Pipeline focus at Istanbul World Energy Congress

Aliyev, Putin and Erdoğan in Istanbul, 10 October 2016. [The Kremlin]

Major pipeline projects such as Turkish Stream and TANAP were the focus of the 23rd World Energy Congress which opened in Istanbul yesterday (10 October) in the presence of the leaders of Russia, Turkey and Azerbaijan.

With the attendance of 250 ministers and CEOs as well as the participation of key figures in policy-making, the forum in Istanbul highlighted the importance of Turkey as a global energy player.

Turkish Prime Minister Binali Yıldırım said that the energy demand in Turkey grew faster in the last ten years than any other OECD member state.

“In this context, Turkey is the second country after China,” he said.

Turkey’s demand for energy could be twofold in recent years, the prime minister said.

“Turkey has a dynamic and fast-growing economy,” Yıldırım said, pointing out that Turkey’s import dependency was still 72%.

Turkey plans to import gas from Azerbaijan via the TANAP pipeline, which is part of the Southern gas corridor, and from Russia via the Turkish Stream, a project to bring Russian gas to the European territory of Turkey under the Black Sea.

Russian President Vladimir Putin signed yesterday with his Turkish counterpart Recep Tayyip Erdoğan the Turkish Stream deal that is estimated at US$12.7 billion. Russia also granted Turkey a discount on the price of gas it already sells to the country.

Putin in Turkey to push energy deals

Russian President Vladimir Putin visits Turkey today (10 October) for talks with counterpart Recep Tayyip Erdoğan, pushing forward ambitious joint energy projects as the two sides try to overcome a crisis in ties.

‘Energy hub’

“You now witnessed the signing of the intergovernmental agreement on the construction of Turkish Stream. As part of this project and the broadening of our cooperation, we agreed on a mechanism by which to provide a discount on gas (for Turkey),” said Putin according to RT.

“This way we are moving towards realising the plans of the Turkish President to create a major energy hub in the country, he added.

Russian Energy Minister Aleksandr Novak said Gazprom of Russia and Botas of Turkey would take the responsibility of figuring out the amount of the discount.

The chief executive of Russian gas giant Gazprom, Alexei Miller, had said ahead of the signing that the agreement foresees the construction of two lines of pipe on the bed of the Black Sea.

The annual capacity of each line is to be 15.75 billion cubic metres of gas a year (bcm/y) making a total capacity of over 30 bcm/y. The agreement aims to build the lines by 2019, Miller added.

The first branch will supply gas directly to Turkey, while the second is to be used to deliver gas to European countries through Turkey, he explained.

It is, however, unclear what route would the Russian gas take from the European territory of Turkey, the options being via Greece and via Bulgaria.

“The intergovernmental agreement would also define the deadline by which the two maritime threads are to be built. It’s December 2019,” Miller said.

Russia will construct and own the maritime stretch of both Turkish stream branches, Novak said.

The land part of the branch, supplying gas to Turkey, will belong to a Turkish company, with a joint venture to be created which will assume ownership of the transit pipeline, he added.

Aside from Turkish Stream, Putin and Erdoğan also reached other pacts including speeding up the construction of Turkey’s first nuclear energy central at Akkuyu and strengthening bilateral military contacts.

“Today has been a full day with President Putin of discussing Russia-Turkish relations … I have full confidence that the normalisation of Turkish-Russian ties will continue at a fast pace,” Erdoğan told a joint news conference. “Our relations will [improve] in many fields, be it in [the] defence industry, political, economic, trade, tourism or culture. We will make up for lost time in the coming days.”

Speaking in Istanbul, the President of Azerbaijan Ilham Aliyev said his country’s energy investments in Turkey will reach $20 billion in line with common interests.

Aliyev said that Azerbaijan and Turkey built energy infrastructure, such as pipelines, to ensure energy security between both countries.

“On a daily basis, Turkey plays a crucial role in the energy security of the region,” he said.

He signaled that growth in Turkey’s prosperity is important not only for Turkey as a leader in defining energy policy in the world, but also for the rest of the world.

Aliyev highlighted projects, which have been implemented in Turkey, to transfer Azerbaijan’s oil and gas, and said Azerbaijan’s gas will be delivered to global markets via four projects under the South Gas Corridor totaling $45 billion in value.

He hailed Trans Anatolian Natural Gas Pipeline (TANAP) as playing a crucial role in providing energy security in the region.

“We took the first step for the Trans Anatolian Natural Gas Pipeline (TANAP) in 2012 in Turkey, which is a significant part of the South Gas Corridor, under the leadership of Azerbaijan and Turkey. TANAP is an important agreement and many countries might become a part of this project,” he added.

New discoveries improve the Southern Gas Corridor’s prospects

Azerbaijan said natural gas produced in the Absheron offshore gas field in the Caspian Sea could be exported through the Southern Gas Corridor. Until now it was planned that only gas from Shah Deniz 2, another offshore field, would be sent to Europe.

He suggested that projects to transfer Azerbaijan’s oil via Turkey should be increased between the countries.

Pointing out that Turkey is a member of the G20, President Aliyev said that in order to describe the Turkish-Azerbaijani relations, it is enough to mention that during the G20 summit in Antalya in November last year, Turkey had a right to invite a non-member country, and it invited Azerbaijan.

“I once again express gratitude to you. This is my fourth visit to Turkey this year. My dear brother Recep Tayyip Erdoğan also pays visits to Azerbaijan. Our friendship, our unity and our brotherhood is permanent, eternal and indestructible,” Ilham Aliyev said.

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