The interruption of the flow of Russian gas to Europe within the context of the invasion of Ukraine has affected the Central Asian Republics such as Kazakhstan and Turkmenistan which were heavily counting on the Russian infrastructure to transport their hydrocarbon resources. Central Asian states have now to be more assertive in diversifying their export routes to Europe and China, the two main power-hungry regions of the world. Turkey, in its turn, wants to take advantage of its geographical proximity to the natural resources-rich countries to become an energy hub. Russian President Putin has already expressed his support in this matter. “This is a quite realistic project and we can do it fairly quickly, and there will be enough people who want to conclude a contract … I have no doubt that in Europe there are many who want to,” Putin said in October at a televised news conference. Nonetheless, Turkish Stream with Russia is far from making Turkey an alternative supply route for Europe. No western country would tolerate an increasing volume of natural gas trade with Russia that will play into the hand of Putin.
An alternative supply route goes through the Caucasus and Turkey. To this end, Turkey, Azerbaijan, and Turkmenistan plan to transport Turkmen natural gas to the European markets through the Turkish territories. “The Baku-Tbilisi-Ceyhan Oil Pipeline and the South Gas Corridor stand out in this regard. We are transporting the Caspian gas to Europe through this corridor, whose backbone is the Trans-Anatolian Natural Gas Pipeline. We should now start working on transporting the Turkmen natural gas to the Western markets in a similar way. We stand ready to cooperate with our Turkmen and Azerbaijani brothers in friendship in the Caspian field.” President Erdoğan said during a tripartite summit held on December 14th in Turkmenistan with his Turkmen counterpart, Sardar Berdimuhamedov, and Azerbaijani President Ilham Aliyev.
On his way back to Turkey from Turkmenistan after the summit, Erdoğan said in an interview with Turkish journalists that the 32 billion bcm-capacity TANAP and the 6 bcm-capacity Trans-Adriatic Pipeline (TAP) have filled their entire volume, adding that building a new pipeline is under consideration. It seems that he confounded the current status of TANAP and the ongoing project to increase its capacity. As Turkey’s Energy and Natural Resources Minister Fatih Dönmez announced in October, TANAP’s current transmission capacity is 16 billion cubic meters (bcm) of gas a year, (10 bcm of this amount is transported to Europe and 6 bcm is destined to satisfy Turkey’s own demand,) and this capacity will be doubled, i.e., to 32 billion bcm in a short period of time.
Turkish authorities did not make a precise timetable for this increase in capacity during this visit, but we have clues on how the project will proceed. TANAP is being developed in phases, and it completed Phase 1 construction in 2020. The reports over the TANAP project indicate that Phase 2 construction will be completed to meet the throughput of 24bcm per year by 2023. This phase will include upgrading the Phase 1 compressor stations and building 2 additional compressor stations. If everything goes according to the plan, phase 3 will be completed to meet the throughput of 31 bcm per year by 2026 with additional upgrades on the previous phases and 3 new additional compressor stations. According to the European Network of Transmission System Operators for Gas, there is also another expansion project of TANAP that could hopefully take off in 2025, which “intends for the transportation of additional 9 bcm annually of the natural gas to be produced in Shah Deniz-2 field and other fields of Azerbaijan through Turkey to Europe.”
On the other hand, the latest natural gas project between Turkey, Azerbaijan, and Turkmenistan will develop the Dostlug (friendship in Turkic languages) field in the Caspian Sea between Azerbaijan and Turkmenistan. In January, Azerbaijan and Turkmenistan agreed on joint exploration and exploitation of the Dostlug field, which stipulates that resources of the Dostlug field be distributed in a ratio of 30 percent to Azerbaijan and 70 percent to Turkmenistan. According to the Deputy Vice President of SOCAR, Vitaly Baylarbayov, production in this field could start within the next 3-5 years. While the Dostlug field contains 100 bcm of natural gas and 60 million tons of oil, there are also other promising natural gas fields in the Caspian Sea and Turkmenistan.
How to transport this gas to Turkey is a thorny issue. Given the fact that LNG is not competitive with pipeline transportation over short distances, these countries need to build a pipeline to have a financially viable option. Gas transportation agreements for pipelines are, however, typically long-term contracts. In other words, before expanding TANAP’s capacity, the investors will need to guarantee at least two decades-long commitments from Turkmenistan and Azerbaijan. Otherwise, it would be hard to finance this multi-billion project. For instance, the agreement for Turkish Stream will remain in force for 30 years, while the Iran-Turkey Gas pipeline has a duration of 25 years.
To sum up, Turkey’s desire to become an energy hub has been a common theme in Turkish energy policies with not much success until recently. Nevertheless, the war in Ukraine has revived less viable options such as transporting natural gas through Central Asia to Europe to diversify energy supply routes. Turkey wants to take advantage of this context despite the lack of its own rich natural resources. One should be mindful of the fact that energy projects of this scale require constant gas production in a stable political environment. The political will of these countries is just the first step and it will take a lot more before realizing these projects. Financial viability and political stability in transporting countries and a sustained production capacity of the supplier for at least two decades are also critical factors in realizing these kinds of colossal projects. This is why developing natural gas reserves in Iran and Iraq is so much problematic. And this is why relying on one single supplier is not a good criterion to be an energy hub if you do not exploit your own resources. The success of Turkish endeavors to become an energy hub will depend on how it weighs these factors.