Page 18 - GLNGl Week 24

GLNG MIDDLE EAST GLNG

Source: Botas

Turkey to build gas pipeline

to supply Nakhchivan

PIPELINES & TURKEY’S state gas grid operator Botas has the Kurdistan Workers Party (PKK), forced the
TRANSPORT opened a tender for a gas pipeline to supply closure of the pipeline.
Azerbaijan’s exclave of Nakhchivan. The new Ankara has been in no hurry to repair the
supply route would sideline Iranian gas sales line, claiming that the attack is a “force majeure,”
to Azerbaijan and comes as Ankara is trying to meaning it isn’t liable to compensate Tehran for
repair its relationship with the United States. any losses.
Sandwiched between Iran and Armenia and The March attack was certainly fortuitous for
sharing a tiny border with Turkey, Nakhchivan Turkey.
has long relied on Iran for natural gas for both The month before, Turkey’s deputy energy
domestic heating and power generation. minister Alpaslan Bayraktar told a conference
The move follows an announcement in Feb- in Istanbul that Ankara planned to use the avail-
ruary by the presidents of Turkey and Azerbaijan ability of cheap LNG delivered by ship to force its
that they planned to fast track the construction pipeline gas suppliers to cut their prices.
of the pipeline, which has been on hold since “This is a signal to our existing pipeline sup-
2010, when an agreement was first signed to pliers that they need to be flexible,” he said.
build it. Global LNG prices were already at historic
Botas’ tender calls for the design of a pipe- lows before the coronavirus (COVID-19) pan-
line running around 80 kilometres from the demic forced them lower still, meaning Turkey
eastern Turkish city of Igdir to the border with has been able to replace Iranian gas with LNG at
Nakhchivan, capable of carrying up to around a fraction of the cost charged by Tehran. Turkey has been
2bn cubic metres of gas, which is more than four And while the threat of undercutting Iran’s
times the enclave’s consumption. exports to Nakhchivan can only improve Anka- able to replace
Design work is to be completed by early 2021, ra’s hand in contract talks with Tehran, the
meaning the line could be constructed and oper- potential for leverage doesn’t end there. Iranian gas
ational as early as 2022. Turkey has for the past few months been
Nakhchivan has been importing Iranian attempting to improve its fractious relations with LNG at a
gas under a swap agreement between Baku and with Washington, which has in turn long been fraction of the
Tehran inked in 2004, under which Azerbaijan pressing both Turkey and Azerbaijan to limit
supplies gas to Iran’s isolated northwestern bor- their economic ties with Iran. cost charged by
der city of Astara, which has no gas supply from The prospect of Turkey and Azerbaijan end-
inside Iran. ing or limiting their gas imports from Iran will Tehran.
In return, Iran supplies 85% of that volume to certainly appeal to the Iran hawks in the Trump
Nakhchivan, with the 15% differential acting as a administration, all the more so given that the
transit fee – terms which Baku has for some years past year has seen the US become one of Tur-
been seeking to renegotiate. key’s main gas suppliers. As of February, the US
The prospect of a rival gas supply line from was accounting for 18% of Turkish gas imports,
Turkey to Nakhchivan could persuade Tehran to compared to only 15% from Iran.
be more amenable, but the planned line prom-
ises to have a substantially wider impact. David O’Byrne is an Istanbul-based journalist
Turkey also imports Iranian gas, but that flow who covers energy.
has been halted since March 31 when a sabotage This story originally appeared on eurasianet
attack, which the Turkish authorities blamed on here.™

P18 www. NEWSBASE .com Week 24 19•June•2020