On Tuesday, June 30th, The Institute of World Politics hosted Vilen Khlgatyan, Vice Chairman of the Political Developments Research Center, for a lecture titled: "Rival Gas Pipelines for Europe: What's at Stake." The lecture explored the two possible major gas pipelines that would supply European nations and the factors at play.
Mr. Khlgatyan began his lecture outlining the energy background of contemporary Europe. Currently 53% of Europe's energy is imported, and of that 23% is natural gas. One quarter of total European energy is imported from Russia, much of it in the form of natural gas. Germany and Italy are the largest importers of natural gas from Russia; however, proportionally it constitutes roughly one third of their national consumption. Several other nations such as the Baltic States and Finland rely 100% on Russian gas.
These consumption patterns raise concerns, Mr. Khlgatyan pointed out, as shut offs like those in the past have serious consequences to residential and commercial activities. It is not a wise business practice to buy your gas from one customer. It is also hazardous when large portions come through Ukraine, currently a politically unstable state with an uncertain future. The Third Energy Package passed by the European Union prevents suppliers of gas from owning the pipelines through which its gas travels. This was done to stop further vertical integration by Russian gas giant Gazprom.
This situation has led to proposals for alternate means of gas delivery. Mr. Khlgatyan compared two major plans that are currently up for proposal. One is the so called Turk Stream - running from Russia through the Black Sea to Turkey, and concluding at the border with Greece. At the border would be a "gas hub," and other European parties would be in charge of organizing distribution from there - in compliance with the Third Energy Package.
The pipelines in Turkey or Turkish economic zones in the seas are not in the European Union, and thus do not have to comply with the Third Energy Package. This project has replaced the former "South Stream" pipeline which was to run from Russia to EU member Bulgaria via the Black Sea and eventually to Austria. Mr. Khlgatyan pointed out that one can clearly see the maneuvering Russia has had to do to avoid interference by the European Union and to reach its customers. Furthermore, Russia is intent on removing Ukraine from its current role as a transit state, which was one of the main reasons the predecessor to Turk Stream was concocted.
A major issue with Turk Stream is European resistance to Russia. Due to the ongoing conflict in Ukraine, most European nations favor exploring options to distance themselves from reliance on Russian energy. However the options are rather limited. As Mr. Khlgatyan pointed out, countries like Germany have moved to denuclearize, and, in many places, shale exploration is banned for safety concerns. He stated that many businesses and industries are even more reliant on gas and will make sure that their governments do not abandon them. Also importantly, Mr. Khlgatyan pointed out, Turkey has only unofficially stated they would comply with the project. They have yet to sign any binding contract with the Russians.
Mr. Khlgatyan showed that an alternate plan for delivering gas supplies to Europe comes from the Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline (also known as TANAP and TAP, respectively). TANAP would connect an existing pipeline in the Caucasus (South Caucasus Pipeline) throughout all of Turkey to Europe. TAP would lead from the Turkish-Greek border across Greece, through Albania, and cross the Adriatic to Italy. Rather than Russia being the provider, Azerbaijan as of now, is the sole supplier of gas coming from the Caucasus.
Where TANAP and TAP excel in not being associated with Russia, the greater pipeline network runs into other logistical problems. It is more expensive to build in the mountainous terrain of eastern Turkey. It also leaves the pipeline more vulnerable to sabotage and other acts of terrorism. Hence the geopolitical cost can easily fluctuate. The Greek question also persists and can be more problematic if there are plans for a pipeline through the northern portion of the country. Mr. Khlgatyan also pointed out that Albania does not have a national gas infrastructure, and would require investments in the construction of a national gas grid, and subsequent political efforts to get such a project fully implemented. Azerbaijan, currently the only supplier of gas in the TANAP-TAP project, would not be able to meet the demand of growing European consumption as a state like Russia could. Other states that could potentially supply TANAP-TAP, such as Iran, Iraq or Turkmenistan all face various hurdles, political and technical, in getting their gas to the EU.
Issues arise in the completion of either pipeline. The most important, Mr. Khlgatyan stated, are the political hurdles of multilateral extra-national trade deals and construction projects. The situation in Greece, he pointed out, is a large deciding factor. If Greece was not to be part of the European Union, that would lead to Russia extending its economic and financial influence there, in part through the pipeline. The question of the future of Greece affects both plans, depending on how EU nations or Russia will chose to act. It was pointed out that Greece is in dire straits and any economic lifeline, such as through transit fees, would be a boost to the Greek economy. While Turkey is in a strategic position both geographically but politically too, in the sense that Ankara is unlikely to ever enter the EU, thus the Third Energy Package does not apply. Yet, the Turks intend to import more gas from Russia, which would deepen their dependence on Moscow.
Mr. Khlgatyan closed his remarks with a reminder that the side that will win is the one that is the most viable, but just as importantly uses more tools of statecraft to further its goals.