Expanding the capacity of the Southern Gas Corridor and the future of EU-Turkish gas cooperation
by Theodoros Tsakiris (University of Nicosia)
This paper first analyzes the current comparative significance of the Southern Gas Corridor within the larger context of EU Gas Security Strategy and its evolving dynamics. It then assesses the alternative sources of supply and additional infrastructure needs for the expansion of the SGC capacity in both a medium-term and long-term perspective. It argues that until at least the 2030s any additional volumes transiting the SGC to the EU will most likely emanate from Azerbaijan and possibly Iran. These volumes are most probable to flow through the second phase of the TAP pipeline and will not exceed 10 bcm/y. The paper concludes by analyzing the impact of increased gas flows through the SGC on the energy cooperation between Turkey and the EU.
The question of European Energy Security and the need to diversify Europe’s natural gas suppliers focused attention on the strategic significance of Southeastern Europe as a transport hub for natural gas from the Caspian region, and potentially the Middle East and the Eastern Mediterranean (EastMed). In order to meet increasing natural gas demand as the countries of the region move towards a cleaner energy mix and to reduce the overwhelming dependence of Eastern and Southeastern Member States of the European Union (EU) on Russian gas imports, European authorities have been keen to promote projects that contribute to supply diversification.
In this context, the Southern Gas Corridor Strategy (SGCS) plays an increasingly important role since it offers simultaneous supply and transit diversification to those EU Members States, like Bulgaria and Greece, that mostly need it, while opening another supply gateway to Italy and via Italy to the Central EU markets. Despite the initially overambitious goals of the SGCS, which aspired through the defunct Nabucco project, to transport up to 31 billion cubic metres per year (bcm/y) to Austria, the opening of the Southern Gas Corridor (SGC) in 2020 will constitute a notable success of the external dimension in the EU’s Gas Security Strategy. The SGC supplies gas from sources of new origin that had never been tapped for EU consumption, transporting non-Russian gas via non-Russian routes to the core EU network, however at very limited volumes.
Although in 2011 European Commission planners overoptimistically expected SGC volumes to cover “roughly 10-20 percent of EU estimated gas demand by 2020” the actual availability of SGC supplies, limited to 10 bcm/y by 2022, correspond to just 2,14% of the 2017 EU demand, or 2.73% of 2017 EU net imports, given the latest commercially available data. The importance of the SGC supplies, however, does not currently lie in the volume of initial exports but in the establishment of a non-Russian controlled corridor. In this regard, it is important to note that over the last 15 years no other major source of new gas supply has emerged in a way that is dedicated to meet the long-term needs of the EU gas market.
To the contrary after 2011 – as a result of the political upheaval in North Africa – Libyan gas supplies have become very unstable and have been cut by half compared to their pre-war levels of 9,75 bcm/y, while Egyptian exports, which may resume in notable volumes by early 2020, have all but disappeared. In the decade to come SGC supplies, therefore, will make up for the losses in Libyan and Egyptian exports in the 2010s. However, at least in its original phase to 2025, the SGC will not rise to the same level of significance as Algeria or Norway. Since 2013, when the Trans-Adria Pipeline (TAP) was selected as the main export option for Azeri gas to the EU, Norwegian and Algerian exports have also increased without being able to balance off the steady expansion of Russian gas exports over the last five years. Algeria and Norway remain the two principal alternative corridors that supplement Russia’s indispensable position as the core gas supplier to the EU.
The SGC volumes would need to expand to approximately 40-60 bcm/y for the region to emerge as a serious alternative to Russian gas exports to the EU, as the Union is also supporting the evolution of new supply Corridors from the EastMed that will operate independent from the SGC, either through a combination of new regional pipelines and existing Liquified Natural Gas (LNG) facilities in Egypt or through the construction of a major dedicated pipeline such as the ambitious East Med Gas Pipeline project. Although the potential for the expansion of the Corridor’s capacity exists, it is highly unlikely that such an expansion will more than double its existing 10 bcm/y transit capacity before the early 2030s. Moreover, most of future additional supplies during the 2020s are more likely to come from Azeri gas fields rather than new sources of supply such as Iran, Iraq, Turkmenistan or for that matter the Eastern Med.
This paper first analyzes the current comparative significance of the Southern Gas Corridor within the larger context of the EU´s Gas Security Strategy and its evolving dynamics. It then assesses the alternative sources of supply and additional infrastructure needs for the expansion of the SGC capacity in both a medium-term and long-term perspective. It argues that until at least the 2030s any additional volumes transiting the SGC to the EU will most likely emanate from Azerbaijan and possibly Iran. These volumes are most probable to flow through the second phase of the TAP pipeline and will not exceed 10 bcm/y. Apart from the important contribution to the EU’s gas security the Southern Gas Corridor Strategy always had an important geopolitical dimension that highlighted the importance of Turkey’s cooperation with the EU. Turkey would use its considerable regional influence – especially vis-à-vis Georgia and Azerbaijan – in order to facilitate the implementation of the Southern Gas Corridor even though that would contradict with the deepening of its strategic cooperation with Russia.
Turkey’s aspirations moved beyond its evident role as an important transit state – especially after it negotiated, in October 2011, a unified transit-tariff regime for the entire length of the Nabucco project, extending from the Turkish–Georgian border to Baumgarten, Austria’s Central European Gas Hub. Turkey was already a major importer of Azeri gas from Phase 1 of the Shah Deniz field, consuming up to 6.6 bcm annually since 2007, and aspired to secure an additional 6 bcm per year from SD2 at privileged prices.
Becoming an important transit country, through the construction of TANAP (the Trans-Anatolian Pipeline) and TAP (the Trans-Adriatic Pipeline), was not the only, or even the most important, priority for Turkey’s gas strategy vis-à-vis Europe’s SGC strategy and Ankara’s allies in Transcaucasia. As Gulmira Ryzayeva put it, “Turkey’s greater involvement would make Ankara more self-assertive in the regional political scene and increase its negotiating power vis-à-vis the EU and its accession talks”.
The link to Turkey’s accession talks is also attested by several statements on the part of senior Turkish policy makers. As highlighted by Turkish Deputy Undersecretary for Energy and Natural Resources Yusuf Yazar, the “energy corridor” role has strengthened Turkey’s position in the accession period … In terms of European vital interests, the EU must shorten and ease the accession period to guarantee both the realization and operation of this “energy corridor”. In 2009 Turkish Prime Minister Recep Tayyip Erdogan even threatened to reconsider his country’s support for the Nabucco project, if the EU did not open the energy chapter in its accession talks with Turkey noting that “If we are faced with a situation where the energy chapter is blocked, we would of course review our position [on Nabucco].” Accordingly, former Turkish Minister of Energy Taner Yildiz even claimed that “with Nabucco, we believe we deserved [to be a member of] the EU”. Turkey’s expanding friction with Cyprus over the latter’s offshore hydrocarbons exploration, its expanding strategic cooperation with Russia and its democratic regression following the 2016 coup have neutralized most of the geopolitical gains Ankara secured vis-à-vis the EU and most EU Member States.
The potential impact of these gains though on Turkey’s accession talks might have been exaggerated by Turkey’s political leadership in the first place. Having said that, it is important to note that Turkey remains the EU’s quintessential partner in the Southern Gas Corridor Strategy. Turkey’s support in the expansion of the Corridor’s capacity especially vis-à-vis countries like Turkmenistan where Ankara yields significant influence, will prove an important asset for EU efforts to enlarge the significance of the Southern Corridor as a major alternative source of its gas imports that could limit its dependence on Russia.
As Turkey-EU relations become more aggravated due to the continued democratic regression of President Erdogan, Turkey’s illegal activities in the EEZ of the Republic of Cyprus and its expanding relationship with Russia, a Turkish-EU cooperation on the expansion of the Southern Gas Corridor may offer a positive note in the overall negative dynamic of Turkey-EU relations that would decrease the possibility of further deterioration and may lead to the revocation of Turkey’s status as a candidate member state. That is why this paper will conclude by analyzing the impact of increased gas flows through the SGC on the energy cooperation between Turkey and the EU.
*To read the full FEUTURE Voice Paper, please download the PDF.*
 This Paper has been prepared within the context of the FEUTURE Policy Challenge Meeting “EU-Turkey Relations: What Policy Challenges. Energy and Security’ organized by ELIAMEP in Athens on 21 February 2019.
 European Commission, On security of energy supply and international cooperation – ‘The EU Energy Policy: Engaging with partners beyond our borders’ COM (2011) 539, 07/09/2011, p. 5.
 BP Statistical Review of World Energy 2018, (BP: June 2018), p.29 (for EU Gas Demand) and pp.29-30 for EU net import calculation. All data are for 2017.
 BP Statistical Review of World Energy 2011, (BP: June 2011), p.29. All data are for 2010.
 For an assessment of alternative export scenarios from the East Med region and its development as a new Corridor policy independent from the existing SGC strategy, T. Tsakiris, S. Ulgen, & A. K. Han, Gas Developments in the Eastern Mediterranean: Trigger or Obstacle for EU-Turkey Cooperation?, FEUTURE, Instituto Affari Intenazionali, (IAI: May 2018), pp.5-7 and pp.20-25 and T. Tsakiris, “The Strategic Significance of the Mediterranean Sea for the EU’s Natural Gas Security Policy”, in M. Ciola and A. Cozzi (eds.), New Energy Corridors in the Mediterranean Sea, Mediterranean Affairs (Spring 2018), pp.5-14.
 S. Pirani, Let’s not exaggerate: Southern Gas Corridor prospects to 2030, (Oxford Institute for Energy Studies: July 2018).
 Nona Mikhelidze, Nicolò Sartori, Oktay F. Tanrisever, Theodoros Tsakiris, The Moscow–Ankara energy axis and the future of EU–Turkey relations, FEUTURE, Instituto Affari Intenazionali-IAI & University of Cologne, (IAI: September 2017), p.11.
 Ibid, p.11.
 Ibid, p.12
 Ibid, p.12