Turkey is located between the countries having 70 percent of the verified hydrocarbon reserves and the world's second greatest consumption zone. Due to its strategic location, Turkey is a considerably suitable venue for the ongoing and future projects concerning transportation of natural gas and oil between eastern and western or between northern and southern countries. Actually, it is this suitable location that has given birth to the Nabucco project.The Turkey-Bulgaria-Romania-Hungary-Austria natural gas pipeline that aims to transport Middle Eastern and Caspian natural gas reserves to European markets, i.e., the Nabucco project, is designed to satisfy the natural gas needs of the countries located on its route, as well as other countries, and with its overall length of 3,300 kilometers and a targeted capacity of 31 billion cubic meters per year, it is a major natural gas pipeline project in terms of the security and reliability of energy in the region. Nabucco is an important energy transmission line that will connect the East with the West. The pipeline is planned to originate from the border with Georgia and Iran, and of its overall length, 2,000 kilometers will be built in Turkey, 400 kilometers in Bulgaria, 460 kilometers in Romania, 390 kilometers in Hungary and 46 kilometers in Austria. The total investment cost of the project is estimated to be 8 billion euros. Work concerning the project first started in 2002, and the pipeline is planned to be commissioned in 2014. The Nabucco project is particularly important for the security of energy and diversification of the natural gas supply, transmission routes and transit countries.
Ahead of the Ankara summit, Romanian Economy Minister Adriean Videanu announced that the problem resulting from Turkey's demands concerning a 15 percent share has been settled, but he did not clarify how this had been done. The European Union seeks to slow down the Nabucco project in order to prevent Turkey from benefiting from the natural gas from Nabucco and wants to see Turkey as a mere transit country. Turkey has announced that it will not demand fees for the passage of natural gas from the Nabucco pipeline and justifiably does not want to be a passive transit country. For this reason, it intends to buy 15 percent of the Nabucco natural gas.
The EU's intention is not just to make Turkey a passive transit country. It is also to create a legal international framework for this and make it applicable to all other similar projects. Indeed, in this connection, Switzerland has proposed to revise Article V of the General Agreement on Tariffs and Trade (GATT) so as to include hydrocarbon projects within the definition of transit in the said article. If it enters into force in its current form, this proposal will create a number of unwanted consequences for Turkey, especially given the existing bilateral and multilateral agreements Turkey has signed with respect to energy strategy as well as its liabilities under these agreements. This proposal inserts the phrase “goods transported via pipelines and fixed facilities” into the definition of “transit traffic” in the definitions section of Article V of the GATT. It aims to cement a legal regime for goods transported via pipelines and fixed facilities, which were not previously within the scope of the said article. With this proposal, Switzerland and the EU countries supporting it, as major energy consuming countries, seek to get rid of transit costs and create a legal provision with secured international binding power that will be in their interests. The EU also plans to ward off local legal provisions of the transit countries, particularly those of Turkey, and minimize the role of transit countries in the flow of goods between producers and consumers. Thus, the transit countries, including Turkey, will be forced to waive all of their sovereignty rights. If the Swiss proposal is accepted, it will be hard to apply it to the existing lines. The provisions of the proposal lack not only the ability of being applied to the energy market, but they will also produce a structure that is in sharp contrast to the international trade's win-win principle.
If the transit countries are denied a share of the trade between producing and consuming countries, the transit countries will not be eager for the construction of new transit lines. This will undermine the development of transit trade on energy in the medium and long term and will be in stark contrast to the main philosophy of the GATT agreement, which aims to improve world trade. At this point, the only solution is to convene producers, consumers and transit countries around the same table in order to design and implement a framework that seeks a reasonable transit fee, purchasing natural gas from pipelines at suitable prices and the security of supply.
The draft Transit Protocol, being prepared as an annex to the Energy Charter, aims to develop generally accepted principles concerning the secure and uninterrupted transit of hydrocarbon and other energy sources that pass through at least two countries. The work on this protocol has been in progress for about 10 years. To regulate this issue within a general heading such as transit traffic under Article V of the GATT agreement, even before this protocol is prepared and signed and without taking into consideration the characteristics of energy transit, will adversely affect the draft Transit Protocol. Moreover, with its binding provisions concerning energy transit applications, it will create unwanted liabilities for Turkey. The said definition of transit has been penned with traditional transit methods in mind. Expanding this definition so as to include hydrocarbon goods carried through fixed facilities will lead to a number of technical and physical problems.
This will make Turkey a passive transit country. In order not to become a passive transit country, it intends to buy 15 percent of the Nabucco natural gas. Likewise, Italy, being an EU member country, too, wants to buy 10 percent of the natural gas passing through its territory.
Currently, Turkey buys expensive natural gas from the Russian Federation and Iran, which prevents Turkey's rapid growth and increase in welfare. If Turkey can supply natural gas at more competitive prices with Nabucco and other projects, this will facilitate Turkey's rapid growth. This is what causes concerns for the EU, and this is the real problem.
