TRANSPARENCY KEY TO BE RELIABLE ENERGY PARTNER

Hurriyet
Jul 1, 2009

ANKARA – Viewing Russia as an unpredictable energy supplier, the
European Union needs a reliable energy corridor. Europeans need to
know more about Turkey’s energy strategy and its plans on energy
efficiency to be convinced that Turkey can provide this, says Jean
Lamy, a top French energy official.

A more transparent and predictable framework of regulation is required
before Turkey can become a reliable East-West energy corridor and
convince international companies to invest in projects such as Nabucco,
a key pipeline to supply gas to Europe.

"We need to know more about Turkey’s energy strategy and its plans
to increase its energy efficiency. If we know this, this will surely
increase the transparency and predictability of the project. The ball
is on your side," Jean Lamy, head of the French Foreign Ministry’s
Department of Energy-Climate, told the Hurriyet Daily News & Economic
Review in an interview in Paris.

Since completing the Baku-Tbilisi-Ceyhan oil pipeline, Turkey has
increased its efforts to become an energy hub by securing multiple
projects for pipelines that would pass through its territory. Nabucco,
an international pipeline project that will bring Azerbaijan’s natural
gas to Europe via Turkey with intent to reduce the continent’s
dependency on Russia while meeting growing demands, is seen as a
major potential development that would fulfil expectations of Turkey
anchoring itself to the EU.

With its 600 billion-cubic-meter gas consumption annually, the EU
is one of the world’s largest markets. But it is estimated that the
27-country union will need another 200 bcm by 2030, which makes the
issue a priority for Brussels. Turkey, as a transit country that could
carry non-Russian gas to Europe, has a unique opportunity to provide
an alternative for the European continent as it seeks to reduce its
dependence on Moscow, which has begun to use its gas reserves for
foreign policy leverage.

However, the problem between Turkey and the EU seems to derive from
a lack of confidence and communication. In addition, Turkey’s way
of negotiating its position has unsettled many European countries
and companies that are considering investing billions of euros in
the projects.

Hurdles not yet overcome An intergovernmental agreement for Nabucco
has to be concluded within days but there are still very important
hurdles, according to sources. Turkey is still negotiating with the
EU and companies within the Nabucco consortium about an option to buy
15 percent of the gas at a low price and become a re-exporter of the
Azerbaijani gas to Europe.

"Fifteen percent of the Nabucco gas makes 4.5 bcm of gas. That’s
a large amount of gas," Lamy said, adding that what was important
for the companies and countries that are politically supporting or
planning to invest is to know the facts and the limits in regard to
the amount of the natural gas to be carried. "The energy security
of transit countries such as Turkey is important for us in order to
be able to secure future supplies for consumers in Europe and that’s
why we have close dialogue with Turkey," he said.

"Nabucco is a priority for the EU and it’s been announced. But
the business plan of building pipelines for companies is different
than those of the governments," Lamy said. The Nabucco consortium
is composed of Austria’s OMV, Hungary’s MOL, Romania’s Transgaz,
Bulgaria’s Bulgargaz, Turkey’s Botaº and Germany’s RWE. France’s Gaz de
France was also interested in participating but was rejected by Turkey
due to Paris’ recognition of the alleged Armenian genocide. Lamy,
who did not want to comment on the issue, just said, "Nabucco is a
European project, not merely France’s."

"The investment should come from private companies. But they can only
do it if they are guaranteed that the pipeline will be full of gas,"
said Lamy. "They need to know from where the gas will come, to whom
it would be sold, its price and the framework. And the public sector,
the governments should take steps to reduce their risk and guarantee
them a return on their investment. Therefore, what we see as a main
problem is the predictability."

He advised all related countries to issue long-term contracts with
companies, increase energy efficiency, adopt a framework of regulation
often referred to as a transit country regime and make business plans
with the source countries.

Divided Europe "Turkey needs to set more transparent rules for
its transit regime. Once it’s done, the gas would flow," William
Ramsay, director of the European governance and geopolitics of energy
department at the French Institute of International Relations, told the
Daily News. Ramsay drew attention to the fact that the EU was far from
establishing a coherent energy policy to secure its future demands.

"Many European countries are considering the energy security problem
as a national concern," he said’ adding that the most powerful EU
countries, France and Germany, have no such problems with their
gas supplies.