Turkish Stream postponed because of Russia, not Turkey
Nearly 10 months ago, on Dec. 1, 2014, Russian President Vladimir Putin surprised the world with the announcement of the cancellation of the South Stream Project, a pipeline to be constructed under the Black Sea and through Bulgaria to supply some 64 bcm natural gas to European countries. Instead of this project, he announced an agreement with Turkey on the construction of a new pipeline, this time via Turkey and Greece, to carry Russian gas to the European continent.
Putin’s move came after the European Union refused to give a green light to the South Stream Project mainly because of political reasons sparked after Russia’s annexation of Crimea and its continued pressure on Ukraine. One of the first consequences of this new Cold War between Russia and the Western bloc was the cancellation of the South Stream Project in which Gazprom had already invested some $5 billion.
The United States and the EU had imposed significant sanctions on Russia since its annexation of Crimea, and there was no way to realize another pipeline project from Russia to Europe under these circumstances. Then came the idea of proposing to Turkey the construction of a new pipeline that would bypass Ukraine and EU regulations. In return, Russia offered a discount in the price of gas it was selling to Turkey.
Months-long discussions have not yielded a result, as the two countries have not been able to agree on the terms of the pipeline project as well as on the amount of the discount. As this column suggested a couple of months ago, Turkey’s reluctance in moving forward on the project has proven itself, as Russian pressure for the immediate conclusion of the agreement was rebuffed.
Finally, it was Gazprom Deputy CEO Alexander Medvedev who admitted the postponement of the project on Sept. 14. But Medvedev blamed the political crisis in Turkey for the postponement of the project without noting the global tension between his country and the Western bloc since the beginning of the Ukrainian crisis.
Russia had sent its draft agreement in late June to solicit Turkey’s opinion and therefore take a seat around the table to finalize the agreement.
Turkey was under heavy pressure from both the U.S. and the EU, as well as its regional partners, Azerbaijan and other energy-source countries, to not sign this agreement. Although some in the government believed that this pipeline project would aid Turkey in its ambitions to become a regional energy hub, those in the Foreign Ministry were more cautious as such a move would kill the country’s objectives of attracting Iraqi, Iranian, Turkmen and more Azeri natural gas to Turkey.
The demand in Europe is not increasing to the extent that all these source countries can make contracts to supply gas to European markets, meaning all of their plans to open up the world would die if Turkish Stream were realized.
It should be noted that there are significant efforts to facilitate a deal between Azerbaijan and Turkmenistan to allow the latter’s reserve flow through Azeri pipelines to Europe via Turkey. Turkey recently initiated a tri-partite summit to discuss regional issues, as well as energy cooperation, an effort in line with the EU and U.S. goals.
Therefore, the primary reason for the Turkish reluctance is that Turkish Stream would make the realization of other regional future projects that envisage Turkey as their main route next to impossible. Turkish Stream would not only jeopardize Turkey’s energy cooperation with source countries in its immediate neighborhood but would also deliver the wrong signals to the rest of the world as well – particularly on the eve of the G-20 summit where the Russian crisis will be discussed under Turkey’s presidency in Antalya in mid-November.
As can be seen, the real reason for the postponement of Turkish Stream is not the Turkish political crisis but the crisis Russia is causing in the entire region. A country that uses its natural resources as a weapon against its neighbors cannot be counted as a credible and respected partner.