What role does energy security play in the Eastern Partnership (EaP)? How can Turkey, as a regional partner to both the EU and most EaP countries, contribute to the energy platform of the EaP?
By Tolga Demiryol
What role does
energy security play in the Eastern Partnership (EaP)? How can Turkey, as a
regional partner to both the EU and most EaP countries, contribute to the
energy platform of the EaP? This article discusses the prospects and challenges
of EU-Turkish energy cooperation within the context of the EaP. Turkey’s
relevance to the energy initiatives of the EaP in part stems from Turkey’s
geopolitical position as an energy corridor.
Image Attribute: Turkey's Oil and Natural Gas Pipelines / Source: The Middle East Eye
Turkey is
located between the rich hydrocarbon reserves in the Caspian region and the
European markets and thus sits at the intersection of the most feasible energy
transit lines. Yet, geopolitics is not the only reason why Turkey is relevant
to the EU’s energy interests in the Caspian. Turkey also has significant
political capital and economic ties in the Caspian region that the EU can
capitalize on to achieve its long-term energy policy objectives.
Despite the fact
that the EU and Turkey have a shared interest in energy security, there are at
least two major obstacles that have so far prevented the EU and Turkey from
effectively coordinating on energy policy. First, the dissimilar and at times
incompatible energy interests of the EU members undermine the EU’s capacity to
implement a common external energy policy. Unable to speak in one voice, the EU
sends mixed signals to its regional partners, including Turkey. Similarly,
Turkey tends to prioritize its own short-term national energy interests over
the long-term benefits from cooperation with the EU. The prevalence of national
interests over communal ones thus generates a credible commitment problem
between the EU and Turkey, where parties are unable to make binding promises
for cooperation. For the EU and Turkey to establish a working partnership on
energy issues, they should arrive at a common understanding whereby each actor
not only values long-term cooperation over short-term interests but also trusts
that the other side will do the same. Second, the commitment issue is
aggravated by the apparently mismatched perspectives that the EU and Turkey
adopt on the political implications of energy cooperation. Turkish decision
makers hold that Turkey’s position as an energy corridor merits tangible
political benefits, most notably concrete progress in Turkey’s accession talks.
Even though most EU officials acknowledge that Turkey could be a strategic
asset for European energy security, few go so far as to establish a direct
issue-linkage between energy and membership. The discordance of the EU’s and
Turkey’s expectations regarding the political payoffs of energy cooperation
undermines the mutual trust that is required for long-term partnership.
The EaP was
introduced as a joint Polish-Swedish initiative in May 2008. The initiative was
conceived as a venue for dialogue and cooperation between the EU and the former
Soviet states of Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine.
The Joint Declaration of the Prague Eastern Partnership Summit, signed on 7 May
2009, stated that the “main goal of the Eastern Partnership is to create the
necessary conditions to accelerate political association and further economic
integration between the European and interested partner countries” (European
Union, 2009). Through the implementation of Association Agreements, the EaP
aims to facilitate the social, economic, and political transformation in the
six partner states.
The EaP is a
multi-dimensional directive, yet energy security has been at the core of the
partnership since its inception. The Prague Declaration says, “The eastern
partnership aims to strengthen energy security through cooperation with regard
to long term stable and secure energy supply and transit, including through
better regulation, energy efficiency and more use of renewable energy sources”
(European Union, 2009). Energy security is one of the four thematic platforms
of the EaP, along with democracy and good governance, economic integration and
contacts with people. Two of the six flagship initiatives of the EaP are also
energy-related. One of these initiatives concerns the integration of regional
energy markets and raising the profile of renewable energy in partner states,
whereas the other initiative directly involves the diversification of energy
import routes. On 8 May 2009, the very next day following the EaP Summit, the
Southern Corridor Summit was held in Prague, where European Commission
officials as well as the presidents of Azerbaijan, Georgia, and Turkey,
expressed their “political support to the realization of the Southern Corridor
as an important and mutually beneficial initiative” (EU at the UN, 2009). Jose
Manuel Barroso, President of the European Commission, speaking at the summit,
underlined that diversification was indeed a priority: “The context of this
summit is very clear. Our strategic priority in the EU is to enhance energy security
in particular by diversifying the EU’s energy sources and energy routes”.
At the core of
the EU’s diversification strategy is the development and integration of
multiple pipeline systems under the general framework of the Southern Gas
Corridor, which would carry gas to Europe primarily from the Caspian region
(possibly from Turkmenistan, Iran, and the Middle East as well), bypassing
transit networks owned or controlled by Russia. This grand energy strategy can
be traced back to the establishment of INOGATE (Interstate Oil and Gas
transport to Europe) in 1995. INOGATE was later expanded through the signing of
umbrella agreements in 2001 when 21 countries agreed to cooperate on pipeline
development. Through conferences in Baku in 2004 and in Astana in 2006, INOGATE
evolved into the primary institutional framework of regional cooperation on energy
security and integration of markets. The next major step in building the
institutional framework of a European energy policy was the signing of Energy
Community Treaty, which entered into force in July 2006, establishing an Energy
Community among the EU members as well as Albania, Bosnia and Herzegovina,
Kosovo, Montenegro, Macedonia, Serbia, Moldova, and Ukraine. Yet another
landmark was the Treaty of Lisbon in 2007, which included an article on energy
policy, calling for solidarity among Member States. In February 2010, the
European Commission established a new DirectorateGeneral for Energy, further
indicating the significance attached to the issue. The EaP’s energy agenda
should thus be considered the latest step in the evolution of EU’s long-standing
efforts to resolve the energy security problem.
How severe is
the energy security problem of the EU? Europe is an energy-poor region. It possesses
only 0.4 per cent of the world’s proved oil reserves but consumes 15.9 per
cent. Similarly, 0.9 per cent of world’s natural gas reserves are in Europe
while European consumption constitutes 13.9 per cent of the global consumption
(BP, 2012). Not only are the hydrocarbon reserves limited but also production
is falling. Total energy production in the EU declined by 13 per cent over the
last 20 years. Natural gas production in Europe is in decline. Since 2001,
EU-28’s natural gas production decreased by 38 per cent while consumption was
reduced by only about 7 per cent. This unfavorable supply and demand structure
inevitably led to greater import dependency. Europe’s total energy import
dependency rose from 47.1 per cent in 2001 to 53.4 per cent in 2012. Europe
imports 90 per cent of its oil and 42 per cent of its solid fuels, yet gas
dependency is the most alarming. Gas import dependency jumped from 48.8 per
cent in 2001 to 65.8 per cent in 2012 (Eurostat, 2014).
EU is following
a multifaceted energy security strategy (European Commission, 2014a,b). The
union is committed to reducing primary energy consumption by 20 per cent by
2020 (European Commission, 2011). The energy saving measures are helpful but
ultimately insufficient to compensate for the decline in production. In 2012, natural
gas consumption in Europe declined 9.9 per cent while production fell by 11.4
per cent. It is possible that part of the decline in energy consumption over
the past few years is due to the contraction of the European economy since
2008. With economic restoration over the next decade, energy demand will likely
increase, unless policy changes produce significant changes in the structure of
energy consumption.
Indeed,
projections for EU’s natural gas demand for the two decades indicate
significant variations based on policy environment and expectations regarding
macro-economic performance. According to Eurogas’ Base Case, which assumes no
significant departure from current policy and market conditions, EU-27’s
natural gas demand will increase from 438 mtoe (million tonnes of oil equivalent)
in 2010 to 471 mtoe in 2035 (Eurogas, 2013, p. 3) In the Environmental Case,
which assumes a growing share of renewables and a restoration of economic
growth in Europe, demand for natural gas will rise to 527 mtoe by 2035, a 20
per cent increase over the 2010 baseline. Only under the Slow Developments
Case, which assumes that gas would become less competitive in Europe, will
demand decline to 394 mtoe by 2035 (Eurogas, 2013, p. 3). Thus, barring a
significant change in policy and market conditions, natural gas will likely
remain a key source of energy for Europe over the next two decades.
Similarly, a
report published by Fitch Ratings in August 2014 confirmed that Europe will
continue to depend on Russian gas supplies “for at least the next decade and
potentially much longer” (Fitch Ratings, 2014). According to Fitch Rating’s
projections, European gas demand will grow slightly until the mid-2020s and
after that, demand growth will once again accelerate as gas-fired electricity
generation replaces coal and nuclear capacity. European shale gas, the report
indicates, will not be a viable option for another decade when production
reaches a critical volume. Even then, shale gas production would most likely be
just enough to compensate for the decline in domestic conventional gas
production in Europe. The best the EU can hope for, the report concludes, is to
avoid significantly increasing gas purchases from Russia. (Fitch Ratings, 2014).
Thus, energy
import dependency will likely continue to be a major issue for Europe.
Dependency, particularly on a single supplier, is considered a source of
economic and political vulnerability in international relations (Waltz, 1970).
Dependent countries are highly vulnerable to supply disruptions whether they
are of technical or political nature. The 2006 and 2009 gas shortages in
Ukraine and 2007 crisis involving Belarus served as bitter reminders that
import dependency threatens the material well-being and security of ordinary
citizens. Import dependency has negative consequences on the foreign policy
capabilities of the dependent country as well. The potential cost of
aggravating an energy supplier casts the dependent actor into an involuntarily
cooperative role. Foreign policy implications of energy dependency are
particularly relevant when the energy exporters are keen on using their market
power as a weapon over importers and transit countries (Gereben, 2013; Stegen,
2011). Ukraine Crisis in 2014 evidenced the extent to which energy dependence
constrains EU foreign policy.
Given the
political and economic costs of energy dependency, the EU has no choice but to
seek to diversify its energy suppliers and import routes. The EU has a few
alternative natural gas suppliers, including Iraq, Iran and most recently
Eastern Mediterranean but none of these alternatives appears to be as readily
accessible as the Caspian reserves in the near future. Iraqi natural gas
reserves rank 12th in the world (EIA, 2013) but given various infrastructure
issues and the continuing political turmoil in the country, Iraq’s natural gas
export capacity is currently limited. Importing natural gas from Iran has long
been on the agenda of the EU and the most recent problems with the availability
of Russian gas have once again brought the issue to the forefront (The
Telegraph, 2014). Most European countries are looking forward to the
normalization of relations with Tehran, as evidenced most recently by UK’s
plans to reopen its embassy in Tehran (Foreign & Commonwealth Office,
2014). With a treasury badly damaged by the international sanctions, Iran too
would be most interested in selling its gas to Europe, arguably more so than
selling to Pakistan (Forbes, 2014). While Iranian natural gas reserves,
estimated to be the second largest in the world, constitute a viable
alternative for Europe, accessing these reserves poses a challenge in the short
term. Even if the ongoing negotiations between P5+1 and Iran ultimately succeed
in lifting the sanctions on Iranian energy trade, Iran’s South Pars gas
reserves require significant development and investment over the next decade.
Once developed and rendered available for international trade, Iranian natural
gas will likely be transported to Europe via the proposed Persian Pipeline
(Iran-Europe pipeline) or possibly a re-animated Nabucco pipeline, both of
which are projected to pass through Turkey. Recently discovered gas in the
Eastern Mediterranean would also be a welcome addition to Europe’s energy
portfolio yet given the disputes over maritime borders in the region (Eissler
& Arasıl, 2014), the enduring Cyprus problem and the diminishing of hostilities
between Turkey and Israel since the escalation of Turkey-Russia border spat on downing of latter's Su-24 in Syria (in 2015), it is getting quite clear that Eastern Mediterranean gas may be available for European consumption in a significant
quantities in the future. Though, fingers are crossed.
Given the
various political and economic limitations of bringing online the natural gas
from Iraq, Iran and the East Mediterranean in the near term, the Caspian
region—estimated to hold six per cent of the world’s proven reserves and
well-endowed with foreign investment—currently appears to be the most
politically and economically feasible option for European diversification
strategy.
The Southern Gas
Corridor linking Caspian reserves to European markets consists of several
existing and projected pipelines. The Baku-Tbilisi-Erzurum (BTE) gas pipeline
carries gas from Shah Deniz gas field in the Azerbaijani sector of the Caspian
Sea to Turkey since late 2006. The current capacity of the pipeline is 8 bcma
(billion cubic meters per annum) but with the completion of the phase II of the
Shah Deniz project it can be scaled up to 25 bcma. BTE currently supplies
Georgia and Turkey but it can be linked to other projects like the Trans-Anatolian Pipeline (TANAP) which will initially carry about 16 bcma of gas from
Georgian-Turkish border to Turkish-European border. Depending on the gas flow,
the capacity of the pipeline can later be increased up to 60 bcma.
There are
several options to further transport the Caspian gas from Turkish territory to
European markets. The primary existing route is the Turkey-Greece
Inter-connector, which carries up to 12 bcma of natural gas. A key aspect of
this project is the extension across Greece to Italy, which will carry Caspian
gas deeper into Europe. A few additional routes to transport Caspian gas from
Turkey to Europe have been considered. Nabucco West, the revised version of the
defunct Nabucco project, was planned to start from the Turkish-Bulgarian border
and transport gas from Shah Deniz Gas field phase II via Bulgaria, Romania,
Hungary to Austria. Yet Shah Deniz Consortium partners rejected Nabucco West in
2013 and opted for the Trans-Adriatic Pipeline (TAP) instead. The main supply
source of TAP will be the gas extracted from phase II of the Shah Deniz field,
which will be carried through Turkish territory via BTE and TANAP. TAP is
planned to start at Greece, cross Albania and the Adriatic to reach Italy.
Turkey thus sits
at the intersection of the pipelines that constitute the Southern Gas Corridor.
Turkey’s relevance to the EU’s energy policy with respect to Eastern
Partnership, however, is not limited to Turkey’s fortunate geopolitical
position. Secure and reliable access to Caspian hydrocarbon reserves requires
not only a network of pipelines but also regional political stability and
cooperation between supplier and transit states. Turkey, with its long-standing
economic ties in the Caspian region can potentially act as an intermediary
between the EU and the partner countries. Turkey has also been willing to
contribute to the resolution of the several “frozen conflicts” throughout the
region by acting as an interlocutor between the EU and other relevant
parties.
Ankara has a
standing policy of promoting interdependence among the three South Caucasus
states in order to expand their trade and energy ties with Turkey. Georgia is
not only a transit corridor of Azerbaijan’s gas, but also a major trade route
for Turkish exports to Central Asia. Turkey also has considerable investments
in Azerbaijan, Georgian and Abkhazian economies. Pending on the normalization
of relations with Armenia and the opening of the Turkish-Armenian border,
economic relations with Armenia also hold great promise for Turkey. Turkey can
also help the EU in its capacity building efforts in the Caspian region.
Turkish state-owned energy companies TPAO and BOTAS are partners in many
pipeline projects in the region. Turkey has also recently shown a great deal of
interest in investing in upstream development projects in the region. TPAO for
instance signed in May 2014 a 1.5 billion USD deal to acquire French Total’s 10
per cent stake in Azerbaijan’s Shah Deniz project. In addition to Shah Deniz,
TPAO owns shares in the two major fields in Azerbaijan, ACG (6.75 %) and Alov
(9 %). Turkey has a strong presence on the ground and Turkish private sector
accumulated expertise that is critical for secure and long-term cooperation.
Lastly, Turkey
due to its historic ties to the region has considerable political capital in
the Caspian, particularly in Azerbaijan, with which Turkey has sustained a very
close relationship since its independence. Turkey also cooperated with the US
in its efforts to help Georgia build a new state after independence. Given the
difficulties that the EU has experienced in politically reaching out to its
Caspian partners over the last decade, the EU can benefit from Turkey’s role as
a regional interlocutor between Europe and the Caspian partners.
It is evident
that the EU and Turkey can both benefit from extending their cooperation on
regional energy issues. Despite the commonality of interests, however,
EU-Turkey energy cooperation has so far failed to meet mutual expectations. The
next section examines how the prevalence of national interests over communal
ones and the opposing views on the Turkish and European sides regarding the
political implications of energy partnership undermine the ability of these two
actors to commit to a more extended form of energy cooperation.
About The
Author:
Tolga Demiryol is assistant professor of Political Science in the School of Economics and
Administrative Sciences at Istanbul Kemerburgaz University in Turkey. Tolga
Demiryol received his Ph.D. in Political Science from the University of
Virginia in 2010. Dr. Demiryol specializes in international political economy
and security. His recent research focuses on the geopolitics of energy.
Publication Details:
Baltic Journal
of European Studies. Volume 4, Issue 2, Pages 50–68, ISSN (Online) 2228-0596,
DOI: 10.2478/bjes-2014-0015, November 2014
This work is an abstract form of author's original work, titled "The Eastern
Partnership and the EU-Turkey Energy Relations"which is licensed under Creative Commons 3.0
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