Over to you, Azerbaijan

Ukraine has requested the Azerbaijani-Turkish Trans-Anatolian gas pipeline (TANAP) consortium to allow it to be part of this project. TANAP is 20 percent owned by Botas (Turkey) and 80 percent by SOCAR (Azerbaijan). The Day’s sources claim that Ukraine is bidding for a 10-stake in the consortium.

According to Vladyslav Kaskiv, chairman of the Ukrainian State Agency for Investments and National Projects Management, Turkey has officially supported our country’s bid, and the ball is now in Azerbaijan’s court – that country must say its final yes or no. “This project currently provides for a pipeline up to the Bulgaria-Turkey border. And it is open to question where it will further go,” Kaskiv told The Day, “and it would be good if the Trans-Anatolian gas pipeline be extended towards Ukraine.” The benefit that Ukraine could derive from participating in this project is that it will have an additional source of gas supply and reduce its dependence on the Russian monopolist, while the consortium parties will have a reliable buyer of gas.

It will be recalled that TANAP is similar to the well-known Nabucco, a prospective rival to South Stream. It will run from Azerbaijan to Greece or Bulgaria across Turkey. Azerbaijan and Turkey signed a memorandum on building the Trans-Anatolian gas pipeline last December. The pipeline will be built by SOCAR, an Azerbaijani state-run oil company, and the Turkish companies BOTAS and TRAO. The project, in which six to seven billion dollars will be invested, is to be carried out within six years. The pipeline will be capable of putting through 16 billion cubic meters of gas a year, with 6 billion remaining in Turkey and the rest going to Europe. There are two main directions of supply under consideration: to Italy (Trans-Adriatic Pipeline) or South-Eastern and Central Europe, which comprises the Nabucco and SEEP (South East Europe Pipeline). SEEP provides for transporting gas from Turkey to Eastern Europe through separate interconnectors, including those that lead to Bulgaria, Rumania, Hungary, and Austria.

Mykhailo HONCHAR, energy programs manager, Nomos center:

“Ukraine can reap several benefits from participating in the consortium. Firstly, pipe producers will be able to get new orders placed.

“Secondly, if constructed, TANAP will be supplying Ukraine with Azerbaijani gas. This option will work if TANAP is extended to join the Trans-Adriatic Pipeline (TAP). This is quite a logical scenario, for the governments of Italy and Albania reached a tripartite agreement to support the Trans-Adriatic project. Should the TANAP pipeline cross the EU border (Turkey and Bulgaria), the existing pipelines, which currently supply Russian gas to Turkey across Ukraine, Moldova, Romania, and Bulgaria, may be used in a reverse mode to deliver gas to Ukraine. Besides, TANAP may allow Turkey and Ukraine (if the latter is a consortium party) to essentially reduce the consumption of Russian gas by replacing it with that of Azerbaijan.

“But the main problem in Ukraine’s accession to the Trans-Anatolian gas pipeline is who will say the final word about participation in this consortium. I will remind you that 80 percent of the TANAP facilities belong to Azerbaijan. Azerbaijani official reports are saying that it is planned to divide this 80-percent stake as follows: 51 percent will remain the property of an Azerbaijani state-run company and the rest will be distributed between the BP and StatOil, the consortium’s gas-extracting companies that are doing the second stage of the Shah-Deniz gas field development. Therefore, from this angle, the Turkish side’s agreement to Ukraine’s participation is a positive thing, but it is worth nothing without the support of Azerbaijan. Azerbaijan has no problems such as shortage of investments or difficulties in procuring the equipment. Therefore, economic benefits from cooperation with Ukraine will not be the decisive factor in making this decision. Azerbaijan will be guided by political considerations in deciding whether or not to accept Ukraine’s participation in the Trans-Anatolian pipeline project. Azerbaijan may perhaps allow Ukraine to take a stake in the TANAP consortium if we side with it in the Karabakh conflict.”