Courtesy of STRATFOR (subscription required), an interesting analysis of the decision by Turkish Energy Minister Taner Yildiz to join Iranian President Mahmoud Ahmadinejad and Turkmen President Gurbanguly Berdimukhammedov at the Jan. 6 inauguration ceremony for a natural gas pipeline running from Turkmenistan to Iran.  As the article notes, Yildiz’s presence raises the possibility that new energy routes and players could create fierce competition in the region:

“…This pipeline’s debut had been planned for quite some time. However, Yildiz’s presence at the ceremony raises the possibility that new energy routes and players could significantly alter the region’s energy dynamic and create fierce competition.

The new natural gas pipeline is the second energy link between Turkmenistan and Iran. Iran previously imported 6 billion cubic meters (bcm) of natural gas annually from Turkmenistan. With the new pipeline, that amount is set to increase to 12 bcm in 2010 and then to as much as 18-20 bcm in 2011. The new pipeline is part of Turkmenistan’s strategy to diversify its export markets after a pipeline break disrupted shipments to its main energy export market, Russia, in April 2009 (natural gas flows have yet to resume). Though the natural gas that will be sent to Iran through the new pipeline is just a fraction of the 50-60 bcm per year that Turkmenistan previously sent to Russia, it gives Ashgabat a financial reprieve, since Turkmenistan depends on energy exports for most of its government revenues. Turkmenistan also recently debuted another pipeline, with a capacity of 30 bcm, which runs to China.

These new pipelines typically would unnerve Russia, which is wary of other powers like China and Iran challenging Moscow’s influence over Turkmenistan. However, when the global economic recession drove European natural gas demand down, Russia simply did not need Turkmenistan’s exports (which it would then sell to the Europeans at a much higher price). Because Russia’s own natural gas supplies were more than sufficient to meet Europe’s needs, Moscow allowed the new pipelines to be completed. Russia also knew full well that it still had a say in these new projects, since it controls much of Turkmenistan’s energy infrastructure.

Although the pipelines to China and Iran fulfill Turkmenistan’s need for export markets other than Russia, they also raise the question of what will happen when European and Russian demand for natural gas returns to previous levels in the next few years, as several STRATFOR sources in Russia and Europe have forecast. At that point, Turkmenistan’s pipelines could be operating at full capacity, sending 50 bcm or more to Iran and China annually. This would leave Turkmenistan unable to meet the Europeans’ needs — if demand returns to the levels before the drop — at its current production capacity of 70 bcm. Thus, this could easily turn into a messy competition among several players for Turkmenistan’s natural gas — signs of which are already visible.

Enter Turkey. Turkey has long been discussed as a potential energy transit country, due to its strategic location joining the European and Asian continents. The Europeans have courted Turkey as a potential energy transport route for projects like Nabucco, which would bring Central Asian, Caspian and Middle Eastern energy supplies to the continent and circumvent Russia. The Russians, meanwhile, see Turkey as key to making sure the Europeans remain dependent on Russia for energy through potential projects like South Stream.

Therefore, the Turkish energy minister’s presence at the Turkmenistan-Iran pipeline inauguration is noteworthy. Turkey is waking up from a near century-long diplomatic slumber and is looking to raise its profile in strategic areas. One such area is the Middle East, and a key country with which Turkey already has an energy and trade relationship is Iran. Turkey imports a small amount of natural gas from Iran and has made clear its intention to transfer Iranian natural gas to Europe. Iran’s geographical location makes it a very attractive alternative to Russia for energy supplies destined for Europe, and it has heavy volumes of its own natural gas (though most current production is used for domestic consumption) and vast untapped reserves.

Of course, Iran’s controversial nuclear program creates massive political complications in getting Iran involved in such a deal right now, but this is not to preclude its participation in the future. Central Asia — and specifically Turkmenistan — contains one of the world’s largest supplies of natural gas, and the Turkmenistan-Iran pipeline now brings that natural gas considerably closer to Turkey. From Turkey, there are no serious obstacles to getting that natural gas to Europe. Yildiz’s presence at the Turkmenistan-Iran pipeline inauguration indicates that the Turks are very aware of that. But Russia is also aware, and will make sure that its voice is heard as competition over energy routes and supplies in the region heats up.”