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Energy Diplomacy

Whether Ukraine can participate in TANAP or not?


After signing of Trans-Anatolia Gas Pipeline (TANAP) Agreement between Azerbaijan and Turkey, questioned point was still remaining – purchasing shares of TANAP Consortium.

The biggest share in TANAP consortium owned by SOCAR (80%) and 20% by BOTAŞ and TPAO. Turkey, several times repeated its willingness to buy additional share in TANAP. But, his statement kept in the place. Nobody talked about anymore. Because, Turkish Government wanted to regulate the agreement according to Turkish legislation, but State Oil Company of the Azerbaijani Republic (SOCAR) cannot agree to that.

Today participation of BP and Total/Statoil in TANAP Consortium is on agenda, as they are leading shareholders in Shah-Deniz Consortium. Since, Russian oil Company LUKoil also owns share in Shah-Deniz Consortium, they have also chance to participate in TANAP Consortium. Recently, Ukrainian Minister of Foreign Affairs, K.Grishenko and Prime-Minister N.Azarov also expressed their interest to participate in the TANAP Consortium.

However, participation of Ukraine in TANAP somehow disputed issue. Firstly, as SOCAR stated, in order to participate in TANAP Consortium, any company must own the share in Shah-Deniz Consortium and must provide TANAP with natural gas on its own share. But, no Ukrainian company owns any share in Shah Deniz Consortium and consequently, Ukraine cannot provide natural gas for TANAP. But, maybe Ukraine may participate as a financial and technical contributor in TANAP Consortium. Anyway, it also depends on the decision of SOCAR, since SOCAR is the biggest shareholder in TANAP Consortium. Participation of Ukraine in TANAP Consortium much more depends on if it meet the commercial interests of SOCAR.

Second point is, when we look at the map of Southern Gas Corridor. The geography that the pipeline passes does not even touch to Ukrainian geography or border. If Ukraine wants diversification, option one must construct new additional connector (maybe from Nabucco-West) to Ukraine in order to provide gas for country. Another way which considered by Ukrainian Government as a priority, is the usage of current gas pipeline (from which pumped Russian gas) in a reverse way. This pipeline comes from Russia, passes through Ukraine, Romania and Bulgaria to Turkey. Now Ukraine pump Russian gas through this pipeline to Turkey, but after the implementation of TANAP is should be vice versa.

Third point, in the January of 2011, Azerbaijani and Ukrainian government signed Memorandum of Understanding in order to establish Joint Venture for transportation of LNG to Ukraine. There are already negotiations on transportation of LNG to Ukraine. However, Ukraine needs to construct LGN terminal in its shores of Black Sea.

Fourth point is reaction of Russian Federation. It is obvious, that final agreement of TANAP traditionally was not welcomed by Russia. Because, any such kind of project bypasses Russia and breaks its diversification policy. As Ukraine is the leading transit country for and natural gas importer from Russia, participation of Ukraine in TANAP will double Russia’s wrath. In a nutshell, Ukraine government, along its national interests, must also consider its big neighbour.

 

Ilgar Gurbanov 

Analyst of Strategic Outlook 

ilqarqurbanov@strategicoutlook.org

 

You can find original article at: http://www.atlantic-community.org/index/articles/view/Does_Ukraine_Stand_a_Chance_in_TANAP%3F

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