Gas supplies in Russia-Turkey relations: heat or cool?

By Gulgiz Dadashova

Ankara and Moscow have openly clashed for the first time in more than a century, bringing the region into a highly-charged position with two world powers confronting each other.

While armed escalation of the conflict between Russia and Turkey is unlikely for now, the two nations seem to be far enough from full restoration of ties that were deteriorated after the downing of a Russian Su-24 bomber jet by a Turkish F-16 fighter at the Syrian border.

The unpleasant incident could paralyze the relations between Moscow and Ankara. Russian leader Putin has applied several economic sanctions against Turkey. Many Turkish businesses voiced fears that the sanctions might badly hit Turkey’s economy, affecting its trade and tourism industries. But, the coin has two sides - the cooling in ties may also negatively affect Russia, which already suffers from low oil prices and West’s economic sanctions. So, both sides stand to lose from the imposed sanctions.

What is most likely to happen is a political standoff. Some say Ankara and Moscow can come close through the mediation of a close ally [Azerbaijan and Kazakhstan already voiced intention to mediate]. But some believe that energy -- one of the main points that brought Russia and Turkey closer in recent years -- can play a mediating role.

Gas supplies, the pillar of Russian-Turkey trade bonds, have so far remained untouched, though Turkish Stream, a joint pipeline project have already been frozen.

Gal Luft, Co-Director at Institute for the Analysis of Global Security and Senior Adviser at United States Energy Security Council, believes Moscow can’t afford to let go of one of its biggest and fast growing clients especially at a time when low oil prices are hurting its economy.

“Despite the latest tension Russia and Turkey are very much dependent on each other when it comes to energy. Turkey gets about 60 percent of its natural gas from Russia and is dependent on Russian financing for the construction of a nuclear power plant [Akkuyu],” he wrote in an email to AzerNews.

In 2014, Turkey rung up a $6.5-billion bill by purchasing 27.4 billion cubic meters of natural gas from Russia's Gazprom, thus making Turkey the biggest importer of Russian natural gas.

Although Russia did not signal any ‘problems’ regarding the gas supply to Turkey, it was widely debated among experts. Turkey's recent search for energy alternatives to ensure that its energy needs are met fell on Qatar, along with Azerbaijan, which is expected to supply gas to Turkey through TANAP in 2018.

Reminding that Turkey also offers one of the best ways for Russia to export gas to Europe, Luft noted that the two countries cannot really afford to let the recent tension over Syria derail their economies and energy security.

The Turkish Stream pipeline was intended to pump Russian gas through Turkey and into southeastern Europe. The two countries inked the deal in May, anticipating that the pipeline could begin delivering oil as early as December 2016.

Luft notes that Russia will continue to seek diversified relations with its neighbors and former Soviet republics in order not to be dependent on one conduit.

Asked whether Azerbaijan can be one such conduit, Luft said that the Russians don’t seem to want to rely on another one of their former republics after the experience with Ukraine.

“Also, there is risk that some of the European supporters of the Southern Gas Corridor might pull out of the project. After all the whole idea of the Southern Corridor was to circumvent Russia,” he wrote.

The 3,500-kilometer Southern Gas Corridor which would finally end Europe’s dependence on a single pipeline was initially launched as part of the South Caucasus Pipeline Expansion, which will connect the Sangachal terminal with eastern Turkey through Georgia. It will link up with the SOCAR-led TANAP to be connected with a third pipeline TAP on the Turkish-Greek border. Europe expects to receive the first gas from this route in 2020.

New projects vs fragile routes

The recent political confrontation in the relations of two big countries makes the scene quite vague in the region, in fact jeopardizing the future energy projects, and giving birth to new ideas.

Senior policy analyst at the Brussels-based European Policy Centre, Amanda Paul expects Russian-Turkey relations to remain difficult for the foreseeable future.

“Russia indicated that it will cancel the planned Turkish Stream project,” she wrote in an email to AzerNews. “However, following an earlier violation of Turkish airspace by Russia, Turkey’s leadership had already indicated that it may drop this project along with a bid by Russia to construct a nuclear plant in Turkey. Indeed Turkey is too dependent on Russia for natural gas with some 60% of its consumption coming from Gazprom. In this new picture Russia will focus its attention on the Nordstream II project that aims to transport natural gas from Russia to Germany.”

Paul believes that this is a very controversial deal as it would effectively strangle Ukraine, which is experiencing tough period of ties with Russia.

In this context Paul stresses the important role of Azerbaijan as a transit country. "Azerbaijan is already playing an important role in terms of shoring up Europe’s energy security and theoretically Azerbaijan could be a transit state for gas including from Russia," she said.

Paul underlined that Azerbaijan can be a transport country also for Iran and others in the Caspian region, although this would clearly involve the construction of new infrastructure which would require investment and would therefore need to be commercially viable.

--

Follow Gulgiz Dadashova on Twitter: @GulgizD

Follow us on Twitter @AzerNewsAz