Azerbaijan’s Energy Policy Achievements (Part-I)

*Dr. Mehmood Ul Hassan Khan 

The geopolitics of energy in today’s world principally revolves around oil and gas. Global energy geopolitics will be principally shaped by the ‘arc of energy’, stretching from the Gulf region to the Caspian Sea, through Siberia and the Arctic region to the Russian Far East, Alaska and Canada.

Azerbaijan, the land of fire has become epicenter of regional energy integration and transcontinental energy supplies. Most recently, Azerbaijan’s President Ilham Aliyev and Recep Tayyip Erdogan have inaugurated the Trans-Anatolian Pipeline (TANAP), the longest element of the Southern Gas Corridor which will supply Turkey and Europe with natural gas from Azerbaijan. The inauguration ceremony was held in Ipsala, Turkey. President Ilham Aliyev termed the inauguration a historic day for the two countries. Moreover, he was of the opinion that TANAP would bring benefits and progress to not just Azerbaijan and Turkey, but the neighboring nations, as well.

With the completion of the construction of Trans-Adriatic Gas Pipeline, which will connect to TANAP on the Turkey-Greece border, for the first time in history, Azerbaijani natural gas will be transported from the Caspian basin directly to the European markets. It marked the completion of the transfer infrastructure to Greece as well as the whole TANAP pipeline. TANAP's first section, ending at a Turkish discharge point in Eskisehir, was completed last year. “Aside from insuring the energy needs of Turkey and other regional countries, it also aimed to contribute to Europe's energy supply security.

While speaking to participants of the inauguration ceremony Turkish president said that a dream of supplying 16 billion cubic meters of Azeri natural gas to Turkey and Europe has come true. He noted that the project would contribute to Europe’s energy security. Non-EU countries such as North Macedonia, Albania, Serbia and Bosnia Herzegovina would also benefit from the pipeline. Furthermore, Turkish President rightly labeled it a project of “regional peace.”

Turkish energy minister Fatih Donmez highlighted the importance of Caspian Energy Resources (CERs) which would change the lives of Anatolia and Europe people. On its part, Georgian Prime Minister Giorgi Gakharia assured that the TANP would bring more opportunities for people and would strengthen region’s role as an East-West energy corridor.

TANAP comprises the longest stretch of the $40 billion Southern Gas Corridor, a series of pipelines that will carry gas from Azerbaijan's Shah Deniz II field to Europe. The $6.5 billion TANAP crosses the breadth of Turkey, east to west, and could transport up to 16 billion cubic metres (bcm) of Azeri gas a year. Europe is allocated 10 bcm, with 6 bcm earmarked for the Turkish market. Capacity could be increased to 31 bcm with additional investment.

The Trans-Anatolian Pipeline is the central element of the Southern Gas Corridor, an ambitious EU initiative from 2008 aimed at reducing energy dependence on Russia.

The Corridor consists of three main elements: the South Caucasus Pipeline (SCP) running from Azerbaijan’s giant Shah Deniz gas field through Georgia to Turkey which was inaugurated in May, 2019 TANAP running through Turkey to Greece and Bulgaria, and the Trans-Adriatic Pipeline. The latter, connecting the Turkish pipeline with Italy through Greece is expected to be finished this year, while the first gas deliveries are planned to be launched in early 2020.

As well as SOCAR, both Turkish state energy company BOTAŞ and British oil and gas giant BP have stakes in the project (38 per cent and 12 per cent respectively). TANAP's shareholders are Azeri state energy company SOCAR (51%), Turkish pipeline operator BOTAS (30%), BP (12%) and SOCAR Turkey (7%).

The Trans-Anatolian Natural Gas Pipeline (TANAP) is a mega project aimed at peace and prosperity of not only fraternal Azerbaijan and Turkey, but also countries of the entire region. The opening ceremony of the Phase 1 of the TANAP was held on Nov. 30, 2019. Opening ceremony of TANAP's Phase 0 took place on June 12, 2018, in the Turkish province of Eskisehir, and commercial gas deliveries to Turkey began in late June 2018.

The volume of gas transportation to Turkey via TANAP has reached 3.08 billion cubic meters (bcm) since the start of commercial gas supplies on June 30, 2018 as of late October 2019. The initial capacity of TANAP, which is the main segment of the Southern Gas Corridor, is 16 billion cubic meters of gas. Around six billion cubic meters of this gas will be supplied to Turkey while the remaining volume - to Europe. After the completion of the Trans Adriatic Pipeline (TAP) construction, gas will be supplied to Europe in early 2020.

The Trans Anatolian Natural Gas Pipeline (TANAP) will turn Azerbaijan into Turkey’s second largest gas supplier. "TANAP, which is the most important link of the Southern Gas Corridor, will not only strengthen energy supply security of Turkey and Europe, but will also contribute to development and stability of the region. Thanks to TANAP, the EU will gain a great advantage in meeting the increasing energy need in a secure way for years to come. TANAP also offers infrastructure both for the EU and potential suppliers for transporting additional volumes of natural gas that Europe may need in the future,"

It is hoped that natural gas from Azerbaijan, TANAP greatly contributes to the energy supply security and diversity of the European Union. With 1,850 kilometers in length and 56 inches of diameter, TANAP is the longest and largest diameter international natural gas pipeline of Turkey, Middle East and Europe. TANAP will contribute to further development of current economic and political cooperation between Azerbaijan and the European Union. It will turn Azerbaijan into Turkey’s second largest gas supplier and EU’s new gas supplier.

The launch of the Trans Anatolian Natural Gas Pipeline (TANAP), which is a part of the Southern Gas Corridor (SGC) project, will allow advancement of Azerbaijan’s vital interests. The SGC concept was officially announced by the European Commission in its Second Strategic Energy Review on 13 November 2008 as one of the EU’s energy security priorities. 11 years later, with the completion of TANAP and TAP, we finally see the concrete fruits of the SGC concept.

The launch of gas exports to Turkey through TANAP and to the EU through TAP will also allow the advancement of Azerbaijan’s vital interests, namely securing income, penetrating Turkish and European gas markets, and diversifying exports routes. For Turkey, getting the gas through TANAP will add a TANAP premium to the price.

The International Energy Charter Forum on the “Enabling Energy Transformation through Technology and Policy Innovations” topic was held in Baku on October 24, 2019. The forum was attended by high officials from 13 countries, including Turkey, Georgia, Austria, China, Greece, Albania, Croatia, Spain, Bangladesh, Bosnia and Herzegovina, Burundi and Yemen. It brought together representatives from 42 international organizations, local and foreign energy companies, public bodies, as well as diplomatic corps in Azerbaijan and about 200 experts and journalists. It was jointly organized by Azerbaijan’s Ministry of Energy and the International Energy Charter under Azerbaijan’s upcoming chairmanship of the Energy Charter Conference. It is another milestone for Azerbaijan Energy Policy which has various strategic dimensions including increase in national income, diversification of energy resources, consumers, markets, regional energy cooperation and last but not least maintaining regional energy security.