ENERGYEUROPEOPINION

Geopolitical and economic significance of TANAP

By Shahmar Hajiyev

On November 30, 2019, Azerbaijan and Turkey will finalize the second-final phase of the Trans Anatolian Natural Gas Pipeline (TANAP) which will carry Azeri gas from Shah Deniz (SD) Stage 2 to Turkey and Europe. The official inauguration ceremony of this important energy project was held in June 2018 in the city of Eskisehir, Turkey with the attendance of the President of the Republic of Azerbaijan – Ilham Aliyev and President of the Republic of Turkey Recep Tayyip Erdogan.

It is worth underlying that as a net gas exporter Azerbaijan needed necessary transit infrastructure to export natural gas to the European energy market, therefore, availability of infrastructure is one of the main factors determining effective management of energy resources for the country.

It was very important for Azerbaijan to ensure the operation of the “Southern Gas Corridor” (SGC) by providing state support to the effective implementation of the full-field development of Shah Deniz gas-condensate field (“SD2”), South Caucasus Pipeline Expansion (“SCPX”) as well as implementation of TANAP and Trans Adriatic Pipeline (TAP) projects, the State Commission was set up by the Order of the President Ilham Aliyev dated 29 October 2013.

One of these important energy projects is the 1,850 km TANAP pipeline, which will bring Caspian gas primarily to Turkish and European consumers. This project is an important segment of the SGC, established a strong basis for the TAP project, which is the final section of SGC to deliver Azeri gas to the European energy market. TANAP project with around 8 billion dollars investment cost has strategic importance for Azerbaijan as the share of Azerbaijan is 58%, and it is also important for Europe as it forms the “groundwork” for the TAP project.

TANAP begins from the Georgian-Turkish border connecting to the SCP system, go through the territory of Turkey ending at Ipsala region near the Greek border and further connecting to TAP (European leg of the SGC ) system for delivery of natural gas to Europe. Gas delivery via TANAP to Turkish energy consumers has been already implemented very successfully. Azerbaijan exported more than 3 bcm of natural gas to Turkey via TANAP. In total, Turkey will receive 6 bcm/year of Azeri gas via TANAP.

As one can see this is the interregional energy project, which supports connectivity and regional cooperation. TANAP plays a very crucial role as the project has both economic and geopolitical significance. Firstly, Azerbaijan showed ambitious desire to be a net gas exporter to the European energy market, which is highly dependent on Russian gas sources, and the security of supply and sources is a sensitive issue for the EU energy security. Delivering new gas sources from the Caspian Sea to European energy consumers, Azerbaijan will contribute to EU energy security.

Secondly, the initial capacity of the pipeline is 16bcm/year and with a maximum 31 bcm/year, Azerbaijan will be able to increase the volume of natural gas by transporting not only the natural gas from the SD field but also from other gas fields directly to Europe.

Analysis of the European energy market shows that the dependence on natural gas in the EU increased. The global share of all the other countries exporting natural gas to the EU was 4.8 % in 2018 and 8.8 % in 2019 in terms of trade value. Russia with a 40.5% share was the largest EU natural gas supplier in 2018. The second-largest share after Russia was Norway with 35.1%. European energy dependence on Russian gas is high, and the EU is interested in reducing its high dependence on a single supplier.

From this perspective, diversification of export routes and gas supplies is extremely important for the EU. It is important to highlight that the TANAP and TAP gas pipelines were included in the European Commission’s list of the “Projects of Common Interest” / Third PCI” 2017.

In the end, TANAP is important for Turkey because Turkey will meet both growing natural gas demand and become a transit country. Energy projects make Turkey a regional energy hub and increase its geopolitical importance.

For Azerbaijan, the SGC makes the country a leading gas exporter in the region.  Energy revenues from the sale of natural gas will support the development of other sectors of the national economy. In addition, Azerbaijan can become an important natural gas transit country. In the future, with the implementation of the probable Trans-Caspian gas pipeline, Turkmen natural gas may also be exported via Azerbaijan to the European energy consumers. All energy projects clearly illustrate that Azerbaijan implements successfully its energy policy, supporting regional cooperation and connectivity, as well as strengthening the national economy.

Shahmar Hajiyev is a Leading Specialist at the Baku-based Center of Analysis of International Relations

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Farid Shafiyev

Farid Shafiyev is Chairman of the Baku-based Center of Analysis of International Relations and an Adjunct Lecturer at ADA University, Azerbaijan. He holds a PhD from Carleton University and an MPA from the Harvard Kennedy School of Government, as well as a Bachelor of Law and a Diploma in History from Baku State University. He is the author of Resettling the Borderlands: State Relocations and Ethnic Conflict in the South Caucasus published by McGill-Queen’s University Press (2018) and numerous articles and op-eds.

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