Turkey in the Context of United States and European Energy Security

"Nuzhet Cem OREKLI" Turkey’s role as a key energy transit country in the Post-Soviet era was largely conferred on Ankara by Washington. The very concepts that were used to depict Turkey’s newly acknowledged importance such as “Multiple Pipelines” and “East-West Transportation Corridor” were frequently pronounced by the senior officials in the Clinton administration at keynote speeches in Washington D.C. or at testimonies before the Senate Relations Committee. ! Multiple Pipelines – a number of complementary routes that reduce dependence on any one export option4. The pursuit of this strategy by the U.S. aimed to ensure: the spreading of influence and profits among the regional powers, promotion of competition, efficiency, and reduce the risk of supply disruptions in any single area5. ! East- West Transportation Corridor – a strategic hydrocarbon export corridor from the Caspian Region to Western markets via Georgia and Turkey. This comprised construction in parallel of the Baku-Tblisi-Ceyhan (BTC) Oil Pipeline, Baku-Tblisi-Erzurum Gas Pipeline6 and Trans-Caspian Gas Pipeline. In the past, the notions mentioned above could have been considered primarily within the framework of decreasing the Caspian countries’ dependence on Russia, by the construction of additional oil and gas export pipelines that by-passed Russia. However, in the Post-September 11 world in which U.S.- Russia Energy Co-operation has become the new fashion of the day in Washington D.C., it is now imperative to focus on Turkey’s function in the context of U.S. Energy Security policy. The main pillars of U.S. Energy Security Policy that are relevant for U.S.-Turkish relations can be outlined as follows: ! Reducing Dependence on Persian Gulf Oil Supplies: Today, the U.S. imports over 50% of its oil, compared to 36% at the time of the 1973 oil crisis.7 The U.S. has tried to reduce its dependence on Persian Gulf oil supplies by a diversification policy of shifting its imports to the Western hemisphere, North Sea and West Africa. However, the U.S. Energy Information Administration projects this import dependency to rise to 60% in the year 2010, of which two thirds will be supplied from the Persian Gulf. Oil supplies from the Caspian region are expected to have a marginal effect on the Middle East’s share of oil exports. Nevertheless, the U.S. will actively continue to push for the access of Caspian oil supplies to world markets, especially through Turkey. The U.S. will also try to ensure that a portion of future Iraqi oil supplies access world markets via the Mediterranean and Red Sea. ! Preventing Supply Disruptions: As the recent events in Venezuela and Nigeria have demonstrated, the principal security concern is not a global physical shortage in oil supplies, but a crisis in any area that can disrupt supplies and cause economic distortion.8 The principal way of limiting the effect of such disruptions is by increasing the number of energy suppliers, including those from the Caspian region. Transit countries with a good track record for security and reliability, such as Turkey, are also important in this respect. ! Surplus Capacity: The availability of spare production capacity among certain oil suppliers, most notably Saudi Arabia, has in the past allowed to cushion the effects of oil supply disruptions elsewhere. In the last twenty years, spare capacity has deteriorated rapidly, decreasing from 25% in 1985 and 8% in 1990 to around 2% of global demand in 2001.9 Iraq could emerge as a quasi-surplus supplier in the next decade, with a portion of its production accessing world markets via Turkey. As in many other instances, Brussels discovered Turkey’s role as a key energy transit country, long after such a vision was first transcribed in Washington. The Green Paper, titled “Towards a European Strategy for the Security of Energy Supply,” adopted by the European Commission in November 2000 states that “particular attention should be given to transit states such as Turkey in the context of transport routes that will be necessary for the full exploitation of the resources of the Caspian Sea.”10 The Green Paper also emphasises that “the construction of new oil and gas pipelines will make it possible to import oil and gas from the Caspian Sea basin and the southern Mediterranean, thereby improving security of supply by diversifying geographic sources of supply.” The EU’s strong interest in strengthening new supply networks should be assessed based on the following realities facing the Union as outlined in the Green Paper: ! The EU currently imports 50% of its energy requirements (compared to 24% in the U.S.), 76% of its oil demand, and 40% if its natural gas consumption. ! Overall energy dependence of the EU could reach 70% within 20 to 30 years. In the case of oil, dependence could reach 90%, for gas 70%. ! In 2020 OPEC is expected to cover 50% of the EU’s oil needs. ! Geographical diversification of the EU’s gas supplies is desirable as long as 41% of imports are from Russia and almost 30% from Algeria. ! Enlargement will only serve to reinforce EU’s energy dependence. Driven by need to reduce the potential gas surplus in Turkey and the desire to serve as a transit country for gas supplies from the Caspian and Middle East to Europe, BOTAS has embarked on developing various schemes, including the construction of an Interconnector with Greece and a pipeline to Austria via the Balkans. These are encouraging steps pursued in co-operation with the national gas companies in the region. However, even if the forerunner projects prove to be successful, in the long term the delivery of substantial volumes of gas supplies to Europe from the Caspian and Middle East through Turkey will ultimately depend on the competitiveness of such options, especially vis-à-vis Russian supplies. Security of supply may be on the agenda of bureaucrats and policy makers in Brussels, but price will continue to be the prime factor for the European consumer. On the other hand, it is important to realise that success in such export schemes will act as a catalyst for more major ones, since markets become more readily available once the infrastructure is in place.