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Turkey: Gas Shortages May Force A Decision On Caspian Pipelines

Boston, 18 November 1998 (RFE/RL) -- The political standoff over Caspian Sea pipelines may soon come to an end as Turkey faces the threat of severe gas shortages.

Until now, oil has been the focus of the intense international competition for Caspian Sea energy routes. The Azerbaijan International Operating Company has delayed an oil pipeline decision indefinitely, under pressure from Washington and Ankara to use Turkey's Mediterranean port of Ceyhan.

The oil industry sees the Baku-Ceyhan route as far too expensive. Some companies are also wary of any plan that rules out the possibility of a less costly oil route through Iranian territory.

But Turkey may have exposed a strategic rift with the United States by declaring last week that it will turn to Iran for gas, unless alternative sources materialize. The oil and gas situations are entirely different. But gas may quickly become more important in the Caspian equation, forcing an end to the political deadlock.

Questions about Turkey's intentions were raised last week after the country started work on a 1,000-kilometer section of pipeline from Ankara to Erzurum that could be extended to Iran.

Last month, Turkey also signed a preliminary agreement with Turkmenistan to buy gas that would be delivered over a trans-Caspian line. But Turkish officials in Washington have made clear that they will use the Iranian route if the line across the Caspian cannot be built first.

Avoiding Iran is one of the primary reasons that the U.S. is promoting the Baku-Ceyhan pipeline for oil. But the policy may do little good if Iran becomes a conduit for gas supplies to Turkey and Europe, instead.

Ankara's reasons for backing Baku-Ceyhan are to minimize additional tanker traffic on the Bosporus and, incidentally, to profit from pipeline transit fees. But its concern about gas supplies may be even more critical, making it willing to deal with Iran.

Turkey's demand for gas has been growing by about 10 percent a year during the 1990s. Unless it gets additional gas, the country could soon suffer electricity shortages and brownouts. Turkey can live without the profits from Caspian oil. But without gas, its economy could grind to a halt.

Ankara's increasing willingness to deal with Iran for gas supplies appears to be influenced by several factors.

First, the threat of future shortages has become more pressing with the passage of time, while political squabbles over the Caspian have created more problems than solutions for Turkey's energy security.

Turkey also appears to be less concerned with pursuing its 23-year contract to buy gas from Iran, now that the former Islamicist Prime Minister Necmettin Erbakan has been ousted from power. When the $20 billion supply deal was signed in 1996, some fears were voiced that it could promote Islamic links. But since Erbakan was banned from politics in June 1997, the government now seems to see little reason to worry about the implications of an Iranian business deal.

Lastly, time has also brought increasing distrust of Russia, which originally promised to increase its gas supplies fivefold by the year 2010 in order to compete with Iran and Turkmenistan. Russia has promised to build a gas pipeline under the Black Sea, but Turkey is now doubtful that cash-strapped Moscow will undertake the ambitious project known as Blue Stream.

Russia is also not above keeping Turkey in suspense over gas supplies, so that it can influence the Bosporus access issue. Eighty-three percent of the oil that passed through the Bosporus last year was Russian, according to Turkish estimates. Whether or not the Baku-Ceyhan line is built, Russian tanker traffic on the Black Sea is bound to increase with construction of a separate oil line from Kazakhstan's Tengiz field to Novorossiysk.

The net effect of all these concerns is that Turkey may now face the possibility of having not enough suppliers of gas, although it seemed that it had too many a year ago. If Russia is undependable and trans-Caspian development proves difficult, it may need an Iranian pipeline for Turkmen supplies, as well as liquefied natural gas from Egypt and other sources.

The future of trans-Caspian gas also seems in doubt this week after Turkish President Suleyman Demirel apparently ended a visit to Turkmenistan without signing an expected agreement on the pipeline plan.

The politics of the trans-Caspian option will remain complex as long as Turkmenistan and Azerbaijan continue to feud over a division of Caspian oilfields. Turkmenistan might also be unwise to channel its exports through Azerbaijan, unless it has alternate routes through Russia or Iran.

When and if Iran serves as a route for gas, it may be harder to argue that it is unsafe for oil. Aside from breaking the U.S. embargo, Iran may also be able to convince other concerned countries that it is a trustworthy link to Caspian resources by delivering Turkmen gas.

The United States is still likely to resist Iranian routes for either oil or gas unless it sees progress on the political and security issues that it has raised, time and time again. But if Iranian participation becomes a reality, the two sides may move closer to an accommodation.

Neither will benefit from preserving the standoff, and Turkey's energy needs are too great to fall victim to political concerns.

(Lelyveld is national correspondent for the Journal of Commerce. He wrote this analysis for RFE/RL)