November 21, 2012 8:31 pm
In the world of natural gas, geography is everything. And for Turkey, located between the rich gasfields of the Caspian and north Middle East and the gas-hungry markets of the EU, geography is about to become destiny with the construction of the planned Trans-Anatolian gas pipeline (Tanap).
A joint venture between Turkey and Azerbaijan, its eastern neighbour, Tanap is expected to begin by carrying gas from the Azeri sector of the Caspian Sea with a possible later expansion to carry gas from Turkmenistan and other Caspian states.
Planned to be commissioned in 2018, Tanap will initially supply 6bn cu m/yr of gas from Azerbaijan’s Shah Deniz field to Turkey, with a further 10bn cu m/yr crossing Turkey on its way to Europe.
Good news for Turkey, where demand is expected to exceed its existing import portfolio within two to three years, but even better news for the EU which has long been looking to secure access to new supplies to reduce reliance on existing sources. Chief among those is Russia’s Gazprom, which meets about 25 per cent of EU gas demand, and in September became the subject of an anti-trust case by the EU.
Since the late 1990s, EU hopes have been set on the creation of the “Southern Gas Corridor”, a bespoke pipeline to carry gas from the ample reserves of the Caspian and north Middle East through Turkey to markets in Europe.
Until a year ago, EU hopes were pinned on the Nabucco pipeline being developed by a consortium of Austria’s OMV, Germany’s RWE, Hungary’s MOL and the state gas companies of Romania, Bulgaria and Turkey, to carry gas from Eastern Turkey all the way to Europe’s main gas hub at Baumgarten in Austria.
But, with questions over whether it could succeed in persuading the BP-led consortium developing the Shah Deniz field to favour the project over two rival pipeline projects, Azerbaijan and Turkey stepped in with Tanap.
Tanap’s first phase is expected to cost in the region of $8bn. It will be scalable to 30bn cu m/yr, with the extra capacity expected to be used to carry gas from other gasfields currently being prospected in the Azeri sector of the Caspian.
Hakan Turker, BP’s head of external affairs and security for Turkey, says the Shafaq-Asiman block it is prospecting in partnership with Socar, the state-owned oil and natural gas corporation of Azerbaijan, could alone hold as much as 1tn cu m of gas.
However, such are the reserves available in the region that a second parallel line is already being planned.
Gulmira Rzayeva, an analyst at Azerbaijan’s official strategy research centre, says: “There is the possibility of adding a second parallel line to double throughput to 60bn cu m/yr.”
That extra capacity could be used to carry gas from Turkmenistan, Kazakhstan or any other country in the Caspian region with gas reserves available for export westwards.
With the delivery of 10bn cu m/yr of Azeri gas to Turkey’s western borders now all but guaranteed for 2018, and with the promise of more to follow, two projects are competing to carry the gas on to European markets starting at Turkey’s western borders.
A truncated Nabucco West project aims to carry 31 billion cu m/yr of gas to Baumgarten, while the Trans-Adriatic Pipeline, backed by the US group EGL, Norway’s Statoil, and Germany’s Eon, is expected to carry up to 20bn cu m/yr of gas through Greece and Albania and across the Adriatic to markets in Italy.
A decision on which line will carry the gas is expected from the consortium developing the Shah Deniz field by the middle of next year, with consortium members BP, Statoil and Total considering an offer to take a combined 29 per cent stake in Tanap, alongside Socar (51 per cent) and Turkey’s state pipeline company Botas (20 per cent).
As well as further enhancing European energy security, Tanap offers the same for Turkey, whose gas demand is expected to exceed its current 51.8bn cu m/yr import portfolio within the next two years.
This is an important consideration given that Turkey has few energy reserves of its own beyond low grade lignite and some unexploited hydro potential and that power demand is expected to continue rising at about 8 per cent a year. Imported gas has long been earmarked to meet much of Turkey’s baseload.
Already 21 new gas-fired plant totalling 21.3GW have been issued with generating licenses despite no new gas being available to supply them.
Applications for a further 60 totalling 29.2GW are on hold, with Turkish officials warning private sector developers will need to arrange their own gas imports if the plant are to be constructed. An impasse that Tanap should go some way to resolving.
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