The Trans-Anatolian Pipeline represents a crucial element of Turkey's energy bridge between the Caspian region and Europe. (Credit: crowbot/Flickr)
The Trans-Anatolian Pipeline represents a crucial element of Turkey's energy bridge between the Caspian region and Europe. (Credit: crowbot/Flickr)

The idea of natural gas deliveries from the Caspian Sea region first emerged in the beginning of 1991 right after collapse of the Soviet Union. In a move to lessen reliance on Russia as a major gas supplier, Western European countries tried to establish cooperation with the newly independent states of the region, which was meant to be beneficial for all parties concerned. From the very beginning of the project, the key role was assigned to Turkmenistan, which had been the second largest gas-producer in the USSR and a promising alternative to Russian gas. At first, the project was named the ‘Trans-Caspian pipeline’. This idea enjoyed the support of Turkmenistan’s leadership, looking to break away from dependence on already existing gas export routes in order to market its nation’s main asset: natural gas. In addition, the proposed project would involve Azerbaijan as a major transit country and could potentially include Uzbekistan and Kazakhstan as additional gas suppliers. The Trans-Caspian pipeline was not realised and was test in a new format under the name ‘Nabucco’ At the same time, competing gas pipeline projects in Azerbaijan and Turkey were coming about to organically turn into a new full-scale concept that would be fully formulated as ‘Southern Gas Corridor’ (SGC) in 2008,[1] where Azerbaijan was given the role as the main supplier of natural gas to the EU. SGC is being carried out in three separate stages: The South Caucasian Pipeline (SCP), Trans Anatolian Pipeline (TANAP), and Trans Adriatic Pipeline (TAP). The construction of regional pipeline segments from Azerbaijan within the SGC was gradually shortening the Nabucco project until it was completely replaced by the SGC. This led to the final suspension of the Nabucco project in July 2013, whereas the SGC moved further towards completion (Figure 1).

Figure 1. Southern Gas Corridor

Source: BP, Wikimedia (2017).

Over time the project changed names and actors, and modified its objectives, however its main four pillars have remained unchanged throughout the project: 1) the Caspian region, 2) natural gas, 3) pipeline, and 4) Europe.

Trans-Caspian Pipeline

The idea of Trans-Caspian Pipeline (TCP) emerged for purely commercial reasons, rather than political. The discourse regarding dependence on Russian natural gas did not exist back then. In the beginning of the 1990s, there were several new routes being discussed in order to deliver Turkmen gas to Europe, whereas the interim task was to bring natural gas to Turkey. The first route was expected to run via northern Iran to the eastern Turkish border where Iran could also supply the pipeline with its own gas. In this project Iran would not only be a transit country, but also a gas supplier (Figure 2).

Figure 2. Iranian-Turkmen Gas Pipeline

Source: CA-Portal (2015).

A pipeline route on the Caspian Sea bed was another option that was considered by Turkmenistan as far back as 1992. A submarine pipeline on the Caspian Sea bed could be constructed in three ways: running along Iranian, Azerbaijani, and Russian coastlines. The cost of each line varied from $4.5 to 5.6 billion USD.[2] In the 1990s, geopolitics did not dominate energy projects in the post-Soviet space, and Iran and Azerbaijan were competing for the role of de-facto transit state for Turkmen gas in order to gain the consequent economic benefits that gas transiting promised.

Turkmenistan considered the Iranian route as the most promising and least costly. After the US imposed sanctions[3] banning all large foreign investments in Iran’s energy sector, virtually excluding Iran from the project. Instead of the Iranian route, the United States proposed supporting a consortium called Pipeline Solution Group International (PSG), which then signed an agreement with Turkmenistan in February 1999. PSG consisted of the Bechtel Group and General Electric expected to “develop, finance, build, operate, and maintain” the 1950 km long gas pipeline that comprised of submarine section along with pipelines laid via Azerbaijan and Georgia to Turkey.[4] Half a year later, the Royal Dutch Shell joined the consortium through acquiring a 50% share of the project. The construction of the $2.5 billion USD pipeline was expected to start in 2001 and to be completed in 2003, with annual capacity reaching 16 billion cubic metres (bcm) annually for the Turkish market alone. Gas supplies to Europe were expected to start in 2010, with the pipeline’s annual capacity extended to 30 bcm around that time.[5] It should be mentioned that legal ownership of the Caspian Sea by the surrounding countries had not been resolved and it was regularly brought up by Russia and Iran as a precondition of constructing the submarine section of pipeline. After the collapse of the Soviet Union, the marine borders in the Caspian Sea had to be redefined between the new independent littoral states which had no concord on how the sea must be partitioned. In addition, Iran claimed a proportional area of the sea than was not stipulated by the treaty with the Soviet Union. This indefiniteness erupted into a dispute between Turkmenistan and Azerbaijan over offshore oil fields – Azeri, Chirag, and Kapyaz.[6] Nevertheless, it was not the main obstacle in successfully realising the project. The main issues were the contradicting expectations of the government of Turkmenistan and PSG. The Turkmen government expected to obtain investments and advance payments and did not agree with the proposed profit distribution scheme by PSG.  Azerbaijan’s demand for a 50% share of the project for its gas in the 30 bcm pipeline complicated matters even more.[7] Gazprom was interested in regaining influence in Turkmen gas market and therefore agreed to renew gas purchases at a higher price. In October 2000, PSG closed its office in Ashgabat leaving Royal Dutch Shell in charge of the project.

Turkmenistan’s noncompliance can be explained by resumption of gas purchases by Gazprom and Itera, which had ceased in 1997, whereas Azerbaijan did not hasten to make concessions in this project, since Azerbaijan had other pipeline options on the table. The subsequent politicisation of natural gas extraction, processing, and export in the region have significantly complicated any further attempts to realise gas pipeline projects. The realisation of the project was promising, and even had financing commitments from  the US Export-Import Bank and Overseas Private Investment Corporation (OPIC).[8] The US special envoy to the Caspian region, John Wolf, prophetically stated that “Turkmenistan is missing its chance to implement the project”.[9]  The members of the consortium would not be approached again regarding the ‘Transcaspian issue’, and never has Turkmenistan been so close to becoming a gas supplier for Europe.

The Nabucco pipeline project

After a decade of failed attempts to build the ‘Trans-Caucasian Pipeline’, first with support from Iran (prior to US sanctions), then from the US, a series of European countries stepped in. The new iteration of the project was the Nabucco pipeline. In June 2002, a protocol of intention to construct the Nabucco pipeline was signed by Bulgarian Energy Holding, Botas (Turkey), MOL (Hungary), OMV (Austria), and Transgaz (Romania). Two years later, these companies established Nabucco Gas Pipeline International GmbH (NIC) with an equal division of shares.[10] In 2008, German RWE became the sixth member of the Nabucco consortium, however it sold its shares to OMV five years later.[11] GDF Suez was the last company to join the consortium in 2013 by acquiring a 9% share from OMV. Table 1 shows the international companies involved in the Nabucco project.

Table 1: Incremental changes in the structure of  Nabucco Gas Pipeline International GmbH shareholders, 2004 to 2013.

Contractor Party Share, %
2004 2008 April 2013 May 2013
OMV (Austria) 20 16.67 33.33 23.34
Botas (Turkey) 20 16.67 16.67 16.67
Bulgarian Energy Holding (Bulgaria) 20 16.67 16.67 16.67
MOL (Hungary) 20 16.67 16.67 16.67
Transgaz (Romania) 20 16.67 16.67 16.67
RWE (Germany) 16.67
GDF SUEZ (France) 9

Source: Doneva (2008, Feb 5), Reuters (2013, Apr 14), Energie (2013, May 28).

The Nabucco gas pipeline was initially expected to begin in Azerbaijan, (and possibly another branch in Turkmenistan), and run almost 4,000 km through Azerbaijan, Turkey, Bulgaria, Romania, and Hungary, terminating at the Austrian gas hub, Baumgarten. The projected annual capacity of the Nabucco pipeline was 31 bcm, and the total cost of the project would be 7.9 billion EUR.

The Nabucco project received full support of the European Commission after the so-called first ‘Russia-Ukraine gas war’ in 2005-2006. The leadership of the EU saw the threat of growing dependence on gas supplies from Russia, and the need diversify their gas imports after the second ‘Russia-Ukraine gas war’ of 2008-2009. The project was meant to include Azerbaijan, Turkmenistan, and Iraq, in addition to Russia as natural gas providers. However, the political instability in Iraq, and Russia’s move to increase its role in Turkmenistan’s affairs, made Iraq and Turkmenistan unreliable gas suppliers at the time. Additionally, Azerbaijan had the Shah Deniz gas field, discovered in 1999, which arguably made it the only feasible gas supplier in the short term. However, the Nabucco consortium did not have production capabilities in Azerbaijan, which meant they were completely reliant on the Azerbaijani government for this. There was also another consortium which had been exploring Shah Deniz area in Azerbaijan since 1996. Table 2 shows the companies that made up the Shah Deniz consortium.

Table 2. Changes in Shah Deniz exploration and development consortium since 1996.

Contractor Party Share, %
1996 December 2013 May 2014 October 2014
SOCAR (Azerbaijan) 10 16.67 16.67 16.67
British Petroleum (UK) 25.5 28.83 28.83 28.83
Elf (France)[12] 10 10
LUKoil (Russia) 10 10 10 10
Statoil (Norway) 25.5 15.5 15.5
TPAO (Turkey)[13] 9 9 19 19
OIEC (Iran)[14] 10 10 10 10
Petronas (Malaysia) 15.5

Source: Total. (2014), SOCAR (2017), BP (2017), Rzayeva (2015).

Azerbaijan, along with its partners (listed in Table 2), came to a decision to construct an export pipeline to Turkey, and in March 2007, the Azerbaijani government  initiated a gas export route called the South Caucasus Pipeline (SCP). The SCP had seven bcm of initial capacity, running 692 km[15] via Georgia to the Turkish city of Erzurum.[16] That meant that before the plan for the Nabucco pipeline was even finalised, there were other pipelines planned to run along the route to and within Turkey.

The construction of the SCP threatened to make the Nabucco pipeline irrelevant. In response, the leadership of the Nabucco project took steps to save the project by shortening its length to compliment the newly built pipelines. The new Nabucco pipeline would first start in Erzurum and connect to the SCP, then run to Ahiboz, Turkey where Nabucco would join yet another pipeline, the Tabriz-Ankara pipeline.

Aside from other pipelines that were built faster than Nabucco, another obstacle presented itself, even though the Nabucco pipeline route had been shortened. A Memorandum of Understanding was signed between the governments of Azerbaijan and Turkey to build the Trans-Anatolian gas pipeline (TANAP) in December 2011[17], which resulted in the termination of the Nabucco project on Turkish territory.

The Nabucco project then turned into the Nabucco-West pipeline, shortening it further. The new iteration would begin on the Turkish-Bulgarian border and only run west through Europe. Along the European route Nabucco-West was also facing competition though, from the Trans-Adriatic gas pipeline (TAP) project that would go through Greece, Albania, and Italy. The Shah Deniz consortium selected TAP for transporting its gas[18] which eventually meant the termination of the Nabucco pipeline project in June 2013.[19]

The South Caucasian Pipeline

The implementation of the Southern Gas Corridor began with the construction of South Caucasian Pipeline (SCP) in 2003, at the same time as the construction of the Baku-Tbilisi-Ceyhan oil pipeline. SCP begins at the Sangachal oil and gas processing terminal (located along the Caspian Sea in Azerbaijan), and runs 692 km via Georgia to the Turkish border, where the gas pipeline enters Turkey’s gas distribution system. The length of the SCP is 692 km and has a full projected capacity of 16 bcm/year.[20] The pipeline was commissioned in 2006 and would supply most of its gas to Turkey from the Shah Deniz gas field. The export volume has accounted for around eight bcm for 2017 thus far.[21] The SCP consortium included several international partners of Azerbaijan, carefully selected in order to maintain the balance of interests of all actors. (Table 3).

Table 3. Shareholder structure of the South Caucasian Pipeline consortium.

Company’s Name Share, %
BP (UK) 28.8
AzSCP (Azerbaijan) 10.0
TPAO (Turkey) 19
Petronas (Malaysia) 15.5
Lukoil (Russia) 10
NICO (Iran) 10
SGC Midstream (Azerbaijan) 6.7

Source: BP (2017).

An extension of the SCP was launched in December of 2012 as a response to the development of gas field that will eventually allow production upwards of 16 bcm a year. The SCP extension will potentially increase the annual export capacities of Azerbaijan up to 25 bcm.[22]

The Shah Deniz consortium had a 25 year history of contracts with gas buyers in Europe, among them Bulgargaz, DEPA Public Gas Corporation of Greece, Enel, E.ON, GDF SUEZ, and Shell. TAP was able to overcome a major obstacle that the other projects could not: a third-party access clause of the Third Energy Package that limits full usage of a pipeline by gas owner. In order for TAP to be operational at its full capacity and secure the repayment of investments, the European commission issued an exemption to this requirement.[23]

 Trans-Anatolian Pipeline

Rapid gas production rates of the Azerbaijani Shah Deniz field signalled a need for new pipelines in Turkey and Southern Europe export the gas to consumers. This was emphasised in the ‘Intergovernmental agreement concerning the Trans-Anatolian Natural Gas Pipeline System between the Government of the Republic of Turkey and the Government of the Republic of Azerbaijan’, signed on 26 June 2012 and entered into force in March 2013.[24] It was two years though, before the project was finalised with the selection of the shareholders and formulating the terms of the project agreement. On 13 March 2015, the Trans-Anatolian Natural Gas Pipeline Project agreement was signed between the consortium’s shareholders: BP, BOTAS, and SOCAR (Table 4).[25]

TANAP is a 1,850 km gas pipeline with its projected capacity around 16 bcm a year. Expected increases in the capacity of the pipeline could reach up to 24 bcm and eventually even up to 31 bcm per year. TANAP terminates in western Turkey where the pipeline will be connected to the Trans-Adriatic pipeline.

Table 4. Shareholder structure of the Trans-Anatolian Pipeline consortium.

Company’s Name Share, %
SOCAR (Azerbaijan) 58
BOTAS (Turkey) 30
BP (UK) 12

Source: TANAP (2017).

TANAP has the utmost geopolitical significance for Turkey, since TANAP runs solely along Turkish territory and represents a crucial element of the Turkey’s concept of the so-called ‘Energy Bridge between the Caspian region and Europe’. This carries the potential risk of making Europe geopolitically dependent on Turkey, if significant volumes of natural gas will be delivered via Turkey’s territory and the relations between the EU and Turkey continue to deteriorate. The project of course enjoys strong support from Turkey, which had initially expected to become not only a transit country but also the sole consumer of all Shah Deniz gas. However, this was not Azerbaijan’s intention; they had preferred to sell its gas in the EU as well. By selling it in the EU, Azerbaijan would not only diversify its gas consumers, but the government also planned to use the gas supply to exercise political influence within the EU, regarding the Nagorno-Karabakh issue in particular. The TANAP pipeline will eventually supply six bcm to Turkey.

Trans-Adriatic Pipeline

The third and final segment of the South Gas Corridor is the Trans-Adriatic gas pipeline (TAP), which will be connected to TANAP on Turkish-Greek border. The story of TAP began with a prefeasibility study undertaken in 2003. Even though the TAP’s submarine section in the Adriatic Sea is not very long and accounts for about 105 km it had contributed to name of the pipeline. In 2012, the Shareholder Agreement was signed between TAP and the Shah Deniz consortium. A list of the TAP shareholders is shown in the Table 5.

Table 5. Shareholder structure of the Trans-Adriatic Pipeline consortium.

Company’s Name Share, %
BP (UK) 20
SOCAR (Azerbaijan) 20
Snam (Italy) 20
Fluxys (Belgium) 19
Enagas (Spain) 16
Axpo (Switzerland) 5

Source: TAP (2017).

In May 2016, the inauguration ceremony for TAP was held in Thessaloniki. The full extent of the pipeline will run 550 km across Greece and 215 km in Albania, traverse the Adriatic Sea for 105 km (for which the project got its name) and eight km in Southern Italy, totalling 878 km (Figure 3). The pipeline will further continue 8 km in Southern Italy which sums up to 878-km of the total length of TAP.

Figure 3. Trans-Adriatic Pipeline and interconnectors

Source: TAP (2017).

TAP will cost $ 4.5 billion USD[26] and is expected to become operational in 2020.[27] Finalisation of the TAP project will allow supply of one bcm to Greece and Bulgaria combined. The IGB Interconnector with Bulgaria is currently being constructed.[28] The main consumer of Azeri gas within the SGC is Italy for the time being. The expected volume of gas delivered to Italy is 9 bcm a year.


For the last two and a half decades, the idea of gas supplies from the Caspian region to Europe has taken the form of three initiatives, two iterations of which never materialised. As a transit country, Turkey has been playing a critical role; no matter which version of the pipeline route would be built, it would run through Turkey. The Trans-Caspian Pipeline project had a good chance to be finalised due to its advantages: the project was economically viable and not politicised by the parties involved. Tensions among the Turkmenistan and Azerbaijan as well as different expectations of the countries’ leaders, did not allow the parties to reach a consensus that could allow implementation of the project.

In case of Nabucco, the flaws of TCP were taken into account and improved upon. In comparison to TCP, Nabucco regarded not only Turkmenistan, but also Azerbaijan as its resource base. In addition, Nabucco had heavy support from the European Commission. Nabucco started as an economic project but over time became politicised, with the primary objective to decrease energy dependence on Russia for political reasons, rather than focusing on the economic benefits of diversifying gas supplies and trade. In addition, Nabucco lost the strategic advantage of timing that it had in the beginning of the 2000s. Once the key companies that were operating gas production projects in the region decided to expand into pipeline projects as well, Nabucco had virtually no chance to succeed in the gas pipeline battle.

The project of the Southern Gas Corridor has been pursuing the goal of lowering gas dependence on Russia by diversifying gas supplies through gas imports from the Caspian region. It has been a relatively long process and the project itself turned out to be costly, at an estimated at $45 billion USD.[29] It promises modest economic benefits to its shareholders, especially during a time when the US is ready to become a major player in the European gas market, which will negatively affect gas prices. Nevertheless, the Southern Gas Corridor contributes to the diversification of Turkey’s natural gas imports more than it does in the case of EU. In addition, SGC will take Turkey closer to becoming a ‘gas hub’ for Europe, which will strengthen Turkey’s political leverage over the EU.

The SGC is close to completion and will become functional, however there are also some technical uncertainties about the future of the entire pipeline system, particularly if the Shah Deniz 2 gas supply will be ready, as today it is at 97%.[30] In addition, the possibility of supplying the projected gas volume in full might be problematic, which will in turn negatively affect return of the investments since the gas prices in the EU market have significantly fallen since the project planning phase. However, Azerbaijan was rational in deciding to participate in the Southern Gas Corridor, both as a shareholder in gas production, and in gas transportation projects. Contracted profits from gas sales can be substituted by Azerbaijan shareholding in the pipeline projects.

In spite of high cost of the entire Southern Gas Corridor, the project has reached several strategic goals. First, the project has enabled Azerbaijan to become an additional supplier of natural gas, though a modest one, that has taken the EU one step further in its policy of diversification of gas supplies. Second, the project was at no cost to the EU states; rather it was funded by private companies. Finally, Europe has obtained a connection with a gas pipeline route with the whole of the Caspian region, which could serve as the primary supplier of gas for decades to come.

Matthias Dornfeldt

Assistant Professor and Research Fellow at the Berlin Center for Caspian Region Studies, Freie Universität Berlin


[1] Second Strategic Energy Review – An EU Energy Security and Solidarity Action Plan,

[2] Ovlyakuliyev, K. (1992, Oct 23). Gazoprovod Turkmenistan-Turtsiya: variantov mnogo, a nuzen odin. Turkmenskaya Iskra.

[3] Based on the Iran and Libya Sanctions Act (ILSA) in 1996. USA Congress. (1996, Aug 5). Public Law 104-172. 104th Congress.

[4] Bechtel Corporation. (1999, Feb 19). PSG International Secures Lead Role in US$2.5 Billion TransCaspian Pipeline Project.

[5] APS Review Gas Market Trends. (1999, Sep 27). Turkmen Gas Will Reach Turkey & Europe By Mid-2003 Via Shell/PSG-Led P/L.…-a055879322

[6] (Turkmenistan were referred as to Omar, Osman, and Serdar). Harris, A. (1998). Azerbaijan – Turkmenistan in the Caspian See. IBRU Boundary and Security Bulletin, pp. 56-62.

[7] Yenikeyeff, S. (2008). Kazakhstan’s Gas: Export Markets and Export Routes. Oxford Institute for Energy Studies.

[8] An Institute for Global Energy Research. (1999, Aug 14). Washington pledges support for trans-Caspian gas pipeline.

[9] RadioFreeEurope. (2000, Sep 23): Uncertainty Around Trans-Caspian Pipeline: PSG Closes Ashgabat Office September 19, 2000.

[10] EBRD. (2017). EIB, EBRD and IFC start appraisal of Nabucco pipeline.

[11] Doneva, I. (2008, Feb 5). Germany’s RWE Joins 5.0 Bln Euro Nabucco Gas Pipeline Project as Sixth Partner – Nabucco Consortium. SeeNews. (

[12] Later Total (France)

[13] Turkish Petroleum Overseas Company

[14] Later NICO (Iran)

[15] BP. (2017). South Caucasus Pipeline Project.–scp-.html

[16] On the basis of its route, this gas pipeline is often referred to as Baku-Tbilisi-Erzurum

[17] TANAP. (2017). About us.

[18] ( 2013, Jun 27). Shah Deniz shareholders decide on export route of Azerbaijani gas to Europe.

[19] RadioFreeEurope. (2013, Jun 26). Consurtiums turns down Nabucco West pipeline.

[20] BP. (2007, Oct 21). The 692km South Caucasus Pipeline has been designed to transport gas from the Shah Deniz field in the Azerbaijan sector of the Caspian Sea, through Georgia and on to the Georgia-Turkey border.

[21] BP. (2017). South Caucasus pipeline.

[22] BP. (2017). South Caucasus Pipeline Project.–scp-.html

[23] European Commission. (2015). COMMISSION DECISION of 17.3.2015 prolonging the exemption of the Trans Adriatic Pipeline from certain requirements on third party access, tariff regulation and ownership unbundling laid down in Articles 9, 32, 41(6), (8) and (10) of Directive 2009/73/EC. Brussels.

[24] TANAP. Agreements.

[25] TANAP. Major Shareholder in the project of the century.

[26] Temizer, M. (2017, Jan 31). Trans Adriatic Pipeline will cost €4.5B.: Managing Dir. Anadolu Agency.

[27] TAP. (2017). TAP project milestones.

[28] ICGB Ad. (2017). IGB project.

[29] TANAP. Major Shareholder in the project of the century.

[30] BP. (2017). Shah Deniz Stage 2.

The views and opinions expressed in this publication are those of the original author(s) and do not necessarily represent or reflect the views and opinions of the Dialogue of Civilizations Research Institute, its co-founders, or its staff members.