As Azerbaijan rushes to supply natural gas to Europe, new agreements with Turkey could accelerate the race.

In the wake of waning interest in the Nabucco pipeline project, Azerbaijan has seized the opportunity to get rolling on a project that accomplishes the same goal: connecting its natural gas resources to the European continent via Turkey.

According to recent agreements signed between Turkey and Azerbaijan, the construction on the Trans-Anatolian Pipeline (TANAP) is expected to begin in 2013. The project, proposed by the State Oil Company of Azerbaijan Republic (SOCAR), will connect the Shah Deniz Phase II gas field with Bulgaria and Greece, around 2,000 kilometers to the west. The estimated cost of the pipeline is $6 billion, and could be finished by 2017.

If constructed, the pipeline would have the capacity to transport 16 billion cubic meters (bcm) of natural gas per year during the initial stages, an amount that would later be increased to 24 bcm, based on demand.

A Memorandum of Understanding (MoU) has been signed between stakeholders in order to form a consortium. SOCAR claimed 80% of TANAP's shares, the Turkish company BOTAŞ took 10%, and the Turkish Petroleum Corporation (TPAO) holds the remaining 10%. Several other European firms, including BP, Statoil, and Total, have also demonstrated interest in investing in the TANAP project. These companies are also members of the Shah Deniz consortium, which will ultimately decide which company will transport the gas from Turkey to key points in Europe.

Various third-party pipeline projects have been considered to carry gas onward to other parts of the continent. The Trans-Adriatic Pipeline (TAP) has secured the bid to connect Italy to Turkey via Albania, and BP has also proposed the South East Europe Pipeline (SEEP) project, which would lay a pipeline from Turkey to Austria. Both projects would transport Azerbaijani gas in high volumes. In February 2012, consideration of the Interconnector Turkey-Greece-Italy (ITGI) pipeline proposal was put on hold, as the partners in Shah Deniz have chosen to focus on TAP. Through TANAP, Azerbaijan will seek to export additional gas volumes to Europe when new offshore fields start production, such as the Absheron gas field, with reserves of 350 bcm, Umid gas field, with reserves of 200 bcm, and Azeri-Chirag-Guneshli field, with 300 bcm. Furthermore, exploration structures such as Shafag-Asiman, Babek, and Nakhchivan could add a combined total of 1 trillion more cubic meters of natural gas to Azerbaijan's reserves.

Since the Nabucco initiative suffered heavy setbacks due to a lack of suppliers and increased competition, the consortium has chosen to downsize its project. Moreover, if TANAP becomes a reality, it would essentially render the Turkish section of the Nabucco pipeline useless. The option on the table is to cut down the original 3,900-kilometer pipeline to focus solely on the length from Bulgaria to Austria, renamed Nabucco West. The project will compete with SEEP and TAP as a contender to be TANAP's link to Europe. Although TANAP's official route through Turkey has not been planned, SOCAR's Chairman Rovnag Abdullayev announced that the company hopes to sign inter-governmental and host country agreements by mid-2012.

Azerbaijan has already enjoyed six years of success in pipeline partnerships with Turkey. The 1,789-kilometer Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline is the second largest in the post-Soviet region, connecting the Caspian Sea to the Mediterranean. The South Caucasus Gas Pipeline (SCP), completed in 2006, annually pumps around 6 bcm of gas from Baku to Erzurum, Turkey. The Southern Caucasus Gas supply runs parallel to the BTC pipeline, and will be capable of delivering 20 bcm from Shah Deniz Phase I after an expansion project starting in 2013.

Azerbaijan is also involved in transporting gas from Kazakhstan to nearby locations in the regions. With the Trans-Caspian Pipeline still in the early stages of development, Azerbaijan is looking eastward to natural gas supplies beyond its borders, to develop not only its own energy sector but promote the importance of the region as a whole when Central Asian gas finally hits the European market.