The subject of Caspian and Middle East gas pipelines to Europe has become increasingly important and emotive in the late 2000s with many projects and aspirations being advanced to create a “4th corridor” aimed at significant reducing dependence on (primarily) Russian gas. The role of Turkey will be critical for all of these projects. While the details of pipeline projects are well known, the role and aspirations of Turkey as an energy transit country have received less attention. Some have portrayed Turkey as a country critical to European energy security and a potential hub for Caspian and Middle East (oil and) gas supplies. But some Turkish statements and commercial positions in relation to pipeline projects have raised questions about the conditions which the country may intend to attach to this role, some of which could be seen as obstacles to natural gas transit. Because of the partisan nature of much of the current debate, it was important to find an author capable of making an expert, but unbiased, assessment of the Turkish position.

Gareth Winrow has long experience in Turkey and was the ideal choice to interview Turkish stakeholders in relation to the many different aspects of the country’s energy situation and the fourth corridor. I am very grateful to Gareth for taking on this project and believe that his paper adds significantly to understanding the complexity of the problems related to these issues.

Key Issues:

• Central Asia is beginning to see a genuine move away from barter deals towards commercial deals in accordance with market forces.

• Contrary to much perceived wisdom, in Central Asia it is Gazprom, Russia’s natural gas export monopoly, that is leading the way in the movement towards market forces.

• Central Asian natural gas and oil will to some extent be able to satisfy European demand, but available reserves and infrastructure will be insufficient to allow Central Asia to replace other gas and oil regions as primary suppliers to European markets.

• Russian and Central Asian oil prices have already reached international levels, and the gas prices are moving in the direction of European levels.

• However, transportation bottlenecks remain and infrastructure often remains insufficient for Central Asian gas, and to some extent oil, exports even to gain available market share in European markets. For exports elsewhere, such as to China or India, transportation bottlenecks still pose even greater problems.

• Kazakhstan was expected to become a net exporter of natural gas in 2008. Although crude oil has been very important to the country’s economy, Kazakhstan must still import oil products for its own needs due to a lack of refinery capacity. Kazakhstan has since 2001-2002 quietly taken steps to reverse the large-scale privatisation of oil assets undertaken in the mid-1990s, and the Kazakhstani state is reasserting its dominant position versus the commercial actors.

• Uzbekistan is self-sufficient in natural gas production but again needs to import oil. Even so, the country has great potential as an oil and natural gas exporter.

• Turkmenistan already exports substantial volumes of both natural gas and oil. However, Turkmenistan has concluded so many agreements to export natural gas that the country will not be able to fulfil all export obligations.

• Azerbaijan, in comparison, became a net exporter of natural gas in 2007 and is an established oil exporter. Crude oil has indeed been spectacularly important to the country’s economy.