Restoring Energy Security After Crimea

April 4, 2014 Topic: Energy Region: AzerbaijanGeorgiaTurkeyEurope

Restoring Energy Security After Crimea

New pipelines necessary.

The crisis in Ukraine has rightly sparked concerns over a possible cut in Russian natural gas to Europe. Europe receives roughly 30 percent of its gas supplies from Russia, and more than half of the Russian natural gas delivered to Europe travels through Ukraine. This dependence needs to be remedied, and the sooner the better. As European leaders weigh the continent’s energy strategies to mitigate the potential long-term loss of Russian supplies, two countries—Turkey and Azerbaijan—stand out as important partners in Europe’s quest for energy security.

Turkey has long sought to become an energy hub for Caspian and Middle Eastern oil and gas to Europe. Azerbaijan, a secular, pro-U.S. country on the shores of the Caspian Sea, has significant hydrocarbon resources of its own. Its location also positions it as a natural conduit for oil and gas exports to Europe from landlocked but energy-rich Kazakhstan and Turkmenistan. The overlap in interests between Turkey and Azerbaijan—as exporting and transit countries—has already resulted in two strategic energy projects: the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-Erzurum (BTE) natural gas pipeline. Two key lessons from these pipeline projects are highly instructive.

The first lesson is that Russia’s grip on Europe’s energy market can be weakened. Secondly, strategic projects from regions on Russia’s periphery that aim to supply Europe with energy can only be achieved once solid American and European backing is in place. European leaders fully acknowledge this reality. After Russia’s annexation of Crimea, Britain’s Foreign Secretary William Hague was quick to point to Turkey and Azerbaijan as an important part of Europe’s future plans. Hague spoke specifically of the Southern Gas Corridor, an EU-initiated project to facilitate Caspian gas to Europe. However, the Europeans are not the only stakeholders in this debate.

Successive U.S. administrations have viewed European energy security as a U.S. national interest. Promoting the diversification of Europe’s natural gas supplies through the development of an East-West corridor of gas from the Caspian region to Europe has been a focal point of U.S. energy policy since the mid-1990s. The BTC and BTE pipelines were part of this strategy, and U.S. political support played an important role in their realization. However, despite U.S. support for supplying natural gas to Europe from the Caspian region and Central Asia, the amount of gas being transported is far from enough to counter Russian exports. Given the recent crisis in Crimea,the United States should renew its commitment to increasing reliable energy supplies to Europe.

In seeking such an end, Washington can also promote further Turkish-Azerbaijani energy collaboration by supporting the Trans-Anatolian Gas Pipeline (TANAP) project. TANAP is an important part of the Southern Gas Corridor, which intends to deliver natural gas from Azerbaijan through Georgia and Turkey to Europe. The pipeline is expected to carry 23 bcm in the second phase, in 2023, and 31 bcm in the third phase, in 2026. While the Southern Gas Corridor is vital for European consumers, it is crucial for Turkey in terms of energy security and economic development. Turkey aims to reduce its reliance on Russian and Iranian gas imports and increase the gas export volume from Azerbaijan in the long run, as Russian and Iranian gas is more expensive than that of Azerbaijan.

In this respect, the additional six billion cubic meters per year to be provided by TANAP will help Turkey to reduce both its reliance on Russian and Iranian gas imports and its annual natural gas costs. As a result, Turkey will be able to ensure its energy security through a diversification of energy supplies and routes as well as accelerate its economic development by reducing outlays.

The ramifications will also be considerable for Azerbaijan. The Southern Gas Corridor project will help Azerbaijan increase its share in the Turkish natural gas market and lessen Russia’s grip on it. At the same time, the Southern Gas Corridor lets Azerbaijan sell its natural gas to the European market. The project will boost Azerbaijan’s energy income, which is the key driver of its economic growth and investment. It will also deepen Azerbaijan’s political association and economic integration with Georgia, Turkey, and the countries of the European Union. These developments should not be merely welcomed by Washington; a renewed American commitment can speed up the process through which these objectives can be realized. Given Russia’s latest conduct in Crimea, there is all the reason to push ahead with Europe’s energy diversification while at the same time making an important commitment to allies such as Turkey and Azerbaijan.

Alex Vatanka is an adjunct scholar at The Middle East Institute. Gonul Tol is the founding director of the Center for Turkish Studies and resident scholar at The Middle East Institute.