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    Iranian Gas May Not Flow Through Turkey

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Summary

Despite commentators' view that Iranian gas will flow through Turkey, that may not be the gas, Hurriyet Daily News writes

by: Serhan √úNAL

Posted in:

Natural Gas & LNG News, News By Country, Turkey, , Iran

Iranian Gas May Not Flow Through Turkey

Despite the new Iran nuclear deal, Iranian gas may not flow to Europe through Turkey even if the sanctions are lifted. There are several reasons for this. 

After the P5+1 countries and Iran reached their agreement on July 14, the global agenda has focused on post-sanctions Iran. The main field of interest is the future of huge energy reserves of the country. Many commentators claim that global energy companies will invest in Iran’s oil and gas sectors in a way to increase Iran’s oil and gas supply to the world energy markets. In this framework, Iran is shown as a possible future gas supplier to the EU, alongside the others. If this happens, Turkey seems the most rational route for Iran gas to reach the European markets. However, this seems unlikely for three main reasons: Turkey-Iran bilateral relations, the regional balance of energy power, and geo-economic issues.

Firstly, in the general course of Turkey-Iran bilateral relations, a mutual insistence on the compartmentalization of relations gives hope for being positive on the transportation of Iran gas through Turkey. Both Turkey and Iran endeavor to keep their economic relations away from geopolitical rivalries. On the other hand, when it comes to the energy relations, Iran has the upper hand in the game. Although Iran is also dependent on Turkey for its gas exports, the Tabriz-Ankara gas pipeline is a vital element for Turkey to balance its dangerous dependence on Russia. Therefore, this economic interdependence gives only an inefficient bargaining power against Iran (look, for example, at Iran-Turkey gas price debates). However, if Iran gas flows to Europethrough Turkey, this will provide Ankara with a strong bargaining chip against Tehran. Naturally, Iran should not be expected to empower Turkey against itself unconditionally.

Secondly, in terms of the regional balance of energy power, Turkey may not be allowed to dominate the regional energy equation. The initial problem is about diversification of energy supply routes. One of the main principles regarding energy security is the diversification of sources and transit routes. But if Iranian gas flows through Turkey in big amounts, this will make Turkey a new and much stronger “Ukraine” in the EU-Iran energy relationship. Moreover, Turkey’s transit role for Iranian gas is directly related to the realization of the Turkish Stream. If the Turkish Stream is constructed, together with the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Iraq-Turkey gas pipeline, Turkey will already rise to a very powerful position in the future by controlling the flow of supplies from Russia, Azerbaijan, Iraq and possibly Turkmenistan. In such an environment, neither Iran nor other related parties will allow Turkey to have control over the flow of Iran gas. Quite a simple logic in realpolitics and the balance of power will thus prevent Turkey from becoming an energy hub so easily.

Thirdly, some geo-economic issues may urge Iran to consider other options rather than exporting gas to Europe through Turkey via a pipeline. Iran’s main gas fields are located in the south of the country and the existing national and regional infrastructure is currently not enough to transport them to the north. Therefore, a new domestic pipeline would have to be constructed from the Persian Gulf to Europe. The key question is who will finance this investment. Post-sanctions relief in Iran will not be enough to finance this investment overnight, the European economy is still in stagnation, and global energy companies may not welcome this big project with enthusiasm due to current low energy prices that were $105 in 2012 but fell to $50 in August 2015.

On the other hand, instead of depending on fixed pipelines toward Europe, it is wiser forIran to focus on developing its LNG export capabilities and constructing new pipelines east with the support of China. With enough LNG infrastructure, Iran can export gas in a wider region from Lithuania in the north and to Korea-China in the east. Besides, if the Iran crisis repeats in the future, LNG exports may provide Tehran with a considerable flexibility. Thus, Iran can combine three goals: Diversification of its gas importers, avoidance from dependence on Turkey, and creating room for maneuver for the next crisis.

Additionally, regional terrorist organizations may be a wild card in the game. Critical energy infrastructure is already among the targets of these groups. Following the June 7 elections in Turkey, the outlawed Kurdistan Workers’ Party (PKK) increased its attacks in Turkey. Even the Tabriz-Ankara gas pipeline was sabotaged by PKK terrorists on July 28 and the gas flow stopped for five days. Not only the PKK but other terrorist groups such as ISIL could pose certain threats to the critical energy infrastructure in southeastern Turkey. Similarly, a possible Iran-Turkey-Europe gas pipeline could also be hit. Therefore, the uninterruptible flow of energy may become a more difficult and expensive task.

As a result, although the Iran nuclear deal seems to be an opportunity for Turkey to transport Iranian gas to Europe, this may not be realistic on several grounds. Firstly,Iran will not allow Turkey to increase its bargaining power against itself by controlling the flow of its own gas. Secondly, other regional actors such as Russia and the EU will try to counterbalance a possible Turkish domination in the regional energy geopolitics as a parallel to the fate of other projects like the Turkish Stream. Thirdly, exporting Iranian gas to the east seems economically and politically more feasible and using LNG instead of pipelines seems a better choice strategically. Additionally, the threat posed by regional terrorist organizations makes it a harder, more expensive and less secure option to export Iranian gas to Europe. 

Turkey therefore may have to wait longer to realize its ambitious goal of transporting Iranian gas to Europe.

This article by Serhan Ünal was originally published on Hürriyet Daily News. Serhan is a Senior Researcher at the Turkish Energy Foundation (TENVA). Republished with permission.