prompting investments into pipeline infrastructure, including to neighbouring Moldova, which until the opening of the Iasi-Ungheni pipeline was wholly dependent on Russian gas. Further north, Poland and Denmark made a final decision in November 2018 to carry out the construction of Baltic Pipe, a key energy infrastructure project that is set to reduce Poland’s dependence on Russian gas imports. Other countries in Central and Southeast Europe are building LNG infrastructure as they look to another alternative to increase their energy security. Bulgaria, for example, recently purchased its first US LNG, and there is strong interest among Central European states such as Hungary in Croatia’s planned LNG terminal on the island of Krk. Meanwhile, Russia is building its own pipeline infrastructure to Europe, which remains heavily dependent on Russia gas. New pipelines such as Nord Stream 2 and the Turkish Stream (aka TurkStream) extension will allow Russia to serve European markets without transiting Ukraine. Gazprom is rushing to complete the Nord Stream 2 pipeline that will run to Germany via the Baltic Sea before the start of 2020 prior to the expiry of the gas transit agreement with Ukraine, though it is unclear whether this deadline can be met. As of May 2019, Gazprom had already secured €6bn in financing out of the previously estimated cost of €9.5bn, and received all permissions for construction besides that of Denmark, the territorial waters of, which the company said it was ready to bypass. Russia is also investing into the Turkish Stream natural gas pipeline, with a total annual capacity of 31.5bcm. The first line will carry half
72 TURKEY Country Report July 2019 www.intellinews.com