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that amount to Turkish consumers. The second line is expected to carry the second half to consumers in Europe. Gazprom has determined the itinerary of the second line of the Turkish Stream pipeline will span Bulgaria and Serbia starting from 2020, then go through Hungary and Slovakia starting from 2021 and the second half of 2022, respectively. It will therefore serve many countries that lost out when the earlier South Stream project was scrapped.
Still a big deal? Azerbaijan will certainly benefit from the opening up of the Southern Gas Corridor, which as Socar noted in its press release, will add to the country’s income as well as contributing to Europe’s energy security. According to local newswire Trend, Azerbaijan had already exported 1.9bcm of gas to Turkey via TANAP as of the end of May since gas began to flow through the pipeline to Turkey last June. This contributed to an increase in the country’s gas exports in the first five months of 2019 to 4.9bcm, 1.8 times highest than in the same period of last year, according to Azerbaijani State Customs Committee data quoted by Trend. The ability to boost its gas exports is expected to provide a fillip to the Azerbaijani economy, which is currently emerging from a contraction in 2016 brought on by low gas prices. Baku has focussed on diversifying its economy away from dependence on hydrocarbons, as well as building new export infrastructure. The international is also expected to create opportunities for the countries along its route, not least Albania, one of Europe’s smallest economies. Xheni Kakariqi, senior manager at Deloitte Albania, wrote in the consultancy’s July global newsletter that TAP “is expected to play a major role in developing Albania’s energy market and facilitating the country’s objective of becoming a gas hub in the Western Balkans”, as well as being one of the largest-ever direct investments in the Balkan country. Yet the project has not been without controversy. Funding from European institutions for the Southern Gas Corridor has been criticised by NGOs, notably Bankwatch, both because of the investment into fossil fuels and because of the cooperation with Azerbaijan, whose poor human rights record and high levels of corruption are perennial concerns. Nonetheless, this has failed to deter the European Investment Bank and European Bank for Reconstruction and Development from entering into a €3.9bn financing agreement with TAP announced this January to advance European energy security. Gas is also viewed as a cleaner alternative to coal, which still dominates the energy mix in much of Southeast Europe. Moreover, despite the fanfare about the completion of TANAP, a report from The Oxford Institute for Energy Studies argues that “up to 2030, the [Southern Gas] corridor will most likely remain an insubstantial contributor to Europe’s gas balance.” In the 2018 report, titled “Let’s not exaggerate: Southern Gas Corridor prospects to 2030”, the think tank points to factors such as the failure to secure supplies from Turkmenistan, the decline in Europe’s demand for gas during the international economic crisis of the late 2000s and the arrival of cheaper Russian gas fro the Yamal peninsula. “While political leaders continue to paint the corridor’s prospects after 2021-22 in very bright colours, the market dynamics – in the Caspian region itself, in the Caucasus and Turkey, and in Europe – are less promising. The commercial conditions for the southern corridor’s success have deteriorated as political support for it has grown,” the paper says. “The outcome of all these changes is that the southern corridor is being initiated in a far more modest form than anticipated, aiming to provide about 2% of European gas demand in 2020, rather than the 10-20% originally envisaged.”
73 TURKEY Country Report July 2019 www.intellinews.com