The country’s demand for energy is rising and new supply sources for natural gas are needed to generate electricity, heat homes and cook. Due to scarce domestic supplies and a lack of sufficient liquefied natural gas infrastructure, those supplies will mostly come via pipeline. Turkey has trained its eyes on tapping the planned link from the Shah Deniz II gas development in Azerbaijan to markets in the EU.
Over the past decade, several plans for gas pipelines along the “southern corridor” have been mooted. This initiative by the European Commission seeks to procure fuel from the Caspian Sea and Middle East via Turkey to reduce its reliance on Russian gas, which accounts for nearly a third of Europe’s supply. With political relations strained over Russia’s interference in Ukraine in 2014-15, the EU is more eager than ever to diversify supplies and avoid potential disruptions.
Among the many schemes that have failed to leave the drawing board, the biggest flop has been the Nabucco project. The $10bn project, initiated in 2002, aimed to carry 31bn cu metres of gas annually from the Caspian Sea along a 3300-km route, but fell afoul of its unfeasible budget, low returns, lack of consensus among its partners and a failure to procure supplies. But the death knell for Nabucco most likely came in June 2013, when the Shah Deniz consortium, formed by British energy giant BP and the state oil company of Azerbaijan, Socar, decided on the Trans-Anatolian Pipeline (TANAP) to transport Azeri gas west.
What differentiates TANAP from Nabucco is that the former has committed supplies, financial backing and customers, Haldun Yavaş, head of the Istanbul-based think tank Caspian Strategy Institute, told OBG. “TANAP is an important undertaking in the sense that it brings additional and diversified supply to both Europe and Turkey,” he said. “The significance of the project is that it opens a fourth supply corridor for Europe: the Southern Gas Corridor.”
The 1850-km, $10bn TANAP will start in Azerbaijan, transit Georgia, then traverse Turkey to the Greek border. TANAP will be the second-largest such project in the world in technical terms, said Socar representative Vusal Mammadov at a conference in Istanbul in March 2014. Georgia is a key component of the transit route from Azerbaijan. The Georgians are expected to stump up $2bn for the section crossing its territory and will include two compressor stations as well as the pipe. The project is jointly owned by Socar (58%), BOTAŞ (30%) and BP (12%).
Annual designed capacity is 16bn cu metres, but TANAP is meant to be scalable, with its capacity increasing with the additions of parallel loops and compressor power as production increases upstream. The project’s second phase would raise capacity to 23bn cu metres by 2023, then 31bn cu metres by 2026 and 60bn cu metres by 2060. Initially, Turkey will receive 6bn cu metres per year and the rest will go to Europe via the connecting Trans-Adriatic Pipeline (TAP), which will span the sea from Greece to Italy. TANAP will also have two exit/entry points in Turkey, in Eskişehir and in Thrace, allowing gas to be sold domestically.
TAP will have an initial capacity of 10bn cu metres, scalable to 20bn cu metres per year. The shareholders in TAP are BP Socar and Norway’s Statoil, which each control 20%. Belgium-based Fluxys raised its stake in 2014 to 19%, while the Spanish energy company Enagas bought a 16% stake. The Swiss energy firm Axpo has 5% of the project's shares. Turkey does not currently plan to partner in TAP, the energy minister, Taner Yıldız, told Reuters in May 2014, though TANAP will link to the line at Kipoi on the Greek-Turkish border.
“The implementation of the TANAP project is underway and is proceeding in a timely manner,” Yavaş said. As of December 2014, the builders of the project had been selected by shareholders, with Fernas Construction, the Sicim-Yüksel-Akkord consortium and Tekfen Construction slated to build the line. Initial gas flow is expected sometime in 2020. A project the size of TANAP will finally help Turkey realise its long-sustained dream of becoming an energy transit hub.
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