Blog Post

Designing a new EU-Turkey strategic gas partnership

The 2014 Ukraine crisis reinforced the EU’s quest for security of gas supply. The European Commission released an Energy Union Communication in February, calling for intensified work on the Southern Gas Corridor (SGC) and for the establishment of a new strategic energy partnership with Turkey.

By: and Date: July 1, 2015 Topic: Green economy

The Southern Gas Corridor in the EU gas security of supply architecture

Source: Bruegel.

In the last decade, the failure of the Nabucco pipeline project, combined with EU vagueness about the opening of the accession process’ energy chapter, has brought EU-Turkey energy relations to a dead-end. This situation is in the strategic interest of neither the EU nor Turkey. A coherent and actively coordinated strategy on the SGC could allow the two players to strengthen gas cooperation with Azerbaijan (to date the only prospective supplier of the SGC) and to open new, realistic, cooperation avenues with other potential suppliers in the region: Turkmenistan, Iran and the Kurdistan Region of Iraq (KRI).

The Southern Gas Corridor: reserves and pipeline projects

Source: Bruegel.

The EU and Turkey share considerable geopolitical synergies in the region, that if accurately exploited might helpunlock future gas exports from the region to their respective markets. If each potential supplier contributes 10 bcm/y by 2025-2030 the corridor might ultimately be expanded to 50 bcm/y: a significant order of magnitude for EU gas markets, most notably for southern and eastern European markets.

The Southern Gas Corridor: a potential scenario

Source: Bruegel.

But how can the EU secure such a “proactive transition”? First of all, the EU should establish dedicated energy diplomacy task forces with Turkey and with each potential supplier. This would allow the EU and Turkey to make full use of complementary diplomatic leverages in the region, and thus to ensure that barriers halting regional gas trade are overcome. The four task forces (EU-Turkey-Azerbaijan; EU-Turkey-Turkmenistan; EU-Turkey-Iran; EU-Turkey-KRI) would represent the key pillars of a new EU-Turkey strategic gas partnership.

In parallel to energy diplomacy, the EU and Turkey should establish a dedicated financing mechanism  for gas infrastructure investments, with a primary focus on upgrading the Turkish gas grid (through which new volumes of gas from regional suppliers might also flow to the Turkish-EU border). The European Investment Bank (EIB) could play a key role in attracting private and institutional investors, through its wide set of financing tools. The four “EU-Turkey Energy Diplomacy Task-Forces” and the “EU-Turkey Gas Infrastructure Financing Initiative” would act under the common framework of the “EU-Turkey Strategic High Level Energy Dialogue” recently launched by the Vice-President Šefčovič and Minister Yildiz.

A new EU-Turkey strategic energy partnership

Source: Bruegel.

Any new EU-Turkey cooperation efforts on the SGC should focus on small, but feasible, bilateral projects, instead of multilateral mega-projects that, as in the case of Nabucco, have proved to be problematic in this complex regional context. The target should not be to provide new major supply alternatives for Turkish and European natural gas markets in the short term; this would be unfeasible, as realistically an expansion of the SGC will not take place before 2025-2030. Its target should rather be to secure the basis for the expansion of the Corridor in the medium term.

Tested cooperation, with relatively limited gas volumes and up to four different supply sources will do most for Europe’s long term security of supply. It is not possible to foresee the political situation in any of the source countries, but cooperation would enable Europe to increase import capacity relatively quickly, from the most appropriate sources at that point in time. Investing today in the option of expanding imports from four different sources works, without having to commit to importing gas-volumes that are currently not (and might never be) needed.

 


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read article More on this topic More by this author
 

Blog Post

REPowerEU: will EU countries really make it work?

By acting together, the European Union can optimise its response to the energy crisis in all scenarios but each country will have to make concessions.

By: Simone Tagliapietra Topic: Green economy Date: May 18, 2022
Read article
 

Blog Post

The EU needs transparent oil data and enhanced coordination

The EU lacks the coordination structure and transparent data necessary to most effectively navigate an embargo on Russian oil.

By: Agata Łoskot-Strachota, Ben McWilliams and Georg Zachmann Topic: Global economy and trade, Green economy Date: May 16, 2022
Read article More on this topic
 

Opinion

For Europe, an oil embargo is not the way to go

Even at this late hour, the European Union should consider taking a different path.

By: Simone Tagliapietra, Guntram B. Wolff and Georg Zachmann Topic: Global economy and trade Date: May 9, 2022
Read article More on this topic
 

Opinion

A tariff on imports of fossil fuel from Russia

A tariff on imports of Russian fossil fuels would allow Europe to hit Russia's energy sector without great suffering.

By: Guntram B. Wolff and Georg Zachmann Topic: Global economy and trade Date: May 2, 2022
Read article More on this topic
 

External Publication

How to weaken Russian oil and gas strength

Letter published in Science.

By: Ricardo Hausmann, Agata Łoskot-Strachota, Axel Ockenfels, Ulrich Schetter, Simone Tagliapietra, Guntram B. Wolff and Georg Zachmann Topic: Global economy and trade Date: May 2, 2022
Read article More on this topic
 

Opinion

A phase out of Russian oil may be less effective than a tariff at reducing Putin’s rents

A punitive tariff on all energy imports from Russia would be a better choice than a gradually phased-in embargo on selected fuels.

By: Simone Tagliapietra, Guntram B. Wolff and Georg Zachmann Topic: Global economy and trade Date: May 2, 2022
Read article
 

Blog Post

How a European Union tariff on Russian oil can be designed

The European Union should apply a tariff on imports of Russian oil; it can be accompanied by a quota for a gradual, conditional phase-out of all Russian oil imports.

By: David Kleimann, Ben McWilliams and Georg Zachmann Topic: Global economy and trade, Green economy Date: April 29, 2022
Read article
 

Opinion

EU risks letting Putin’s gas divide-and-rule strategy win

The 2 May meeting of EU energy ministers should deliver strong and common EU action. Failing to do so would undermine Europe’s unity, energy security and foreign policy.

By: Agata Łoskot-Strachota, Simone Tagliapietra and Georg Zachmann Topic: Global economy and trade, Green economy Date: April 29, 2022
Read article More by this author
 

Opinion

Europe must get serious about cutting oil and gas use

As energy security risks increase, European governments must stop subsidising oil and gas, and ask people to consume less.

By: Simone Tagliapietra Topic: Global economy and trade, Green economy Date: April 29, 2022
Read article Download PDF
 

Working Paper

Cutting Putin’s energy rent: ‘smart sanctioning’ Russian oil and gas

The most efficient way for Europe to sanction Russian energy would not be an embargo, but the introduction of an import tariff that can be used flexibly to control the degree of economic pressure on Russia.

By: Ricardo Hausmann, Agata Łoskot-Strachota, Axel Ockenfels, Simone Tagliapietra, Ulrich Schetter, Guntram B. Wolff and Georg Zachmann Topic: Global economy and trade, Green economy Date: April 28, 2022
Read article More on this topic
 

Blog Post

A sanctions counter measure: gas payments to Russia in rubles

A requirement for gas to be paid for in rubles is a way for Russia to side-step central bank sanctions.

By: Maria Demertzis and Francesco Papadia Topic: Global economy and trade Date: April 19, 2022
Read article
 

Opinion

Cutting Putin’s energy rent: ‘smart sanctioning’ Russian oil and gas

Three ways Europe could limit Russian oil and gas revenues.

By: Axel Ockenfels, Simone Tagliapietra and Guntram B. Wolff Topic: Global economy and trade, Green economy Date: April 11, 2022
Load more posts