Wednesday, September 05, 2012

Turkey: Nuclear-Natural Gas Quid Pro Quo?

No argument here:

One of the world’s fastest-growing economies, Turkey has significant energy needs. The majority Muslim nation’s energy demands will double by 2023, according to one projection.

Nuclear Energy perhaps? Turkey has contemplated it for some years, but lacked a partner to help cover the expense of building the facility- running nuclear energy plants is inexpensive, building one is expensive. Now it has a partner – and in an arrangement that seems close to unique:

The $20 billion venture will be wholly financed by a subsidiary of Rosatom, Russia’s state-controlled nuclear energy corporation.

The Russian firm has agreed to build, own and operate the plant for its entire productive life, with spent fuel sent to Russia for reprocessing. The deal represents an unprecedented level of cooperation between the former adversaries.

Various Turkish officials have a lot of questions about this, some of which involve national sovereignty, always a touchy subject. For example, Turkey doesn’t have a nuclear regulator at present and it’s uncertain whether the new plant will be regulated by the Russians or the Turks. Additionally, it isn’t clear which country will decommission the facility. To be honest, these items can be worked out in time – I suspect it is the Russian connection that gives them an air of urgency.

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Most interestingly, though, there is the strong implication that Russia isn’t doing this solely (if at all) out of the kindness of its heart:

Gas- and oil-producing giant Russia has enlisted Turkish support for its proposed South Stream pipeline to diversify its access points to European markets.

There’s no direct evidence of quid pro quo, though plenty of evidence of heavy negotiation that included both the nuclear facility and the natural gas line – almost every story I looked at yoke them together, which suggests, at the very least, that the two projects represent a single unit that will proceed in sync. In fact, Turkey and Russia signed 17 (mostly) energy-related agreements in one go, which in itself has aroused a good deal of concern in Turkey.

But most of that number [$100 billion in trade] comes from Turkish imports of Russian oil and gas, and some Turkish energy experts cautioned that the increase would do more good for Russia than for Turkey. The deal for the nuclear plant, scheduled to be built over seven years in the Mediterranean city of Mersin, raised further concerns among some Turks of relying too much on Russia.

This is from the NY Times and it too keeps the natural gas and nuclear projects closely linked. Still, even if there is more correlation than causation here, I wondered if there was more to the Turkish involvement in the natural gas line.

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Indeed, there is a kind of race going on between Russia and Europe to build a viable natural gas line to serve European markets, with Turkey involved in both of them.

The South Stream gas pipeline is intended to provide a direct connection between suppliers and consumers, thus avoiding transit risks and guaranteeing a continuous energy supply for Europe. Nabucco on the other hand, aims to bring Caspian gas supplies to Europe to reduce dependence on Russian gas imports taking a northern route from the Turkish-Bulgarian border to Austria.

The story doesn’t really explain what Nabucco is all about, but it does point out that diversifying the supply of natural gas is important – and it is. Let’s take that as a given.

Nabucco is a consortium formed by Turkey, Romania, Bulgaria, Hungary and Austria. The European Union supports it and so does the United States – because much of the natural gas will come from Iraq. The pipeline itself stretches from Turkey to Austria, with feeder lines from Georgia and Iraq.

The South Stream line, meanwhile, will carry Russian natural gas through Bulgaria and Turkey and on to Italy. This already tortuous route is necessitated by bypassing Ukraine, which wants no part of the project (Russia accused Ukraine in 2006 of stealing natural gas flowing though the latter, a conflict that got bitter quickly; in 2009, Russia rather roughly shut down the natural gas supply to the west for reasons not fully explained, stranding some countries, such as Bulgaria, in the middle of a harsh winter. See here for more on that). Losing the Ukrainian option meant involving Turkey, even if it provides a less than ideal route.

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Check out the Nabucco and South Stream web sites for a more complete accounting of the pipelines. Note, too, that I have no brief on natural gas pipelines and their doings. In the parlance of American politicians, no winners and losers here. (Both pipelines serve a practical purpose and both serve natural gas-poor Europe. If Nabucco backstops Russian petulance, consider it a bonus.)

In the end, what’s really worth discussing is a 1200 megawatt Russian nuclear facility at Mersin. It’s ultimately up to the Turks to decide if that’s a good idea and so far, and with some dissent, the decision is – yes. It works for Turkey.

2 comments:

Bill said...

"In the end, what’s really worth discussing is a 1200 megawatt Russian nuclear facility at Mersin."

Bigger than that -- the Akkuyu plant will have four 1200-MW units.
"... In mid 2012 the company had received the site licence and said that site works should begin in mid 2013. The power generation licence and environmental approval were expected in mid 2013, and the construction licence was expected at the end of 2014, enabling full construction to start in 2015. The company expected to commission the first unit in 2020."
http://www.world-nuclear.org/info/inf128-nuclear_power_in_turkey.html

SteveK9 said...

I thought I had read something along the lines that the Russians would take the profits for 15 years and then the plant is all Turkey. Probably oversimplifying but that would sound like a great deal for Turkey, and a good one for Russia.