TURKEY-AZERBAIJAN MEETING KEEPS NABUCCO ALIVE
Andrea Bonzanni

World Politics Review
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Jan 21 2010

Turkey continues to work along different tracks in its strategy to
become the "gas hub" of Europe, as demonstrated by the official visit
to Ankara of Azerbaijani Foreign Minister Elmar Mammadyarov in late
December. Mammadyarov’s visit should set to rest speculation about
Turkey’s waning political support for the Nabucco pipeline, as well
as Ankara’s supposed reorientation toward Russia.

Mammadyarov was received in Ankara by Prime Minister Recep Tayyip
Erdogan and President Abdullah Gul before meeting behind closed doors
with his Turkish counterpart, Foreign Minister Ahmet Davutoglu.

Although the details of the talks have not been disclosed,
the enthusiastic declarations of friendship that followed are an
indication of renewed cooperation between Turkey and Azerbaijan, the
country that first promised its large reserves to the Nabucco project.

Given the particular context in which the meeting was held, this result
was far from obvious. The two countries enjoy a history of alliance
and solidarity, catalyzed by common ethnic and cultural roots. But
relations between them had reached a nadir over the preceding months,
following Turkey’s rapprochement with Armenia.

Azerbaijan has been locked in conflict with Armenia since 1998 over
the fate of the separatist Azerbaijani province of Nagorno-Karabakh.

During that time, Turkey has been Baku’s main supporter, even
conditioning normalizing its own relations with Armenia on a resolution
of the Nagorno-Karabakh conflict.

The rapprochement between Turkey and Armenia therefore represented a
betrayal of Azerbaijan, and not only provoked symbolic retaliations,
such as the temporary removal of Turkish flags from a Baku cemetery,
but also fueled an ongoing dispute between Ankara and Baku over the
price of Turkey’s gas imports. To Baku’s displeasure, Turkey’s gas
purchases are regulated by a contract signed by the two countries
in the 1990s on the basis of very low price forecasts. Although the
accords include clauses for renegotiation, Turkey has always refused
to agree to a higher price. Baku currently receives just $120 per
million cubic meters (mcm), amounting to about half the average price
on the European market — and a third of European prices this fall.

So it came as no surprise that a few days after Turkey and Armenia
signed their historic agreement in Zurich on Oct. 10, Azerbaijan’s
President Ilham Aliyev called the gas situation "illogical" and
promised to intervene in order to end his country’s subsidization
of Turkish gas consumption. Not long thereafter, the international
consortium operating the giant Azerbaijani gas field of Shah Deniz
announced that one of the five wells was closed, officially for
"technical reasons."

Further, Azerbaijan accelerated its search for alternative buyers for
its natural gas, rapidly implementing a contract signed in June with
Gazprom and signing memoranda of understanding with Bulgaria and Iran.

If the latter two agreements are turned into fully fledged contracts,
a pre-existing pipeline will be modernized to transport 500 mcm a
year to the Islamic Republic, while another 1,000 mcm a year will
cross the Black Sea using the new technology of compressed natural gas
(CNG). On Nov. 20, the president of Azerbaijan’s national oil company,
SOCAR, even declared that the country is considering exports to China
via the newly opened Turkmenistan-China pipeline.

Turkey, too, has looked elsewhere for its gas needs, signing
preliminary agreements with both the Iraqi central government and
the Iraqi Kurdish regional authority. Most importantly, Turkey has
facilitated rapid progress of the South Stream pipeline, a joint
venture between Gazprom and Italy’s ENI whose completion is likely
to make Nabucco unviable. In that context, Turkey’s consent to allow
passage of the South Stream pipeline through Turkey’s Black Sea
territorial waters as well as Erdogan’s participation via Webcam in
a bilateral summit between Russian Prime Minister Vladimir Putin and
Italian Prime Minister Silvio Berlusconi in October were seen as a
blow for Nabucco.

In light of Mammadyarov’s visit to Ankara, the Turkey-Azerbaijan
impasse now seems to have been overcome. It is not known if Baku
accepted Turkey’s last publicly made offer, which consisted of a
complex system of tolls per kilometer that would roughly double
Azerbaijan’s revenues. However, a further rupture between the two
countries after the December meeting is extremely unlikely, due to
the unattractive alternatives available to Azerbaijan. President Ilham
Aliyev needs to maintain good relations with the European Union and,
most importantly, with the United States in order to balance Russia’s
support for Armenia as well as Moscow’s preponderant power in the
Caucasus.

The Nabucco pipeline, then, is still alive, although it may end
up being a different Nabucco from the one initially envisaged and
supported by the European Union and the United States. Following the
recent tightening of Russian and Chinese control on the Turkmen gas
sector, the project will in fact receive no more Central Asian gas. It
must instead look south and east for its supplies, notably to Cairo,
Baghdad and Iraqi Kurdistan. Turkey also hopes to involve Iran, with
which it signed an intergovernmental agreement for the development
of the giant South Pars field at the end of October.

This version of Nabucco may still help mitigate the perceived Russian
threat to European energy security. But due to the resulting Iranian
and Syrian involvement and the excessive strengthening of the Kurdish
regional authority that it implies, it will hardly find advocates
in Washington.

Andrea Bonzanni is a post-graduate student at the Graduate Institute
of International and Development Studies in Geneva. He has worked
as a consultant for the United Nations and the World Bank and is
currently energy policy analyst for the Italian Center for Turkish
Studies. The views expressed here are his alone. He can be reached
at andrea.bonzanni (at) graduateinstitute (dot) ch.

Photo: Photo: Turkish Prime Minister Recep Tayyip Erdogan (European
Commission photo).

From: Emil Lazarian | Ararat NewsPress