TurkStream: Precursors, Problems and Prospects

Russia’s president, Vladimir Putin, called Recep Tayyip Erdogan, his Turkish counterpart, in late June to congratulate him on an important event: the first of the planned TurkStream pipelines, was being laid on the bed of the Black Sea.[1] Putin’s call indicated both that Putin regarded the enterprise as an important endeavour for the country, and that the project had indeed reached the point of no return.

TurkStream would provide Russia with the opportunity to send gas to Turkey and later, possibly, to Europe, and could lead to a resurrection of another similar project, such as South Stream, which was abandoned, seemingly for good, a few years ago.[2]

Besides the obvious financial benefits, the project, together with North Stream 2 (NS2), would have an important strategic goal. First, if accomplished, it would bypass Ukraine, Belarus and other eastern European countries of the former USSR/Warsaw Pact. They would be economically and geopolitically marginalised, or would be increasingly dependent on Russia, their only source of gas.

Moscow, of course, did not discount the possibility that US LNG could enter the eastern European market. Still, people in Moscow believe that, unless highly subsidised by Washington, US LNG will not be able to compete with Russian gas.

Second, both TurkStream and NS2 would cement Russia’s relationship with Europe, contributing to the widening rift in the trans-Atlantic relationship, which became clear after the recent 2017 NATO meeting and then the G20 summit in Germany. The most important thing to note here was the emerging rupture of “old Europe,” to quote Donald Rumsfeld, the secretary of state in George W Bush’s administration. At the same time, Moscow is especially anxious to forge a relationship between these countries, especially Germany. Here, Russia has the same objective as China, which regards western and central Europe as major elements of its “Silk Road Project.”

From South Stream to Turkish Stream

Moscow planned to use the Black Sea to send gas to south and central Europe some time ago, and here Turkey played an important, if not crucial, role. As a matter of fact, Ankara’s relationship with Moscow has had a long history. Some 30 years ago, when Mikhail Gorbachev became the head of the Communist Party and perestroika [reconstruction] was still more of a project than a practical policy, Moscow signed an agreement with Ankara to send gas to Turkey through Bulgaria. At that time, still a member of the Warsaw Pact and totally under Soviet control. The agreement was to cover the period from 1986 to 2011, and in May 2009, Ankara and Moscow renewed the agreement.[3]

Around the same time, when the old Soviet/Turkish agreement was extended, Moscow started to see Turkey more as the potential partner in building a southern gas line which would move Russian gas to Europe and bypass Ukraine. This was the major idea of South Stream. At the very beginning of the project, Turkey was not critical to its success. Moreover, Moscow cast suspicious, angry eyes on Ankara’s encouragement of Azerbaijan and, even more so, Turkmenistan, to send gas to Europe via Turkish territory.

The project was launched in 2007, when Gazprom and Italy’s Eni signed a co-operation agreement.[4] Still, South Stream faced opposition from southern European countries; mostly, one could assume, because they came under pressure from Washington and Brussels. Consequently, Bulgaria decided to drop its participation in the project. It was abandoned and now TurkStream is to be the replacement for South Stream. Still, even in its infancy, the project was in limbo and there was no guarantee that the project would materialise. There was still scepticism as recently as September 2015.

The project was halted completely in the same year, when Turkey shot down a Russian plane. Still, after the new Moscow-Ankara rapprochement, the idea resurfaced. There was economic and geopolitical interest on Turkey’s side and Moscow counted on this.

To start with, Russian gas lines would not just satisfy Turkey’s internal needs, but could potentially make Turkey a major gas hub for Europe. It also demonstrated Turkey’s assertiveness vis à vis the US. Indeed, the relationship between Ankara and Washington worsened considerably, especially after the USA’s decision to strongly support both Iraqi and Syrian Kurds, whom Ankara regarded as major threats. These problems with Kurds led to the recent (2016-2017) Turkish invasion in Syria and Erdogan’s stern reminder that Turkey would never allow a Kurdish state.[5]

Thus, Russia’s strong desire to build TurkStream and the changes in Ankara which, from now on, paid little or no attention to either Washington or Brussels’ objections, rekindled interest in TurkStream which, as one observer noted, seemed to have been “forgotten for good.”[6] While Ankara’s interest in the project seems to have been rekindled by December 2016, the project made a real start by May 2017.

Potential problems

While recent events seem to indicate that Turkish gas lines, at least one string, would be finally built, they do not indicate that “surprises” are excluded, as was the case in the past. In 2010, Gazprom doubled the delivery to Turkey[7] as implicit confirmation that Turkey is on Russia’s side. Still, in the same year, Ankara announced that Turkey was not interested in the project, but actually in a rival project, Nabuceo West, and the TransAnatolian Pipeline (Tanap) project[8].

To make the situation even more humiliating for Russia, Turkey made the announcement almost on the same day when Putin, in the presence of important guests, the representatives of major western companies, officially announced the launch of “South Stream.”[9] There is no 100% guarantee that similar “surprises” would not happen again in the future. Yet even if the project would be successfully finished, Moscow would have a limited benefit for several reasons.

First, the emerging Turkish Stream is just one line. It will provide enough gas for Turkey’s internal consumption. There is no guarantee that the second line, designed to send gas to Europe, would be needed, for problems could emerge in the future, as was the case in the past,[10] albeit Greece and Hungary expressed interest in receiving gas from TurkStream.[11]

Second, Turkey plans to be a transition territory for other gas lines, especially those started in Azerbaijan. While some observers believed that the failed coup could disrupt the construction of Tanap, it did not happen. Construction of the 31bn m³/yr Tanap gas pipeline is proceeding as normal, as is development of the second phase of the Shah Deniz gas field, which will supply the pipeline with 16bn m³/yr.

Turkey also contemplated receiving gas from other sources and/or using its territory to transfer the gas further to the west, albeit “progress on proposed pipelines to bring gas from fields in Iraqi Kurdistan and Israel’s east Mediterranean, which could fill the remaining 15bn m³/yr of Tanap’s capacity, is less assured. The pipelines are aimed at meeting future Turkish demand as well as providing additional volumes for export to Europe, but it is uncertain whether there is a big enough market to justify their development.

In addition, Turkey expressed strong interest in gas lines from Turkmenistan. It is true that the possibility is not viable at present. The building of gas lines through the Caspian Sea is strongly objected to by Russia, which insists on its objections being taken seriously. Turkmenistan could also send gas through Iran, and there were hints on the Iranian side that it would not object. Still, these plans were predicated on full co-operation between Tehran and Ankara, and this is not the case at present.

Yet the situation in the Middle East changes quickly, and what is impossible today could be quite viable tomorrow. In addition, Turkey might not need too much gas from TurkStream, owing to the decline in internal gas consumption.

Turkish gas demand has fallen from 49.1bn m³ in 2014 to 47.4bn m³ last year, and the country is already set to receive an extra 6bn m³/yr of Azeri gas via Tanap from 2018. Turkey has also pledged to prioritise coal and renewables over gas use in power generation in order to reclaim some degree of energy independence. Equally, a slowing economy is likely to translate into sluggish demand growth, even if further political instability is avoided. All of this worried Gazprom, which tried to limit its involvement in the project.

It is clear that completion of the first line of TurkStream will not solve all of Moscow’s problems, and allow it to send gas to Europe, avoiding the use of old Soviet-era gas lines. Still, TurkStream is an important step in this direction, and explains Putin's close attention to the enterprise.

Dmitry Shlapentokh