BACKGROUND: Last week’s Moscow meeting marks the implementation of a 2009 agreement to hold regular senior Turkish-Russian intergovernmental consultations. Turkey has institutionalized such high-level meetings with Iraq and Syria and Erdoğan successfully secured Putin’s approval for this process when he visited Ankara last August. Foreign Minister Ahmet Davutoğlu, Foreign Trade Minister Zafer Cağlayan, Energy and Natural Resources Minister Taner Yıldız, Agriculture and Rural Affairs Minister Mehdi Eker and Transportation Minister Binali Yıldirım accompanied Erdoğan. They met with President Dmitry Medvedev, Prime Minister Vladimir Putin, and other Russian political and business leaders.
Russia currently supplies almost two thirds of Turkey’s natural gas consumption (which provides most of Turkey’s electricity) and one fifth of its domestic oil needs. In 2008, Turkey imported 65 percent (22 billion cubic meters) of its natural gas and 25 percent (8 million tons) of its oil from Russian sources. Turkey also purchases coal from Russia and is contemplating establishing a nuclear power program that would rely on Russian-made reactor fuel. The natural gas from Russia and Central Asia enters Turkey directly via “Blue Stream” dual pipeline that runs along the seabed of the Black Sea and indirectly through an older Western Pipeline whose convoluted route traverses Moldova, Ukraine, Romania, and Bulgaria.
Both Russian and EU energy managers see Anatolia as a pivotal transit route for their future energy plans. Turkish officials have sought to balance their demands while also exploiting them to elevate their country’s importance as a key energy bridge for both Moscow and Brussels. From Ankara’s perspective, serving as an oil and gas conduit connecting Europe with Central Asia and the Caucasus underscores Turkey’s value as a major Eurasian energy security partner to many countries. Turkish officials hope to transform their country into an energy hub for much of the eastern Mediterranean. Although approximately two-thirds of the world’s known oil and gas reserves are located around Turkey, most oil and gas exports from Eurasia currently bypass the country, passing either through the Persian Gulf or through Russia and Europe. Thus far, Turkey’s own dependence on Russian energy and the EU’s lethargy in implementing its energy initiatives has given Moscow a distinct advantage over Brussels in winning Ankara’s support.
Russian officials perceive Turkey as their main energy partner in southeast Europe, similar to Germany’s role in northeast Europe. Russia and Turkey are now contemplating constructing a second leg for Blue Stream. The expanded capacity would allow Turkey to import more gas for domestic consumption as well as enable Russia to export gas to other countries in the eastern Mediterranean such as Cyprus, Israel, Lebanon, and Syria. Russia’s Gazprom and Turkey’s BOTAS have been evaluating the merits of constructing a giant underground natural gas storage facility in Turkey that would facilitate selling gas to third parties.
Russian officials have also been pushing Ankara to back the $11-billion South Stream pipeline project supported by Russia’s state-run energy company Gazprom and Italy’s state-run energy corporation ENI. It would complement Blue Stream by also running under the Black Sea, delivering natural gas from Russia and Central Asia directly to Southeastern Europe. The pipeline’s route would traverse Turkey’s underwater economic zone, come ashore in Bulgaria, and then split into two branches that would terminate in Italy and Austria. Moscow’s goal in this endeavor is to bypass Ukraine. The Nord Stream pipeline supplying Russian gas to Germany serves the same purpose by circumventing Poland, Belarus, and the Baltic republics.
European governments have instead been pressing Ankara to join the EU-backed 3,000-km Nabucco pipeline project, which would avoid Russian territory and transport natural gas from the Caspian and Middle East regions through Turkey and the Balkans into Central Europe. From this perspective, Nabucco serves as a complement to the Baku-Tbilisi-Ceyhan oil pipeline which circumvents Russian territory. Although the Turkish government remains committed to Nabucco, financial and other problems continue to impede its construction. Nabucco would be twice as long as Baku-Ceyhan, cost three times as much (over $11 billion), and has not even started construction despite being proposed in 2002.
IMPLICATIONS: Turkey’s and Russia’s energy goals coincide insofar as each wants to benefit from the transport of energy supplies into central Europe. Although frictions have risen over which country should assume the lead role in supplying Central Asian gas to European importers, even serving as a transit country for a Gazprom-led effort would benefit Turkey by generating millions of dollars in transit fees, reducing tanker traffic through Turkey’s overcrowded and environmentally threatened Bosphorus Strait, and perhaps enhancing Ankara’s leverage over Moscow by increasing Russian energy companies’ dependence on traversing Turkish territory to reach international markets.
The frictions became evident when Turkish officials originally sought to link the Russian and EU projects by having Gazprom supply gas to Nabucco by sending it through Blue Stream to Turkey, which would then direct the flow into Nabucco. This arrangement would have reinforced Turkey’s status as an energy “hub” country, allowing Turkish energy firms to store and resell gas at marked up prices. Turkey has also sought a similar arrangement regarding Azerbaijani gas exports that pass through Turkey. Neither Russian nor Azerbaijani energy managers have been eager to allot Turkey such an expensive role. They have instead sought to confine Turkey’s status to that of a transit country. For their part, EU governments want to limit Gazprom’s involvement in Nabucco since the pipeline’s purpose is to limit Europeans’ already alarmingly high dependence on Russian gas supplies.
During Putin's visit to Ankara in August 2009, Turkish officials gave Gazprom the right to explore in Turkey’s Exclusive Economic Zone to determine where they might construct the South Sea pipeline. After meeting with Erdoğan in Moscow last week, Putin told reporters that the Turkish government will decide whether to proceed with South Stream by November 10, 2010, pending favorable results from an environmental impact assessment and geological and seismic studies. Both Turkish and Russian officials profess to support the construction of Nabucco as well, but doubts persist that sufficient gas will be available to support both projects given the stagnation in Russian domestic production and the recent deals to send a large share of Turkmenistan’s gas exports to China and Iran.
During Erdoğan’s visit, the two governments agreed to expand their cooperation regarding the Samsun-Ceyhan trans-Anatolia oil pipeline. This 500-kilomter project is currently being constructed by the private Turkish company Calik Energy and Italy’s state-controlled ENI corporation. It aims to carry 1.5 million barrels of Russian and Kazakh crude daily from Turkey’s Black Sea port of Samsun to its Mediterranean port of Ceyhan, where the oil would be loaded onto tankers for shipment to European markets. Ankara supports the pipeline both to reduce the oil tanker traffic in the Bosphorous Straits and to strengthen Turkey’s role as a major Mediterranean energy hub. Putin said he had proposed, and Erdoğan had agreed, to work with ENI to transform the present 50-50 joint venture into a tripartite agreement that would have the Russian government join the consortium. As a result, Rosneft and Transneft, Russia’s state-owned oil and energy pipeline corporations could assume prominent roles in constructing and operating the pipeline. A competing proposal, previously preferred by the Russian government, to build a Burgas-Alexandropoulos pipeline appears to have collapsed due to a lack of support by the Bulgarian government that took office in July 2009.
Diverging Turkish-Russian energy interests were more evident when the two leaders addressed the Nagorno-Karabakh issue. Despite Erdoğan’s request, Putin declined to commit to exerting any pressure on Armenia to make concessions regarding Nagorno-Karabakh in order to secure Turkish parliamentary ratification of the October 2009 protocols, which would establish mutual diplomatic relations and reopen their joint border. When asked about the issue at their joint news conference on January 13, Putin argued that linking the Turkish-Armenian reconciliation with the Nagorno-Karabakh dispute would simply delay progress on both issues. “Both the Karabakh and Turkish-Armenian problems are extremely complicated in their own right, and I don't think they should be joined together in a package,” he said. “Each problem is hard to resolve even taken on its own, and if we lump them together, any hope of their resolution automatically recedes into the distant future.” Russian Foreign Minister Sergei Lavrov made similar remarks the following day when he visited Yerevan. Russian officials may not be eager to see a reconciliation between Turkey and Armenia since, while offering the possibility of drawing Azerbaijan and Turkey closer to Russia, the protocols’ adoption could reduce Moscow’s influence in Armenia and promote the development of new east-west energy and commercial routes through Turkey that circumvent Russian territory.
CONCLUSIONS: One divisive energy issue that the Turkish and Russian negotiations will need to address soon is the scheduled expiration in 2011 of their natural gas purchase agreement. The current deal has penalized Turkey by requiring Ankara to buy large quantities at fixed prices. A few years ago, Turkey had to import more gas than it needed and at higher prices than Azerbaijan and certain other suppliers would have charged. Turkey will want the next framework accord with Russia to give Ankara more flexibility on the size of its purchases, the price Turkey pays, and the right to re-sell gas purchased above Turkish domestic needs on third markets.
In addition, Turkish policy makers must decide whether to deepen their energy partnership with Moscow by accepting Russia’s offer to construct and provide fuel for the nuclear reactors Turkey plans to build in coming years. Accepting the Russian bid would make Turkey even more dependent on Moscow for energy, in this case for both Russian nuclear technology and Russian-made uranium reactor fuel. Not only could this worsen even further the already large trade imbalance in Moscow’s favor, but it would render Turkey even more vulnerable to Russian pressure.
Richard Weitz is Senior Fellow and Director of the Hudson Institute Center for Political-Military Analysis. He is the author, among other works, of Kazakhstan and the New International Politics of Eurasia (Central Asia-Caucasus Institute, 2008).
© Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 2010. This article may be reprinted provided that the following sentence be included: "This article was first published in the Turkey Analyst (www.turkeyanalyst.org), a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center".