Number 11 — July 2006

Research Notes
T h e W a s h i n g t o n In s t i t u t e f o r N e a r E a s t P o l i c y

Assessing Turkey’s Future As

an Energy Transit Country
By Daniel Fink

O
n June 2, 2006, the first load of Caspian oil Russian gas exports to the EU run through a pipeline
from the Baku-Tbilisi-Ceyhan (BTC) pipe- through Ukraine. Dependency on Russia is espe-
line was loaded onto the British Hawthorn, cially severe for Greece, Austria, and Germany, which
a tanker that set sail to the Italian port of Savona with receive 79 percent, 65 percent, and 38 percent of their
85,000 tons of oil in its hold. The first shipment of gas from Russia, respectively.
Caspian oil arrived six days earlier through the BTC, The pipelines through Turkey can be classified in
where it began to fill one of the seven 1-million–barrel two groups. First are those on the east-west corridor,
tanks at the Ceyhan Marine Terminal on Turkey’s carrying Caspian or Persian Gulf oil and gas. Second
Mediterranean shore. are those on the north-south corridor, carrying Rus-
The recently completed BTC pipeline along the sian oil and gas. Although the EU hopes that Tur-
east-west (Caspian Sea to the Mediterranean) corri- key’s energy infrastructure will decrease dependency
dor offers the landlocked Caspian basin another export on Russian gas, Russia will still play a significant role
route to global markets bypassing Russia. Interestingly, in providing Europe with gas along the north-south
at this stage, Russia is also interested in Turkey’s role as corridor.
an energy transit country along the north-south (Black In order to establish itself as an energy hub, Turkey
Sea to the Mediterranean) corridor, giving Moscow will have to expand its natural gas grid for domestic con-
a chance to bypass Ukraine; currently, Russia exports sumption, storage, and export. Since 1987, Turkey has
much of its oil and gas to Europe through Ukraine. received its natural gas from the Russian Federation–
With two pipelines under construction and several Turkey gas pipeline. In 2004, Turkey consumed 688,000
projects under consideration, Turkey, if it can master barrels per day (bbl/d) of oil and 22.5 billion cubic
the task of balancing Western and Russian interests, meters (Bcm) of gas, the equivalent of 388,000 bbl/d.
hopes to become an important energy transit route.
October 2005. Available online (http://ec.europa.eu/energy/russia/
presentations/doc/2005_luxembourg_en.pdf ).
Background: EU’s Dependency on Russia . “Ukraine FM Tells EU: Learn from Gas Dispute with Russia,”
for Energy Agence France-Presse, February 8, 2006.
. “Table of European Imports of Russian Gas,” Agence France-
On December 31, 2005, Russia cut gas deliveries to Press, January 4, 2006.
Ukraine, which in turn reduced supplies to the Euro- . Meanwhile, Turkey is also looking to expand its own energy sector,
which includes plans to pursue nuclear energy. In February 2006,
pean Union (EU). This action caused trepidation Energy Minister Hilmi Guler announced plans to build a nuclear
among the EU members, which in 2004 received 35 plant in Sinop. “Turkish Minister Says Nuclear Energy Is a Must,”
BBC Monitoring Europe, April 14, 2006.
percent of their gas from Russia. Eighty percent of . Figures in billion cubic meters of gas (Bcm) will be converted to
the equivalent million barrels of oil per day (bbl/d). The conversion
formula is 1 Bcm = 6.29 million barrels.
. “The Energy Dialogue EU-Russia 2005,” European Commission, . British Petroleum, “BP Statistical Review of World Energy 200,”

Daniel Fink is a research assistant with The Washington Institute’s Turkish Research Program, working under the supervision of Dr. Soner
Cagaptay. The opinions expressed in this report are his own and not necessarily those of the Institute, its Board of Trustees, or its Board of Advisors.
Copyright © 2006 The Washington Institute for Near East Policy, 1828 L St. NW, Suite 1050, Washington, DC 20036. All rights reserved.
 R e s e a rc h No t e S # 11

Sixty-four percent of Turkey’s gas consumption comes get for Iraqi insurgents since 2003. The 966-kilometer-
from Russia, with the rest coming by pipeline from long parallel pipelines have a nominal capacity of 1.1
Iran (276,000 bbl/d) and by tanker (as liquefied natural million bbl/d and 500,000 bbl/d, respectively. Since
gas, or LNG) from Algeria and Nigeria (20 percent). the current war in Iraq, however, the actual use of
Another development in Turkey’s energy infra- the pipelines has fluctuated. Because of attacks, the
structure is a World Bank Gas Sector Development pipelines are shut down more days than they are open.
Project that will provide Turkey with a facility to store The maximum flow through the pipelines since the
the energy equivalent of 6.29 million barrels. This war began has been 750,000 bbl/d.
facility will be the first of its kind in Turkey. On Feb-
ruary 3, 2006, Turkey’s energy minister, Hilmi Guler, Lines under Construction
and Gazprom CEO Aleksey Miller discussed coop- South Caucasus Gas Pipeline (Baku-Erzurum-
eration on the project, which will be built south of the Ceyhan Pipeline). The South Caucasus Pipeline
Tuz Golu (Salt Lake) in central Turkey. (SCP), also known as the Baku-Erzurum-Ceyhan
pipeline, will carry Azerbaijani gas to Turkey. It is
East-West Corridor built by the South Caucacus Gas consortium paral-
Completed Lines lel to the BTC up to the Georgian-Turkish border,
Baku-Tbilisi-Ceyhan Oil Pipeline. The 1,770-kilome- which is 98 percent complete. From there, the Turk-
ter BTC has the potential of carrying between 1 mil- ish government is building a 260-kilometer extension
lion and 1.5 million bbl/d of crude to Ceyhan, though linking the SCP to its gas network in the eastern city
initial throughput will be 400,000 bbl/d. On May 25, of Erzurum. The pipeline will begin supplying gas
2005, the Azerbaijani government officially inaugu- to Turkey in fall 2006 and will provide a means of
rated its part of the BTC; the Georgians inaugurated transporting gas from the Azerbaijani Shah Deniz
their portion in October 2005. gas fields in the Caspian Sea to Turkey. The SCP link
The $4 billion pipeline, which seeks to diversify is scheduled to transport the energy equivalent of
Caspian oil export routes away from Russia, is the 114,000 bbl/d of Azerbaijani gas.11
product of Azerbaijani, Turkish, and U.S. coopera-
tion. The United States, which wants to encourage Turkey-Greece-Italy Gas Pipeline. The Turkey-
the independence of former Soviet republics, pro- Greece Interconnector natural gas pipeline project
vided the diplomatic leverage and commitment for will connect Turkey’s and Greece’s natural gas grids
the project. Azerbaijan assembled the consortium to in western Anatolia and western Thrace, respectively,
develop the oil fields, and Turkey agreed to finance its through a seabed pipeline across Canakkale Strait
portion of the pipeline.10 (Dardanelles). Originally envisioned as a confidence-
building measure, the pipeline is now under construc-
Kirkuk-Ceyhan Oil Pipeline. The Kirkuk-Ceyhan tion, with the first deliveries expected in the fourth
twin pipeline, which has been functional since 1977 as quarter of 2006. The pipeline will begin operating at
Iraq’s largest crude export line, has been a major tar- nominal capacity in 2009.12 Turkish prime minister
Recep Tayyip Erdogan called the project a “bridge”
June 14, 2005. Available online (www.bp.com/genericsection.do?ca that “can lead to a further rapprochement between our
tegoryId=92&contentId=7005893).
. Ibid. two peoples on environmental issues and other mat-
. World Bank, “Recent Gas Dispute Stresses Importance of Gas ters.”13 Last year, Italy and Greece signed an agree-
Storage for Turkey” (Ankara, Turkey: World Bank, 2006).
. “Oil from U.S.-Backed Caspian Pipeline Reaches Turkey,” Asso-
ciated Press, November 18, 2005. 11. John Roberts, “Nabucco Gas Group Seeking EU Exemptions,”
10. For more on the BTC, see Soner Cagaptay and Nazli Gencsoy, Platts Oilgram News, April 1, 2005.
“Startup of the Baku-Tbilisi-Ceyhan Pipeline: Turkey’s Energy 12. Kerin Hope, “Russia to Discuss Gazprom Role in New Greek-
Role,” PolicyWatch no. 998 (Washington Institute for Near East Turkish Gas Pipeline,” Financial Times, February 6, 2006.
Policy, May 27, 2005). Available online (www.washingtoninstitute. 13. “Karamanlis, Erdogan Inaugurate Work for Vital Natural Gas
org/templateC05.php?CID=2319). Pipeline Project,” Athens News Agency, July, 3, 2005, Foreign

 www.washingtoninstitute.org
 Assessing Turkey’s Future As an Energy Transit Country

ment to extend the interconnector to transport gas to and Iranian gas to Romania, Hungary, and Austria.
Italy even though construction on the Italy-Greece At its nominal capacity, the pipeline would transport
pipeline has not yet begun.14 the energy equivalent of about 500,000 bbl/d.16
Russia, which views the interconnector pipeline as European support for Nabucco increased in the
a way of providing Western Europe with gas supplies months following the Russia-Ukraine gas dispute.
that bypass Ukraine, has lent its support to the project. Notwithstanding Nabucco’s popularity, the project
Russia’s support could raise the 300-kilometer-long faces both political and economic obstacles. Nabucco
pipeline’s capacity to more than 172,000 bbl/d.15 presents just one option for Iran to use its gas. Iran
has signed agreements to explore multibillion-dollar
Projected Lines deals to export liquefied natural gas to both China
Nabucco Gas Pipeline. The Nabucco pipeline is an and India. Reinjecting its gas into oil fields as a way
ambitious project that seeks to diminish Europe’s of increasing their output is another option supported
dependence on Russian gas. The 3,300-kilometer by many Iranian oil experts. Even if Iran opts for
pipeline would transport Azeri, Kazakh, Turkmen, Nabucco, Iran’s recent behavior—indicating it might
use gas as a diplomacy tool, much like Russia does—
is another impediment to the project. On January 23,
Broadcast Information Service (FBIS T06-17-22Z), July 4, 2006.
14. John McLaughlin, “Power Cut Woes Turn Up Pressure on Italy’s
Policymakers,” Lloyd’s List, January 24, 2006.
15. Kerin Hope, “Russia to Discuss Gazprom Role in New Greek- 16. “Bulgaria Sees a Drop in Russian Gas Supply,” Agence France-
Turkish Gas Pipeline,” Financial Times, February 6, 2006. Presse, January 24, 2006.

www.washingtoninstitute.org  
 R e s e a rc h No t e S # 11

2006, the daily flow of 165,000 bbl/d of Iranian gas to Europe. Turkey’s plans to construct a gas pipeline
to Turkey was decreased to 31,450 bbl/d.17 Although from Turkmenistan were stalled in 1999, although
Iran cited technical failures for the problem, some recent talks suggest that the two countries want to
analysts in Turkey contend that the decrease was revive the project. Turkmenistan envisages a pipe-
Tehran’s way of punishing Turkey because Ankara line that will run 230 kilometers under the Caspian
had just retracted an invitation to Iranian president Sea, carrying the energy equivalent of 275,000 bbl/d
Mahmoud Ahmadinezhad. Possible economic sanc- of natural gas.18 Concern exists about the reliability
tions against Iran caused by its nuclear program could of the legal and regulatory framework. Kazakhstan,
also endanger the project. Nevertheless, on June 26, with its proximity to the Caspian gas fields, presents
the European Commission gave political backing to a more viable supply option. Discord between Azer-
the project, bringing the $5.8 billion scheme one step baijan and Turkmenistan over demarcation rights in
closer to fruition. the Caspian Sea poses another challenge to the real-
ization of the TCP; the TCP would have to cross
Trans-Caspian Gas Pipeline. A Trans-Caspian through Azerbaijan.
pipeline (TCP) would transport either Turkmen or
Kazakh gas to Turkey, presumably for delivery en route Kazakh Oil. On June 16, 2006, Kazakh president
Nursultan Nazarbayev signed an intergovernmental
17. “Flow of Gas from Iran to Turkey Increases but Still below Nor-
mal,” BBC Monitoring, January 23, 2006. 18. Turkish Press Scanner, Radikal, January 31, 2006.

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 Assessing Turkey’s Future As an Energy Transit Country

agreement with Ilham Aliyev, president of Azerbaijan, port of Samsun.25 In November 2005, Blue Stream
allowing Kazakhstan to join BTC by supplying the reached its projected capacity of the energy equiva-
Azerbaijani portion with oil from the extensive Kasha- lent of 275,700 bbl/d.26 On November 17, 2005, the
gan fields.19 The agreement envisages the transport of pipeline was opened at an official ceremony attended
500,000 bbl/d of Kazakh oil by tanker.20 The United by the prime ministers of Turkey and Italy—Recep
States supports introducing Kazakhstan to BTC. “The Tayyip Erdogan and Silvio Berlusconi—and Rus-
USA wants the Kazakh-Azeri talks on the transport sian president Vladimir Putin. Turkey’s Calik Energy
of Kazakh energy resources through the BTC oil pipe- Company, Russia’s Gazprom, and Italy’s Eni are major
line to be completed,” U.S. energy secretary Samuel stakeholders in the project.
Bodman said in March 2006.21 Azerbaijan’s industry
and energy minister, Natik Aliyev, said Azerbaijan was Projected Lines
considering building a new terminal capable of absorb- Samsun-Ceyhan (Bypass) Oil Pipeline. The Turkish
ing the Kazakh oil.22 In December 2005, the head of straits (Bosporus and Dardanelles) are congested, and
Kazakhstan’s national oil company (KazMunaiGaz) tanker traffic poses serious environmental risks to the
said that if oil output reaches 400,000 bbl/d, a pipeline area.27 Istanbul is especially vulnerable because it lies
could be built on the Caspian seabed.23 Demarcation along the two shores of the Bosporus. The Istanbul
rights of the Caspian Sea will have to be resolved for Strait (Bosporus) is a narrow waterway (less than half
the project to be realized. a mile across in most places) with many sharp turns
and powerful currents; the passage of supertank-
Iraqi Gas. Turkish energy minister Hilmi Guler ers through the city’s downtown poses a great risk
expressed Ankara’s desire to build a new natural gas to its inhabitants in the case of an accident. In the
pipeline parallel to the Kirkuk-Yumurtalik pipelines past decade, traffic along the straits has risen by 300
during Ankara’s meetings with Iraqi prime minister percent, with 2.9 million barrels carried daily in 150
Ibrahim Jaafari on February 28, 2006. Turkey’s energy vessels.28 Turkey wants to see a 560-kilometer-long
companies Botas and TPAO are in the process of pipeline from Samsun in northeastern Turkey on the
searching for new sources of oil and gas in northern Black Sea to Ceyhan in southeastern Turkey on the
Iraq and are bidding to diversify Iraq’s natural gas Mediterranean as a route for Caspian oil to reach the
supplies.24 Mediterranean without going through the Turkish
straits. The 560-kilometer pipeline seeks to transport 1
North-South Corridor million bbl/d.29 In April 2006, Turkey’s Calik Energy
Realized Line and the Italian state company Eni received a decree
Blue Stream Gas Pipeline. Blue Stream, the world’s from Turkish president Ahmet Necdet Sezer to con-
deepest twin gas pipeline, began to pump Russian gas duct a six-month feasibility study to construct the oil
to the Turkish port of Samsun in 2003. The $3.2 bil- pipeline. Turkey estimates that a Samsun-Ceyhan
lion pipeline runs from Isobilnoye in southern Russia, pipeline could reduce tanker traffic by 50 percent.30
to Dzhugba on the Black Sea, then on to the Turkish
25. U.S. Department of Energy, Energy Information Administration,
“Turkey,” country analysis briefs, October 14, 2005. Available online
19. Guy Dinmore and Isabel Gorst, “Kazakhstan Signs Pipeline (www.eia.doe.gov/emeu/cabs/turkey.html).
Accord,” Financial Times, June 17, 2006. 26. “Interfax Oil and Gas Report,” Interfax, November 24, 2005.
20. Ibid. 27. On February 22, 2006, the strait had to be closed because of a
21. “US Secretary of Energy Urges Kazakhstan to Join Caspian Pipe- drifting tanker, which nearly rammed into the Dolmabahce palace
line,” BBC Monitoring Central Asia Unit, March 14, 2006. and left eleven other vessels waiting to enter the straits.
22. “Aktau-Baku Pipeline Could Be Built on Caspian Seabed,” Inter- 28. Patrick Byrne, “Pipeline Pedigree Helps Turkey Find a Place in
fax, December 27, 2005. the Sun,” Lloyd’s List, February 22, 2006.
23. Ibid. 29. Richard Swann, “Eni Joins Turkey’s Calik in Plan to Build 1-Mil
24. Evren Mesci, “Kuzey Irak’la Paralel Boru Hatti Için Kulis” (Back- b/d Line Bypassing Bosporous,” Platts Oilgram News, November
stage for a Parallel Pipeline with Northern Iraq), Sabah (Istanbul), 10, 2005.
March 1, 2006. 30. Ibid.

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 R e s e a rc h No t e S # 11

Burgas-Alexandroupolis Oil Pipeline. In 2005, Rus- on the Mediterranean. Alternatively, an LNG terminal
sia signed an agreement with Bulgaria and Greece, could be built in Israel capable of receiving gas from
laying the conditions for a 300-kilometer Burgas- Turkey. Gazprom’s Aleksey Miller supports the idea of
Alexandroupolis pipeline that will run from the Black connecting Turkey to Israel with underwater pipelines,
Sea coast of Bulgaria to the Aegean Sea coast of Greece and he has expressed a desire to connect them to feeder
with an annual capacity of 700,000 to 1 million bbl/d.31 lines capable of reaching Jordan, the Palestinian Author-
This route would allow bypassing the Turkish straits ity, and Lebanon. In March 2006, Israel’s acting premier,
through pipelines that would not cross Turkish terri- Ehud Olmert, expressed his hope for the signing of an
tory. Transneft, Russia’s oil pipeline monopoly, has met intergovernmental agreement saying, “I certainly believe
with executives from Chevron and Kazakhstan’s state that in a year’s time we will be able to sign an agree-
oil company, although construction has yet to begin. ment with Mr. Putin on Russian gas supplies to Israel,
and then a gas pipeline will be built through Turkey, and
Samsun-Ceyhan Gas Pipeline. The construction of we’ll get ready to receive Russian gas.”33
a gas pipeline from Samsun to Ceyhan would allow
Russian gas to be transported farther south along the Turkey As an Alternative
north-south corridor to countries on the Mediterra- Turkey’s ability to establish itself as an energy trans-
nean. In February 2006, Hilmi Guler said that Turkey port hub will depend on an array of intergovernmen-
and Russia participated in discussions related to the tal, business, and territorial agreements. With Russia
extension of a natural gas pipeline to Israel and Leba- trying to broaden its influence, the pace at which Tur-
non.32 Such a pipeline, however, would likely be built key can, with U.S. help, expand the BTC/east-west
only after on an oil pipeline along the same route. corridor in a balancing act with the advancement of
the north-south corridor will ultimately determine
Turkey-Israel Oil/Gas Pipeline. Talks between Turk- Turkey’s future as an energy transport hub. What is
ish and Israeli officials have taken place that envisage the more, while Turkey profits from the east-west corridor
transport of Russian oil and natural gas to Israel through by buying oil and gas from the East and selling it to
four underwater pipelines. The European Investment the West, Russia envisions retaining the profits of the
Bank has financed a feasibility study, although no formal north-south corridor, offering Turkey only transit fees.
plans exist to date. A Turkey-Israel gas pipeline would Russia aspires to achieve a predominant role; it can be
depend on a surplus of either Azerbaijani or Russian a major supplier of energy for shipment through Tur-
gas, which Turkey could transport to Haifa, Israel’s port key. Many of those interested in seeing Turkey as a
corridor for Caspian energy, however, wish to develop
alternatives to strong reliance on Russian energy.
31. Isabel Gorst, “Go-Ahead for Euros 900m Pipeline to Ease Pres-
sure on the Bosphorus,” Financial Times, April 12, 2005.
32. “Turkey and Russia to Extend Gas Pipeline to Israel, Lebanon,” 33. “Israeli Acting Premier Interviewed on Russian Gas, Arms Sales,”
Associated Press Worldstream, February 3, 2006. BBC Worldwide Monitoring, March 20, 2006.

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R e s e a rc h No t e S # 11

Assessing Turkey’s Future As an Energy Transit Country