Location, Location, Location...

Turkey is playing hardball, I like it. From Bloomberg.

Turkey Seeks Bigger Pipeline Role, Roils Europe It Aims to Join

By Celestine Bohlen

April 22 (Bloomberg) -- Turkey is playing hardball in the geopolitical struggle over an $8 billion pipeline at the center of Europe's efforts to cut dependence on Russian natural gas.

The nation, which bridges Europe and Central Asia, is trying to profit from its strategic location and become a key part of Europe's energy plan. This might bolster its push to join the European Union -- if its negotiating tactics don't exhaust Europe's patience.

Europe wants Turkey to be a transit corridor along the Nabucco pipeline's 3,300-kilometer (2,062-mile) route from the Caspian Sea region to Austria. Turkey wants more control: acting as a regional energy hub, collecting gas from the east, buying some domestically at below-market prices and passing on the rest to Europe for a variable fee.
Pipeline Monopoly

Moscow-based Gazprom OAO has a monopoly on gas pipelines from Russia and Central Asia to Europe. Russia accounts for a quarter of the EU's gas consumption and more than 40 percent of gas imports. With gas demand rising 3 percent a year, the EU will consume 620 billion cubic meters by 2020, 500 billion imported, its figures show.

Nabucco has political backing from the EU and U.S. as an alternative to Gazprom. Meanwhile Gazprom and Eni SpA, Italy's largest oil company, are promoting a new $15 billion pipeline, named South Stream, to rival Nabucco.

In January 2006, Nabucco catapulted to the top of the EU's agenda after Russia briefly cut gas deliveries to Ukraine over a price dispute, blocking flows to Europe. Although Nabucco's capacity of 31 billion cubic meters would account for only 5 percent of the EU's 2020 gas needs, it would provide competition and may help lower prices, the EU says.

``The Nabucco pipeline is a clear economic and political necessity,'' said EU Energy Commissioner Andris Piebalgs in a March 2006 interview.

Gas-Rich Regions

Turkey, a member of the North Atlantic Treaty Organization and an EU candidate since 2005, has long aspired to link the oil-and gas-rich regions of Central Asia with Europe. Its port city of Ceyhan receives 1 million barrels daily of Azerbaijani oil through the Baku-Tbilisi-Ceyhan pipeline.

Turkey's push for more control over Nabucco, and more revenue, clashes with the EU's proposal that Turkey -- like EU members Bulgaria, Romania, Hungary and Austria -- collect only transmission fees tied to costs.

``All Turkey is trying to do is get some of the gas for domestic consumption, and its fair share of commercial transactions,'' says Mithat Balkan, who until six months ago was the Turkish Foreign Ministry's energy coordinator.

Turkey doesn't feel any obligation to abide by rules set by a club that hasn't yet accepted it as a member, Balkan says.
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