Analysis - Turk energy hub hopes rise, security a concern

Oil markets were shaken earlier in August by Russia’s military thrust onto Georgian soil, through which the $4 billion Baku-Tbilisi-Ceyhan pipeline runs, as well as a 10-day fire in eastern Turkey that originally stopped the flow on the line that provides 1% of world oil supplies from the Caspian basin.

Analysts say the violence in Georgia, which included the bombing of military installations, proves the need to divert energy dependence from a resurgent Russia, which showed Ukraine in 2006 it is ready to flex its muscles to deal with political disputes.

That may help realize European Union candidate and NATO-member Turkey’s hopes of becoming a regional energy hub, attracting pipeline and other energy infrastructure investment, while billing itself as a reliable friend to the West. “As far as Turkey goes, this shows Europe the urgency of being less dependent on Russian energy. This concern should help create a more united European energy policy that will work to diversify energy dependence and could in the end strengthen the case for the Nabucco,” said Gareth Winrow, Turkey energy security analyst.

Turkey, apart from being the longest transit state of the BTC is also a member of the six-country Nabucco Consortium that plans to build a pipeline that will bypass Russia, bringing Caspian natural gas supplies to Europe. The €7.9 billion Nabucco pipeline, aimed at pumping 31 billion cubic meters of gas via Turkey and the Balkans from 2013, was born out of anxiety over Russian supplies when a political dispute between Moscow and Kiev cut exports in 2006.

Russia supplies a quarter of the EU’s gas. But Turkey is also aware that recent developments have strengthened Ankara’s hand. “Projects like the Nabucco that is supported by the European Union and is important from a point of view of supply security will only strengthen Turkey’s position,” said an official at the Prime Minister’s office, speaking on condition of anonymity.

SABOTAGE

But even if Turkey’s hand is strengthened as a reliable transit country, stuck between the Caucasus, Russia and the Middle East, it must also prove that it can guarantee the security of pipelines on its territory. Responsibility for the explosion and fire in eastern Turkey that stopped the flow of the BTC in early August was claimed by the separatist Kurdistan Workers Party (PKK), which usually attacks military targets in Turkey. The group also said in a statement it was planning on carrying out more attacks on economic targets, including pipelines that cross Turkey.

Government authorities are still carrying out an investigation at the site of the blast that occurred the night of August 6-7 to find out the cause of the blast. But Energy Minister Hilmi Guler said previously there was no evidence of sabotage. In the long-term the possibility of sabotage on the pipeline may pose more problems to an east-west energy corridor through Turkey than the conflict in Georgia.

“I doubt the Georgia conflict will have any significant impact on energy supplies or investments. What will have a much more significant impact is the terrorist actions, which disrupted BTC before the hostilities started,” said Jonathan Stern of the Oxford Institute for Energy Studies. “If it’s that easy for disorganized terrorists to sabotage the line, this is not good news,” he said.

While some officials have said the explosion and fire on the BTC does not look like the work of the PKK, the accident has caused some concerns about pipelines that run through Turkey. The PKK claimed responsibility for an explosion on a pipeline between Turkey and Iran in March, which halted gas exports along the line for five days.

BP owns 30.1% of the BTC, while Socar holds 25%. Other shareholders include US Chevron and ConocoPhillip, Norway’s StatoilHydro, Italy’s Eni and France’s Total. “If it was the PKK, they attacked an above ground area which is a soft target. In theory a second attack is possible. It’s impossible to secure every point along the pipeline, but they should obviously improve security along above ground pumping stations, valves,” said Winrow. (Reuters)