For those of you who haven’t caught up with the latest acronym, the BRICs are so last year. The MINT economies (Mexico, Indonesia, Nigeria and Turkey) are, according to Jim O’Neill, former Goldman Sachs chief economist and outgoing chairman of Goldman Sachs Asset Management, the countries to watch.
I’ve written in this column about Mexico in the last 12 but this month I wanted to focus on Turkey.
Its importance is not simply economic but also geo-political as a country through which oil and gas pass to European markets.
The sources of that oil and gas today are the Russian Federation, Iran and the Central Asian Republics, principally Azerbaijan. Kurdistan is in the throes of being added to that list.
What this means for the Great Game in the 21st century is anyone’s guess or conspiracy theory.
Traditionally, significant volumes of crude oil from the former Soviet Union were brought by pipeline and rail tank cars to Russian and Georgian Black Sea ports.
Today, of course, that oil comes from the Russian Federation and the Central Asian Republics. There the oil is lifted and taken to market by tankers passing through the Turkish Straits.
When Azerbaijan began to develop its oil resources following independence in the 1990s, it looked for a new export route that made it less dependent on its former masters.
Now, James Bond may not have negotiated “the contract of the Century” (that privilege belonged to the consortium of international oil companies who agreed with the Azerbaijani Government to develop the ACG oil fields with their 6billion barrels of reserves), but he had quite an excursion in the World is Not Enough.
You may remember him deactivating a nuclear weapon inside an oil pipeline in Azerbaijan.
You may remember hero Pierce Brosnan deactivating a nuclear weapon placed inside an oil pipeline in Azerbaijan by baddie Robert Carlyle.
Back in 1999 when the film was made a pipeline from Azerbaijan to Turkey was still a gleam in the eye of the oil executives and politicians but today it’s a reality.
Many in the industry, including many here in Aberdeen, have been involved in some capacity with the Baku-Tbilisi-Ceyhan (BTC) Pipeline.
This 1,600km (1,000-mile) pipeline, completed in 2005, carries crude oil from the Sangachal terminal in Azerbaijan, via Georgia, through Turkey and terminates at marine facilities in the Turkish port of Ceyhan, thus by-passing Russia.
Next door to these facilities in Ceyhan is an Iraqi marine terminal from which Iraqi crude oil, some at least of which is now produced in Kurdistan and carried by pipeline to the terminal, can also be shipped.
So both in terms of providing a maritime export route from the Black Sea and pipeline routes that give access to shipping in the Mediterranean basin, Turkey has been and remains an important transit country for oil.
Now, however, Turkey’s potential as a transit country for natural gas is the focus of attention and potential significant investment. There are natural gas flows into Turkey from the Russian Federation, Iran and Azerbaijan.
Sales of gas through Turkey to Europe commingled with Iranian gas by virtue of transit through Turkey, can benefit from certain sanctions relief for non-Iranian suppliers in the European single market.
The South Caucasus Pipeline already carries gas from the massive Shah Deniz field in Azerbaijan to the Georgian/Turkish border.
The second stage of the Shah Deniz gas project will require the construction of a high pressure gas pipeline across Turkey from the Georgian to the Greek borders known as the Trans-Anatolian Pipeline or TANAP.
This will link with the Trans-Adriatic Pipeline (TAP) which is in development. These pipeline projects will deliver gas to the European single market.
Oil and gas lawyers working on international pipeline agreements are challenged by complex allocations of risk in gas transportation, the regulation of pipeline capacity, underlying sales agreements which drive the revenue stream and lastly but not least the investments required to build the infrastructure and its construction.
The significance of the Azeri gas exports through Turkey when they come, is not only the quantities of gas coming to European markets, but also the contribution they make to the diversity of supply. Most gas entering the European market from the East along the southern gas corridor has been predominantly Russian.
Penelope Warne is senior partner and head of energy CMS Cameron McKenna whose network includes offices in Istanbul and Moscow
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