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Turkey courts Turkmenistan to diversify energy imports

By JOHN C.K. DALY, UPI International Correspondent

WASHINGTON, Sept. 3 (UPI) -- The implications of the recent conflict between Russia and Georgia continue to reverberate far beyond the two countries. The confrontation exposed the vulnerability of Western export routes of Azeri Caspian oil across Georgia into Turkey via the $3.6 billion, 1,092-mile Baku-Tbilisi-Ceyhan pipeline. The million-barrel-per-day BTC pipeline, the world's second-longest, began operations in May 2006 and provided a fiscal bonanza not only to exporter Azerbaijan, but to Georgia and Turkey as well, which were able to collect lucrative transit fees.

Ironically, it was not the military confrontation in South Ossetia that exposed the pipeline's vulnerability as much as an Aug. 5 attack on the pipeline claimed by the separatist Kurdistan Workers' Party. Turkey consequently is considering any and all options to safeguard its energy imports, including reaching out to Turkmenistan.

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The explosion occurred about 11 p.m. on Turkey's BTC pipeline segment at Yurtbasi village, forcing officials to shut off Valves 29 and 31 as officials waited for the oil contained in the 4-mile segment of No. 30 terminal to burn out. While the pipeline is buried along its entire length to prevent such assaults, its valves and electrical power infrastructure are not, and the attack forced pipeline operator BP to declare force majeure. The attack occurred three days before Georgia began its ill-advised military incursion into South Ossetia. The closure of BTC cost Turkey $300,000 a day in lost transit revenues; since the line became operational, Ankara received $2.6 billion in transit fees.

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During the five-day campaign Tbilisi claimed that Russian aerial forces targeted the BTC pipeline, asserting that bomb fragments were found near the line. Georgian Security Council Secretary Aleksandr (Kakha) Lomaia stated, "Russians bombed the BTC pipeline south of the city of Rustavi," but the Russian military denied the charges, and subsequent surveys of the pipeline revealed no damage. The Georgian segment of BTC is 155 miles, while 669 miles of the pipeline traverse Turkey. BP only reopened the pipeline on Aug. 25.

The incident reminded Ankara, not that it needed reminding, of the vulnerability of its energy imports, which fuel 90 percent of the country's needs. Both major suppliers of natural gas to Turkey are currently in disfavor with Washington. Iran currently provides nearly one-third of Turkey's domestic demand, while Russian energy giant Gazprom provides 63.7 percent of Turkey's natural gas imports, primarily via the Black Sea undersea Blue Stream pipeline, with smaller volumes coming from Azerbaijan. Turkey's giant northern neighbor also provides 29 percent of the oil used in Turkey.

The problem for Turkey is that it's caught in the larger regional "power politics." Last Dec. 31 Turkmenistan suddenly halted natural gas shipments to Iran, citing "essential" work on its pipeline. Iran in turn cut its natural gas shipments to eastern Turkey, and when Ankara appealed to Gazprom to increase its shipments to make up the shortfall, it received a polite "nyet," forcing it to tap its strategic natural gas reserve until the crisis was resolved.

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Moscow also has indicated its displeasure with Turkey allowing U.S. warships carrying humanitarian relief for Georgia to pass the Turkish Straits by suddenly and unilaterally halting Turkish truck shipments into Russia, citing new customs regulations, with Ankara estimating that $3 billion in losses to the two countries' $38 billion annual bilateral trade turnover have already occurred. In an attempt to resolve the issue, Russian Foreign Minister Sergei Lavrov just visited Turkey, his second visit in three months.

In light of Moscow's ambivalence, Turkey is turning once again to the possibility of expanding energy ties with Turkmenistan.

On Sept. 2, the same day that Lavrov left Ankara, Turkish Minister of Energy and Natural Resources Mehmet Hilmi Guler met with Turkmen President Gurbanguly Berdimuhamedov in Ashgabat and discussed prospects for increasing energy cooperation, according to the press service of the Turkmen president. Raising Guler's hopes, Berdimuhamedov said, "Turkmenistan is open for mutually beneficial cooperation with all countries, first of all with reliable and long-standing friends such as Turkey." Berdimuhamedov invited Turkish participation, possibly partnering in projects to explore Turkmenistan's Caspian Sea coast as well as Ankara participating in high-technology ecology-friendly energy projects.

Good intentions aside, there exists the minor inconvenience that as yet there exists no direct Turkmen-Turkish natural gas pipeline; as noted earlier, all current Turkish imports of Turkmen natural gas are first routed through Iran via the the Saparmurat Niyazov-era $190 million, 124-mile Korpehze-Kurt Kui 8 billion cubic meters (bcm) per annum natural gas pipeline, opened in September 1998. Korpezhe-Kurt Kui was Turkmenistan's first pipeline not crossing Russian territory.

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Turkey for years has pinned its hopes on the proposed $5 billion Caspian undersea Trans-Caspian Gas Pipeline, which would have an annual capacity of 30 bcm of natural gas and would run from Turkmenistan's eastern Caspian port of Turkmenbashi to Azerbaijan's capital, Baku, where the gas would be pumped westward through the South Caucasus Pipeline, also known as the Baku-Tbilisi-Erzurum Pipeline.

Unfortunately for Turkey, there exist several substantial obstacles to such a project. First, Gazprom has been ardently courting Turkmenistan to sell it its surplus natural gas production, dangling the enticing incentive of paying market rates for it, a temptation that Berdimuhamedov, despite Western energy company approaches, may find irresistible.

The second obstacle is geographical -- the five nations bordering the Caspian have yet to agree to a definitive division of its seabed, and it's unlikely that the Trans-Caspian Gas Pipeline therefore could be expected to attract significant foreign investment, especially as Russia and Iran most likely would oppose the project, as it bypasses them both.

The third and final obstacle is again geographical, in that the Trans-Caspian Gas Pipeline would feed into the Baku-Tbilisi-Erzurum Pipeline and, as recent events have shown, the pressure that Russia can bring to bear on energy exports transiting Georgia is substantial.

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In light of such realities, it would seem, at least in the short term, that Turkey, like Georgia, is going to have to find a way to coexist with a resurgent Russia, as are Gazprom's European customers, however much thawing Cold Warriors might wish to revive a confrontational posture toward Russia. If present political trends continue, then millions of European and Turkish consumers might see the new Cold War reflected in their thermostat settings.

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(e-mail: energy@upi.com)

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