EU Energy Geopolitics: The Potential Role of Iran and the Turkish Route
As the struggle between Russia and the West in Ukraine deepens, the EU is beginning to reconsider its options vis-a-vis weakening Russia's near monopoly in the European gas market.
In the context of the changing international environment, Iran's role in delivering gas to Europe represents a potential alternative in the diversification of the European energy sector, in particular after the November 2013 interim agreement to curb Tehran's nuclear activity, which resulted in the international sanctions relief.
Iran is seeking to bring more foreign companies into its energy sector, which according to recent BP statistics, has the world's first-largest natural gas reserves (33.6 trillion cubic meters). The instability in the Middle East, especially in Iraq, and the scheduled pipelines including TANAP, TAP, IAP, IGB and IBR projects, which constitute the EU-proposed Southern Gas Corridor, seem to be increasing the significance of the Turkish route for the diversion of Iranian gas to European markets. The question remains, however: will this concept alleviate the energy security geopolitical burden of the EU or would it just replace it with an over-dependence on Turkey? And, if this is the case, what could be the role of existing and planned regasification terminals in the Eastern Mediterranean region?
EU energy security: Threatened by an unsettled geopolitical environment in Eurasia
According to figures released by the US-based Energy Information Administration (EIA), the member states of the EU in addition to Turkey, Norway, Switzerland, and non-EU countries in the Balkans, have consumed a total of 18.7 trillion cubic feet of natural gas (n.g) in 2013, while Ukraine is the transit route for about 16 percent of Europe’s consumed gas.
Moreover, a number of eastern European countries such as Bulgaria import up to 100 percent of their gas from Russia. Even the mere threat of a Russian supply cut to Europe due to ongoing tension in Russia-US-EU relations because of the crisis in Ukraine, at a time when demand and supply of liquefied natural gas (LNG) in global markets are hardly balanced, could have serious repercussions on the financially crippled “old continent.”
As China imports more LNG consignments, and particularly after Moscow and Beijing have signed an impressively important gas deal recently (May 2014), the amount of gas supply to Europe by Algeria and secessionist war-torn Libya has fallen dramatically.
Not only eastern European countries but also the eastern part of Turkey may face gas shortages if the gas flow from Russia feeding the transit pipeline that runs along northeast Europe and Ukraine. Ankara has agreed with Iran to develop three blocks of Iran’s giant South Pars gas field and pipeline (2008), Iran-Turkey-Europe (ITE), crossing 5,000 kilometers to Greece and from there on to Germany. International sanctions against Iran have halted the project. Furthermore, Ankara required that Tehran give a transit order to deliver Turkmen gas via Turkish territory.
Ankara, due to political imperatives related to the ongoing Kurdish minority issue in southeastern Turkey, has decided to support the financial independence of the Kurdish Regional Government (KRG) of Iraq (an extraordinary geostrategic move if one keeps in mind the fierce thirty years long conflict with PKK), by signing a deal under which Kurdistan will export petrol, not through the Bagdad-controlled Kirkouk-Ceyhan pipeline, but through a bypass stretching from central KRG (Taq-Taq field) to the Turkish border where it is connected to the line leading to Ceyhan (2013) (1).
Both parties wish that Kurdish petrol exports to hydrocarbon thirsty Turkey will reach 450.000 b/d by the end of 2014 and one million barrels per day by the end of 2015, helping the country to boost its rapidly developing economy and its claim to become a regional energy hub. Moreover, Erbil and Ankara are planning to build a second crude petrol pipeline to Ceyhan and a natural gas one that is scheduled to feed Turkish power plants. Turkey wants to import up to 353 b/cm of natural gas annually and even double this quantity.
Ankara can, moreover, increase its natural gas imports from Tehran or LNG shipments from Qatar in order to present itself as a reliable alternative to Russian imports to the EU.
It worth noting that, according to the latest estimates by BP, Russian gas reserves of 44.6 tr/c3 dropped to 32.9 tr/c3 and thus Iran’s 33.9 tr/c3 to be discovered thus far represent the world’s largest reserves (2).
EU unwillingness to use Iran as an alternative supply source as a direct result of political issues, especially from mounting pressure from the US, seems to bewilder. The prolonging of the six months ease in US sanctions imposed on Teheran in relation to the latter’s nuclear program (P5+1 group, 2013), in concert with the severe worsening of US/EU relations with Russia, may offer Europe an extraordinary solution. Iran is willing to increase its production to attract much deeded investment, both domestically and from abroad, particularly in the South Pars gas field. Any investment could easily result in a large increase in production and in economic stimulation for Iran.
The Islamic Republic is in good position to export gas to the EU either via ITE or the scheduled, though decided in 2013, TANAP and TAP pipelines through Turkey, Greece and Albania to Italy and Central Europe, as well as southeastern Europe through the Greece-Bulgaria Interconnector (GBI) and Ionian-Adriatic Pipeline (IAP) or build its own pipeline.
Interestingly, the second option was in motion in the form of an Iran-Iraq-Syria pipeline that was thwarted by the West and Sunni Gulf States through the attempted destabilization of the Assad regime in Syria (3). Iran could heal Europe’s energy security anxiety in combination with Azerbaijan, appeasing all worries expressed regarding Azeri reserves.
Teheran’s geostrategic alliance of convenience with Moscow shouldn’t been viewed as an obstacle if Iran wishes to act on this opportunity to further legitimize itself in the eyes of the international community. Indeed, Russia discusses with Israel, Iran’s arch nemesis, the latter’s gas reserves in the Levant basin, and did not veto UN sanctions against its ally.
Yet politically, any move by Iran to bolster the Southern Corridor would provoke Russian ire and risk weakening the nascent yet formidable China-Russia-Iran nexus which is posing a worthy challenge to the West.
Given that China also imports Iranian oil and has a bourgeoning relation with Russia, it would be highly unprobable to opt out for such an arrangement for economic gain.
Yet, times are changing in US-Iran relations, and this is visible in their stance toward Iraqi MP Maliki. In any case, bringing Iran in from the cold will mean overturning years of US foreign policy – the focus of which has been to curb Tehran’s role as a major supplier of energy. There has been a consistent discouragement by America over investing in Iran’s energy segment. But the West, facing the challenge of either accepting Russia’s current and future energy dominance of Europe via Gazprom, or reliving the Cold War era, would rather reverse pre-existing policy on Iran, competing as it is with Asia’s emerging economies (China, India, Japan South Korea) for a place in the “energy security sun” (4).
Conclusion - The “Turkish route”: A blessing for the EU to curb its over-dependence on Russian hydrocarbons or a substitution of one malice with another?
This reasoning is supported by the mere fact that the surge of ethnic and sectarian strife in Syria, Iraq and across the Middle East has led a number of analysts predict the potential upending of the region’s territorial order, known as “Sykes-Picot” secret Anglo-French agreement to divide Ottoman Empire provinces into respective zones of control (1916).
Apart from territorial fragmentation, there is another force crossing national lines and even realigning national relationships: trade. New transnational zones of economic cooperation are making Middle Eastern borders more porous, but in a way that does not directly challenge existing states. Instead, mutual economic interests, especially in the oil and gas industries may signal a softer end to “Sykes-Picot.”
This dynamic is most apparent along the border between Turkey and Iraqi Kurdistan, where US protection could have encouraged Kurdistan to declare its independence from Iraq. Instead, the Kurds chose to pursue their own economic interests within that order. Iraqi Kurdistan will soon be earning enough from its oil exports to replace what it receives from Bagdad in oil revenues (1).
The rapid advancement of ISIS (Islamic State of Iraq and Syria) in Iraq has prompted both the Turks and Kurds to cooperate both economically as well as politically, for ISIS is a bigger threat to the Turks than the Iraqi Kurds. In Syria too, the Kurdish enclaves in the country’s north, could serve as an advancement against ISIS.
That said, it is by no means a coincidence that the Israeli Prime Minister has asked the International Community to immediately support the “Kurdish aspiration for independence,” while describing the situation in Iraq and the Middle East as a “collapse” due to the ongoing rivalry between Sunnis and Shiia Muslims.
Indeed, the surge southwards of ISIS jihadist fanatics was made possible by the tacit acquiescence of the Kurdish militias, other Sunni groups and, most importantly, by Washington and London not for containing Iran, but for removing the Assad regime in Syria which was prepared to cooperate with Russia in the exploitation of the gas of the Levant basin (2).
In December 2013, Russia’s SoyuzNefteGaz signed a $900 million deal to support Syria’s first offshore drilling attempt. Not only did that outrage the Syrian opposition but it also poses a threat to the interests of their backers and US and Britain’s allies - Saudi Arabia, Qatar, Turkey and Jordan. Turkey took Ukraine’s side after Russia’s annexation of Crimea, which threatens its role as a predominant NATO power in the Black Sea region. In turn, this has driven Iran closer to Moscow and led to fears of a Russia-Syria-Iraq-Iran axis of influence to rival Western alliances in the Middle East.
While ISIS’s surge south raises nightmare concerns of a global oil price spike, its threat offers the opportunity for the US and Turkey to detach the Kurdish region further from Iranian-influenced Bagdad. Washington lobbied and showed support for a new oil deal that would allow the Kurds to export 300,000 barrels per day along pipelines leading from the Kurdish region through Turkey. Finally, the ISIS surge provided the US and Turkey the opportunity to push for crude oil exports not only to US oil refineries but also to Israel.
The appalling danger of the Syria and Iraq conflict is that it is drawing in the regional powers further into a clash, which could drag in the global power players that are vying for access to the oil and gas that drives their economies and is causing collisions of interest and growing insecurity (3).
A battle is raging over whether pipelines will go toward Europe from east to west, from Iran and Iraq to the Mediterranean coast of Syria, or take a more northbound route from Qatar and Saudi Arabia via Syria and Turkey. Having realized that the stalled Nabucco pipeline, and indeed the entire Southern Corridor, are backed up only by Azerbaijan’s reserves and can never equal Russian supplies to Europe or thwart the construction of South Stream, the West is in a hurry to replace them with resources from the Persian Gulf.
Syria ends up being a key link in this chain, and it leans in favor of Iran and Russia; thus it was decided in the Western capitals that its regime needs to change (4). The same applies for Northern Iraq and KRG, where the humanitarian façade of the intervention lead by Washington in favor of the Kurdish Pesmerga fighters against the assault of the Sunni jihadists, in fact is about securing the secure flowing of Iranian natural gas on its way to Turkey and to European markets.
There is a major hydrocarbon route driven rivalry going on between US and Russia in a huge area that Zbignew Bzrezinski called “Eurasian Balkans” (5) and regional powers like Iran and Turkey in the Middle East are drawing the dice…. But then, from the European point of view, if Iranian and Kurdish natural gas is fuels the EU through Turkey, Brussels faces the risk of finally partially replacing the Russian politically motivated divide and rule hydrocarbon export policy in Europe with Turkish overwhelming self-esteem to be a world-class energy hub.
And so, such a choice is of paramount importance for Europe’s energy security in view of the arbitrary and continuous violation of Cyprus' Exclusive Economic Zone (EEZ) by Turkish warships to the detriment of regional security in this war-prone region.
Iran can export natural gas to EU in the form of LNG which could reach the prospected Levant basin LNG offshore terminal in Cyprus through the Suez Canal and other similar facilities in Greece and other Mediterranean countries. Israel’s offshore natural gas reserves would then serve as an additional, viable source for EU needs. In my view, this would be the best of choices to make by the EU ‘Common Energy Policy’.
Dr. Thrassy MARKETOS (Research Fellow on Eurasia geopolitics in the Hellenic Army Headquarter Academy of War - Athens, Greece)
Notes CHP. I
1.Until 2012, 70 percent of the Turkish-Iraqi commercial transactions were concentrated in Kurdistan, although KRG population represents only 1/6 of the total population of Iraq.
2.Maryam Pashang, Ukraine Crisis and the Role of Iran in Europe’s Energy Security, Natural Gas Europe, 23.03.2014 as well as Thrassy Marketos, ‘Iran’s Geopolitics in the midst of the US-Russia-China Energy Security Struggle for the Geostrategic Control of Eurasia’, CENTRAL ASIA AND THE CAUCASUS Journal of Social and Political Studies, Volume 8 Issue 3 2009.
3.Thrassy Marketos, ‘East Mediterranean Energy Geopolitical Elbowing with an American, Russian, Israeli, Turkish and Iranian Prefix: international and regional actor’s role’, more in detail in chapter ‘Geopolitical binding of the energy recourses potential of the Eastern Mediterranean with the evolution of the civil conflict in Syria: international and regional actors’, CENTRAL ASIA AND THE CAUCASUS Journal of Social and Political Studies, Volume 14 Issue 1 2013.
4.Iran has raised its oil exports to Asia by 16 percent to 1.16 million bpd. In ‘New Research Paints Iran as Crimean Winner’, Middle East Oil and Gas, issue 470/08.04.2014
Notes CHP. II
1.Marina Ottaway-David Ottaway, ‘How the Kurds Got Their Way: Economic Cooperation and the Middle East’s New Borders’, May/June 2014
2.Iraq: ISIS, Turkey and Western Oil and Gas Interests, Natural Gas Europe, 20.06.2014
3.Dmitri Minin, ‘The Geopolitics of Gas and the Syrian Crisis: Syrian “Opposition” Armed to Thwart Construction of Iran-Iraq-Syria Gas Pipeline’, Global Research, 03.06.2013
4.Zbigniew Brzezinski, ‘The Grand Chessboard’, 1998