Ukrainian Signs In Turkish March: New Reality Of Energy Policy

By Sergey Korsunsky, Extraordinary and Plenipotentiary Ambassador of Ukraine to Turkey

The Prime Minister of the Republic of Turkey Recep Tayyip Erdoğan said one of those sayings, which perfectly characterizes current role of Turkey within international political and economic arena: "Turkey is the extreme Eastern point of West and the extreme Western point of East". The seventh economy in Europe and the seventeenth in the world, the second army in NATO after the USA, 76 millions of population, the average age of which is 27,7, can't be ignored by the key geopolitical players, no matter what the problem is - starting from Near East regulation and ending with oil and gas transportation.

Turkey borders the countries of Near East, Caucasus and Balkans, controls strategic straits and strives to take a significant part within the dialogue between Eastern and Western civilizations. It's not a coincidence that the newly elected US President B. Obama paid his first important visit to Turkey and George Friedman, the founder of the online-group of strategic analysis "Startfor", predicts that the influence of this country already in 20-30 years will get out of the borders of Black Sea region and Near East. He thinks, that already within a medium-term prospect Turkey will turn into a strategic player of the world class. Pay attention: meanwhile many countries struggle for the sympathy of IMF, the Head of Turkish Government states that he will sign the agreement with the fund only on the conditions of Turkey. The Government of the country gradually and with dignity negotiates on the EU joining and is able to insist, when talking about the election of NATO Secretary General. Economic crisis affected this country: significant reduction of GDP and export, increase of unemployment rate. At the same time - no bankrupt bank, stable currency, and continuous construction boom.




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This amazing stability of several last years has allowed Turkey to gain and promote the image of the state as a trustworthy partner. The USA and Russia, as well as the EU lead dialogue on many key issues of international policy, including biggest infrastructure projects, which are able to change geopolitical configuration directly by Ukrainian borders.

We should especially underline, that for our country Turkey is not only a popular resort, but also a state with which we have multibillion goods turnover with the biggest surplus among all trade partners. We can't ignore that Turkey has been chosen a non-permanent member of the UN Security Council, its representative Dzheyla Pazarbaziolu heads IMF mission in Ukraine, Movlud Chavushoglu is a vice-president of the Parliamentary Assemble of the European Council and Şenes Erzik is a vice-president of UEFA.

btd-And still, among most important strategic problems for Ukraine, the solution of which directly concerns our geopolitical interests and in which the role of Turkey is a decisive one, we should specify the establishment of new ways of oil and gas transportation from Middle Asia and Pre-Caspian region to Europe. The oil pipeline Baku-Tbilisi-Ceyhan (BTC) with capacity of 1 mln barrels a day  has already allowed to change the situation in Caucasus qualitative: Azerbaijan has gained access to deep-water ports of the Mediterranean, and Georgia has become a transiting state. With the flow of Iraqi oil from Kirkur to Ceyhan, and in the prospect of Egyptian and Iraqi gas this port will promote its significance that can only be compared with the significance of main ports of Persian Gulf.

This year has been marked by a rapid intensification of exporters as well as consumers of energy sources within the context of the establishment of new, alternative ways of oil and gas transportation. However, if oil is a global good which is relatively easy to transport and due to this fact the global oil market is pretty diversified, then gas is practically the only product remaining "regional". That is why natural gas and particularly the determination of the ways of its transportation, remains now one of the most urgent problems of economy, as well as policy in general.

It's enough just to glance at the map of developing fields in Russia and Central Asia and on operating and planned gas pipelines to see: in practice at the current stage the point is in establishment of three energy transporting corridors in Eurasia: North ("Nord Stream", Yamal - Western Europe), Central - though Ukraine and South - through Turkey ("Nabucco", "South Stream", "Blue Stream" and "Blue Stream-2"). By this, if the construction of "Nord Stream" is still oriented on development of new fields and the issue of this project is rather about its political and economic expediency and about the solution of ecologic problems, then formation of South corridor is performed on absolutely other bases and is principal for Ukraine. The case is that Russia has no new sources of gas to fill pipelines of "South Stream" and "Blue Stream - 2", especially considering the intention to increase the capacity of "South Stream" up to 63 billion cubic meters of gas annually announced during August visit to Turkey of Russian Prime Minister V.Putin.

By the way, during this visit and after it different Russian authorities and representatives of "Gazprom" reported repeatedly, that Turkey approved piping of "South Stream" through its territorial waters.

TurkeyLet's clarify: Turkey approved preliminary geologic and geophysical researches in the region of assumed way of this gas pipeline, and the decision on the level of participation of Turkey within the project will be made only after the report about these procedures considering the total complex of geopolitical and ecologic factors.

There are reasoned doubts that the consent of Turkey concerning "South Stream" will be reached that easy: we can't ignore the view of the EU, which although with internal fight with Germany, France and Italy, still made a decision to include "Nabucco" project into the list of priorities. By this, these two projects were declared at the political level as "non-competing", although for professionals it's absolutely evident that the promotion of the "South Stream" idea has one of the objectives to slow down, and in the best case to impede the construction of "Nabucco" gas pipeline. For the interests of "Gazprom" within Balkans and Central Europe it's highly undesirable to open the market of real alternative gas, for which "Nabucco" is developed. As this gas pipeline is planned to be filled with Azerbaijani, as well as Turkmen, Iraqi, Iranian and even Egyptian gas. Naturally, today there are problems with "Nabucco" filling, however, the same "experts" used to talk openly about the ephemery of BTC oil pipeline, but it has become real.

As the sources of gas for "Nabucco" are not Russian, and its capacity will comprise 31 billion cubic meters, this project is not a rival for the main - Central way of transportation of natural gas to Europe through Ukraine. At the same time the concept of "South Stream" anticipates significant redistribution of the volume of exporting gas from "Ukrainian" way to "Black Sea".

At the official level "Gazprom" declares about its intentions to use "South Stream" for transportation, first of all, of Turkmen gas. However, take a look at the map - it's hard to explain, why does Turkmenistan in this case need to send gas into a long trip round Caspian Sea, if the construction of a direct line Turkmenistan - Azerbaijan will be much cheaper and will allow to prevent extremely high technologic and ecologic risks of "South Stream".

The issue on the price of this project is at all surrealistic. Where they will get 20-25 billion Euro for the construction of extremely complicated underwater part, nobody knows, including the authors of this idea. Italian company Eni states soundly, that it knows how to build these ways, however the planned "pipe" will be the longest and deepest. They don't even know whether they need to build intermediary compressor plant (by the way, in the direct proximity of our territorial waters), and also a mass of other problems. And in future - a complicated procedure of the agreement of ecologic part, but the initiators of the project are happy to use all Mass Media to report to everybody about the extending list of countries, included into "South Stream": Italy, Turkey, Bulgaria, Serbia, Greece, Croatia. They are promised everything. The intentions to attract Romania are quite indicative, and it's clear that "Romanian" point of the way out of "South Stream" on the ground requires the way through the territorial waters of Ukraine. Why do they do all this, and moreover with Turkey?

171967387Besides already above mentioned objective to impede the accomplishment of "Nabucco", there is another important task - to create additional instrument of influence on Ukraine by imitating wide international support of "South Stream". Economic crisis that seriously affected "Gazprom" and resulted in rapid reduction of Russian gas consumption by all its traditional customers will end some day. Already in the next year Russian energy giant plans to act logically to get back lost positions and it simply vitally need to be sure, that the situation in Ukraine is "under control". Particularly, this concerns tariffs on transportation , and the preservation of Russian influence on Ukrainian energy policy. As if Ukraine will in fact join European Energy area (and after the signing of the corresponding memorandum with the EU this process gained absolutely real lines), Russia can really appear to face the necessity to lead with Ukraine a dialogue on the EU language, and this is not simple comparing to our CIS maslin.

In this complicated situation Ukraine should keep patient realizing one simple fact: no round pipes, flows and agreements won't let in the near future to deal without Ukraine within the context of transit of Russian and Caspian gas to Europe. By this, first of all our country should provide guaranteed technologic process, and it means – the accomplishment of the Memorandum Ukraine - the EU and further integration into European Energy area. Even if to imagine that all Russian flows are built, the gas demand of Europe by that time will be that high, that Ukraine, undoubtedly, will preserve the status of the main transiting state, naturally if that time Ukrainian infrastructure will correspond the required standards of security and safety. By this, however, we have no right to forget also about cooperation with neighbors, among which Turkey is one of the most promising.

Amazing but fact: the objectives of Ukraine and Turkey on strengthening and development of transiting potential correspond. The establishment of Central European gas market in case of "Nabucco" project accomplishment and the coming on Austrian gas-distribution plant "Baumgarten" of Caspian gas is beneficial not only for its direct consumers, but also Ukraine considering the total complex of geopolitical factors. The collapse of "Gazprom" monopoly will result in reduction of dependence of Balkan states and the countries of Central Europe from Russian suppliers, and it means will promote the accomplishment of more independent foreign and internal policy. We also can't ignore the reduction of prices on the ground of market mechanisms, which will become additional argument and within the context of the definition of the price for Ukraine. Ukrainian manufacturers of pipes and compressor plants will be able to take a direct part in the process of pipelines though Turkey construction, considering already acquired positive experience of bilateral cooperation.

nuclear-plant-1But gas is not the only product of the market. The Government of Turkey adopted political decision to erect several nuclear plants and the first tender is now on the final stage. There are also definite options for Ukrainian manufacturers. Lately, the discussion on the accomplishment of the oil pipeline Samsun-Ceyhan has activated, which is already for ten years has been observed as one of the most important ways of oil transportation from the basin of Black Sea into the Mediterranean, round overloaded straits of Bosporus and Dardanelles. This oil pipeline could transport Russia and Kazakh oil to the deep-water port of Ceyhan and further for the world market.

However, it's efficient to consider also another variant: in case of necessity through the reverse way Ceyhan - Samsun to the basin of Black Sea could flow high quality Iraqi oil from Kirkuk, where Turkish companies already work actively. Lately Turkey has started the establishment of its own tanker fleet and is pretty able to assure oil transportation from Samsun to Ukraine. Provided Ukraine has technologic facilities to process light Iraqi oil, this way can be attractive from the point of view of market diversification, as today Ukrainian plants are practically fully oriented on Russian oil of the brand urals.

Modern Turkey intends to become a full-right transiting state, considering this status as an important mechanism of strengthening of economy and political significance of the country. Recently, Turkish companies has signed the agreement on gas supplies from Iran, achieved the review of the conditions of contract with Russia on gas supplies through Balkan way, have started practical development of the Black Sea shelf and the construction of new gas holders near LNG terminals near Istanbul. This year Ankara held the signing of the key agreement on "Nabucco" project accomplishment. Turkish government has also political will, as well as resources to fulfill the plan. That is why, it is extremely important to support Ukrainian - Turkish dialogue at the summit level, as well as at the level of experts and companies, in order not to stay away from geopolitical projects, which will be started in the near future in direct proximity from out borders.
Translated by EuroDialogueXXI from ZN