Pipeline Politics and Natural Gas Supply from Azerbaijan to Europe: Challenges and Perspectives

231 Pages·2018·6.397 MB·English

by  Sevinj Amirova‐Mammadova (auth.)

Energiepolitik und Klimaschutz
Energy Policy and Climate Protection
Sevinj Amirova-Mammadova
Pipeline Politics and
Natural Gas Supply from
Azerbaijan to Europe
Challenges and Perspectives
Energiepolitik und Klimaschutz
Energy Policy and Climate Protection
Reihe herausgegeben von
L. Mez, Berlin, Deutschland
A. Brunnengräber, Berlin, Deutschland
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Reihe herausgegeben von
PD Dr. Lutz Mez PD Dr. Achim Brunnengräber
Freie Universität Berlin Freie Universität Berlin
Weitere Bände in der Reihe http://www.springer.com/series/12516
Sevinj Amirova‐Mammadova
Pipeline Politics and
Natural Gas Supply from
Azerbaijan to Europe
Challenges and Perspectives
Sevinj Amirova-Mammadova
Baku, Azerbaijan
Dissertation Freie Universität Berlin, Department of Political and Social Sciences,
Otto Suhr Institute of Political Science, 2017
D 188
Energiepolitik und Klimaschutz. Energy Policy and Climate Protection
ISBN 978-3-658-21005-2 ISBN 978-3-658-21006-9 (eBook)
https://doi.org/10.1007/978-3-658-21006-9
Library of Congress Control Number: 2018932744
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Acknowledgments
There are several people to whom I would like to express my gratitude for their
contribution and support. First and foremost, my thanks go to my supervisor,
PD. Dr. Lutz Mez, who provided me with constant encouragement and sage
advice from the very beginning of this project. His invaluable suggestions also
helped me to deal with a ruthless critique of all the chapters provided by my
colleagues and friends. I should also thank Tina Flegel, my friend and collea-
gue for her encouragement and support.
Despite a very stimulating academic environment the main challenge con-
sisted in finally finishing the writing of this thesis. My family and friends as-
sisted me enormously in overcoming this challenge. I am extremely grateful for
their moral support and practical advices, which greatly smoothed the progress
of this at times uneasy process. The debt that I owe to my family is immea-
surable.
I withhold my deepest gratitude for my parents, Rafael and Ummahani,
my siblings, Zaur and Sevda, and my husband, Mukhtar. Without their support
and patience this work would have been impossible. They have always provi-
ded me with the unconditional – emotional and practical – support in all my
undertakings. I owe my thesis to my family.
Table of Contents VII
Table of Contents

Acknowledgments ............................................................................................ V 
List of Abbreviations ...................................................................................... XI
Figures and Maps ........................................................................................ XIII
1  Introduction ................................................................................................. 1 
1.1  Background: Rise of natural gas industry and formation of regional
markets ................................................................................................. 1 
1.1.1  Sketching alternatives: Southern Gas Corridor ...................... 4 
1.2  Research design and methodology ....................................................... 7 
1.2.1  Research objective, questions and hypothesis ........................ 7 
1.2.2  Current state of research ....................................................... 13 
1.2.3  Conceptual challenges and research gap .............................. 28 
1.2.4  Structure of the dissertation .................................................. 29 
2  Theory and Methodology ......................................................................... 31 
2.1  Theoretical framework ....................................................................... 31 
2.1.1  Figuration ............................................................................. 32 
2.1.2  Structural power and structural change ................................ 38 
2.1.3  Radical geopolitics and logics of power ............................... 46 
2.2  Theory and practice ............................................................................ 51 
3  Energy Security and Pipeline Politics ..................................................... 53 
3.1  Historical development of the energy security concept ...................... 53 
3.2  Conceptualization of energy security ................................................. 57 
3.2.1  Energy security from consumer and supplier perspective .... 61 
3.2.2  Limits of state's involvement in the liberalized energy
markets ................................................................................. 64 
3.3  Pipeline politics and transportation .................................................... 73 
3.3.1  Transit challenges ................................................................. 75 
3.3.2  Limits to obsolescing bargains ............................................. 76 
3.3.3  Credibility in energy transit .................................................. 78 
3.3.4  Political economy of network interdependence .................... 81
VIII Table of Contents
3.3.5  Nature of pipeline dependence ............................................. 82 
3.3.6  Asymmetric interdependence ............................................... 84 
3.4  Pipeline transportation and supply challenges .................................... 85 
4  Energy and Politics ................................................................................... 87 
4.1  Caspian energy development in 1990s ............................................... 87 
4.2  Assessing energy capacity of the region ............................................. 91 
4.2.1  Myth and reality of the Caspian energy ................................ 92 
4.3  Geopolitical dimension: energy interests and foreign policies of
external actors..................................................................................... 96 
4.3.1  United States ........................................................................ 98 
4.3.2  Russia ................................................................................. 100 
4.3.3  Turkey ................................................................................ 102 
4.3.4  Iran ..................................................................................... 104 
4.3.5  European Union .................................................................. 106 
4.4  Energy politics of the regional states in the 1990s ........................... 108 
4.4.1  Azerbaijan .......................................................................... 109 
4.4.2  Kazakhstan ......................................................................... 111 
4.4.3  Turkmenistan ...................................................................... 112 
4.5  Energy projects of the first phase of development ........................... 112 
4.6  Status of the Caspian Sea and regional energy projects ................... 116 
5  The Southern Gas Corridor and Second Phase of the Caspian
Energy Development ............................................................................... 121 
5.1  EU’s supply security and Southern Gas Corridor ............................. 121 
5.1.1  Europe’s growing gas demand ........................................... 123 
5.1.2  Caspian gas for the corridor ............................................... 127 
5.1.3  EU’s southern corridor strategy .......................................... 130 
5.2  Pipeline projects of the Southern Gas Corridor – initial stage .......... 133 
5.2.1  The Nabucco pipeline ......................................................... 134 
5.2.2  Interconnector Turkey – Greece – Italy (ITGI) .................. 139 
5.2.3  Initiative of complementary projects: Nabucco and ITGI .. 141 
5.2.4  Trans Adriatic Pipeline (TAP)............................................ 142 
5.2.5  White Stream and Azerbaijan-Georgia-Romania
Interconnector ..................................................................... 145 
5.3  South Stream vs. Southern Gas Corridor .......................................... 149 
5.3.1  Understanding the rationale of South Stream ..................... 151 
5.3.2  EU regulatory framework as a challenge for South Stream 153 
5.4  Economic and political dimensions of the southern corridor ........... 156
Table of Contents IX
6  New Geopolitics of the Southern Gas Corridor ................................... 159 
6.1  Azerbaijan and Turkey reshaping the energy corridor ..................... 159 
6.1.1  Azerbaijan’s energy preferences ........................................ 160 
6.1.2  Turkey’s energy objectives ................................................ 161 
6.1.3  Reshuffling pipeline dynamics ........................................... 163 
6.2  Trans-Anatolia Pipeline – TANAP ................................................... 167 
6.2.1  Implications of TANAP for the regional states .................. 169 
6.2.2  Implications of TANAP for the projects of the Southern
Gas Corridor ....................................................................... 171 
6.3  Energy firms and their interests ........................................................ 172 
6.3.1  Intertwined interests of SOCAR and BP ............................ 174 
6.4  Route selection process .................................................................... 177 
6.4.1  Nabucco-West vs. SEEP .................................................... 178 
6.4.2  Nabucco-West vs. TAP ...................................................... 179 
6.5  Supply of Southeastern European countries ..................................... 181 
6.6  Trans-Adriatic Pipeline and the future of Turkmen gas ................... 184 
6.6.1  New dimension of the Russian gas politics in Central Asia 186 
6.6.2  Further supply opportunities .............................................. 188 
7  Conclusion ............................................................................................... 191 
Bibliography .................................................................................................. 203
List of Abbreviations XI
List of Abbreviations

AGRI Azerbaijan – Georgia – Romania Interconnector
AIOC Azerbaijan International Operating Company
bcm Billion cubic meters
BP British Petroleum
BTC Baku Tbilisi Ceyhan Pipeline
BTE Baku Tbilisi Erzurum pipeline
CCGT Combined Cycle Gas Turbines
CIS Commonwealth of Independent States
CNG Compressed Natural Gas
CPC Caspian Pipeline Consortium
DESFA Greek Public Gas Transmission System Operator
EC European Commission
EU European Union
FDI Foreign Direct Investment
FSU Former Soviet Union
GUEU Georgia-Ukraine-European Union
IAP Ionian Adriatic Pipeline
IEA International Energy Agency
IGA Intergovernmental Agreement
IGB Interconnector Greece Bulgaria
INOGATE Interstate Oil and Gas Transport to Europe
ITGI Interconnector Turkey–Greece–Italy
LNG Liquefied Natural Gas
MOU Memorandum of Understanding
MOUC Memorandum of Understanding and Cooperation
NICO Naftiran Intertrade Company
NIOC National Iranian Oil Company
NRAs National regulatory authorities
PSA Production Sharing Agreement