by Yigal Schleifer

25-05-05

Turkey's heartland of Anatolia -- the massive plateau that serves as a land bridge between Asia and Europe -- is dotted with the remains of 13th-century inns, reminders of the merchant caravans that travelled the fabled east-west Silk Road.

Some 800 years later, Turkey is again trying to take advantage of its strategic location. Today, instead of caravansaries it is building pipelines, and instead of silk and spices the products are less romantic: oil and natural gas.

A major part of this plan becomes a reality, when the new Baku-Tbilisi-Ceyhan (BTC) pipeline, a $ 4 bn, 1,093-mile project that brings Caspian Sea oil to Turkey's Mediterranean coast will be inaugurated. It should be fully operational by the end of 2005.

The pipeline -- built by a consortium of 11 companies, including British Petroleum, the American firm Unocal, and Turkey's national oil corporation -- is designed to bring a non-Middle Eastern source of oil to the West. This would loosen Russia's and Iran's grip on the transport of Caspian and Central Asian oil by creating a new route that is friendlier to the United States and Europe.

For Turkey, which has few energy supplies of its own, the pipeline is the initial step in its effort to become a major energy player, not as a producer but as a transit point. In an era when countries are increasingly looking to diversify their energy sources, Turkey hopes to establish itself as a kind of energy supermarket, betting that controlling oil routes will turn out to be as strategically valuable as producing the stuff.

"Geographically, Turkey is endowed with advantages, so we would like to use those advantages to give Turkey a role as a supplier of energy resources," says a senior Turkish foreign ministry official involved in energy issues. "It gives Turkey relevance."

The Department of Energy estimates that by 2025, 68 % of oil consumed by the US will have to be imported, up from 58 % today. A similar trend is expected in Europe.
"That means that the West will be more dependent on energy transportation corridors," says the Turkish official. "Our American friends are very keen on guaranteeing the flow and enhancing energy supply security."

But growing political dissent across the Caucasus and central Asia -- encouraged by President Bush in his visit to Georgia this month -- is complicating matters ahead of the event. Azerbaijani police beat protesters, some reportedly holding portraits of Mr Bush, who rallied in Baku, shouting "Freedom!" and "Free elections!". Washington wants greater democracy across the region, but it also wants stability, and it counts Azerbaijan, a mostly Muslim country of 8 mm, as an ally in the war on terror.
Turkish planners envision a country crisscrossed by pipelines, carrying oil, gas, and natural gas. Turkish officials say they plan to spend some $ 80 bn over the next two decades to develop the country's energy infrastructure.

The BTC is initially expected to carry close to 1 mm bpd of oil, most of it ending up in the Turkish port of Ceyhan, where it will be loaded onto tankers. By most measures, it's a drop in the oil bucket -- Saudi Arabia alone pumps 7 mm bpd -- but Brenda Shaffer, research director of the Caspian Studies Program at Harvard University in Cambridge, Massachusetts, says in today's energy markets, even a small amount can have a big impact on prices.

"On a world level, every development of oil that's outside of OPEC changes the dynamic of the market in a number of ways," says Ms Shaffer. "The more sources that are outside of OPEC, the less it can control world oil prices.”

The pipeline has had a wider regional impact even before the oil has begun to flow, Shaffer says.
"A lot of the positive benefits have already started happening," she says. "The money that has arrived in the region is allowing for economic growth in Azerbaijan and Georgia, and is helping with stability. The security relationships [between the three BTC countries] have become more crystallized because of the cooperation."

Construction of the BTC was accompanied by vocal security and environmental concerns. The pipeline is built underground to deter terrorist attacks and minimize the possibility of rupture, but it still snakes through areas prone to earthquakes and political unrest. Critics also question whether the BTC and Turkey's other pipeline dreams will yield the dividends it hopes for.

Bulent Aliriza, a researcher at the Centre for Strategic and International Studies in Washington points out that a much larger pipeline runs from Iraq to Turkey, but it gave Ankara little influence over Saddam Hussein during the time he was in power.

"There are limits to the political leverage that a pipeline gives," he says.

What may ultimately make the difference in Turkey's long-range energy plan are the changing needs of the European Union (EU), which it hopes to join. An EU paper on energy policy issued in 2000 designated Turkey as an "energy corridor" that should be developed.

"It was originally a US strategic thing, to get around Iran and Russia," says Gareth Winrow, an energy and foreign policy expert at Istanbul Bilgi University. "Now there is the EU wanting to diversify its resources and build new pipelines. These things are coming together -- US interests, EU interests, and Turkish interests, and it's something Turkish officials know they can play on."

Source: Christian Science Monitor