Turkey: The King of the Pipes

In less than a month, Turkey struck key energy deals with the European Union and Russia that will substantially increase its key role as a transit hub for oil and gas, fuelling concern in Brussels and Moscow that the EU and Russia are becoming too dependent on Ankara.

Turkey is sitting at the energy crossroads of Russia, Europe, Central Asia and the Middle East. “Turkey’s role is about to become substantially more important as it will have a significantly enhanced role in the energy relationship not just between Russia and Europe but between Central Asia and eventually perhaps with Iran and Russia and that will give Turkey then a much stronger bargaining position in dealing with Europe, in dealing with Russia and Central Asia and eventually with Iran,” Chris Weafer, chief strategist at Moscow’s Uralsib bank, told New Europe on August 21.

Russian Prime Minister Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan signed a raft of agreements in a ceremony in Ankara on August 6 that will support Turkey’s drive to become a regional energy hub. Ankara granted the Russian natural gas monopoly Gazprom use of its territorial waters in the Black Sea for the planned South Stream gas pipeline to Europe, which will bypass Ukraine. Russia in turn promised to support a planned Turkish oil pipeline from the Black Sea port of Samsun to Ceyhan on the Mediterranean. 

Putin’s visit came after Turkey and EU countries on July 13 signed an intergovernmental deal to launch the Nabucco natural gas pipeline project that the EU hopes will reduce its energy dependence on Russia, but experts say will increase its reliance on Turkey.

“It definitely improves Turkey’s position and that must be making the Europeans nervous as well because while Turkey has backed off its demand to link membership talks to the European Union with pipelines you can’t say in the future they might use the pipelines as a bargaining chip to try and push their goal of joining the European Union,” Weafer said, adding that a lot of Brussels bureaucrats are extremely nervous of becoming increasingly reliant on Ankara and would much rather spend money on upgrading more pipes that don’t rely on Turkey. “But in terms of cost and engineering if you have to bypass Ukraine by far the easiest way is to come via Turkey,” he said. 

The planned South Stream pipeline will bypass Ukraine, through which 80 percent of Russia’s gas exports to Europe now flow. Russia-Ukraine gas disputes have repeatedly left EU countries in the cold. To reduce dependence on Russia, the EU has long promoted the Nabucco pipeline, which will cross Turkish territory.

“It’s  just a new version of Ukraine where Turkey could use its then critical role as part of the bargaining or part of its efforts to push its case to the European Union,” Weafer said. 

Konstantin Simonov, director of the independent National Energy Security Fund in Moscow, warned that Turkey may use its leverage over Russia and the EU. “Turkey now is like the king of the pipes because Nabucco will be through Turkey and maybe Russian pipe will be through Turkey,” Simonov said. “Turkey will blackmail Europe and will blackmail Russia because from Europe Turkey will ask for some political benefits and from Russia Turkey will ask for economic benefits. I mean from Europe it will be the membership to the European Union and from Russia cheap prices for gas and the right re-export this gas to Europe. Turkey will try to buy this gas and then to sell this gas directly to Europe but it will not be the gas of Gazprom it will be the gas of Botas or another Turkish firm.”

The Russian energy consultant said that on one hand the South Stream agreement reached between Putin and Erdogan is a good step because now Russia can avoid Ukraine. But on the other hand, Turkey can also be a problem. “Now all pipes to the south of Europe – Russian pipes, anti-Russian pipes as Nabucco project, for example - there will be going through Turkey and that is why Turkey soon will begin to blackmail Russia. That is why maybe it is a good agreement because now we can avoid Ukraine but in the future it can be the beginning of a serious problem,” Simonov said.

Weafer said EU officials fear that they may be jumping out of the frying pan into the fire. “There is certainly a lot of concern in Brussels about building up the reliance on Turkey as an alternative route to Europe from Ukraine. In that sense South Stream would actually suit Europe better — not in terms of diversifying supply, but in terms of routes, pipelines coming into Bulgaria across the Black Sea would possible represent a safer long-tem risk than pipelines going though Turkey. It’s all part of the equation,” Weafer said.

“Probably Brussels bureaucrats are hoping that they might be able to use LNG to a much greater extent and substantially reduce their vulnerability on piped gas entirely. But we’re a very long way from that and it seems to be difficult avoid becoming reliant on either South Stream or Nabucco or both and that inevitably means greater reliance on Turkey.”

Kostis Geropoulos 

Source: New Europe, August 23, 2009