For part one of this essay, click here.
As explained in part one, Turkstream is a joint venture between Russia’s state-owned gas behemoth Gazprom and Turkey’s state-owned BOTAS. The route would transport Russian gas to Turkey under the Black Sea. The second stage of the project would focus on the extension of TurkStream to the Greek border for transport into the European market.
Turkstream poses two immediate threats.
The first is to Ukraine. TurkStream represents, like Nord Stream I and II, a way of circumventing Ukraine to supply Europe with Russian gas. So Ukraine would suffer economic losses by having the pipeline bypass its territory while its ability to heat and fuel its domestic population remains in limbo - Kiev is heavily reliant on Russian gas and squeezed by gas debt, and purchases gas from the EU in reverse flow deals. However, the expected capacity of TurkStream won't be enough to remove the demand for the Ukrainian transit route altogether. TurkStream’s capacity will account for less than half of the 55-65 billion cubic metres (bcm) of gas that transits Ukraine to Europe annually.
The second threat from TurkStream is to Europe’s Southern Gas Corridor (SGC) project, a top agenda item for the EU. The SGC will link Caspian gas reserves (primarily Azerbaijani) to Italy and then further into Central Europe, and is earmarked to cost around US$50 billion dollars. The SGC will link three key pipelines, and is an expensive attempt to limit the Russian gas monopoly in Europe. It starts with the existing South Caucus Pipeline, which transports Caspian gas to Turkey. The second pipeline is the Trans-Anatolian (TANAP), which would deliver Caspian gas via Georgia to Turkey and onwards to Europe. Construction is expected to be complete by 2019 and there is a planned capacity of 16 bcm annually. TANAP is set to connect with the final pipeline in the SGC, the Trans-Adriatic (TAP), which will transport 10 bcm annually of Caspian gas to Greece, onto Italy and upwards into Europe. Construction is now underway and is set for completion in 2019.
The success of the SGC relies crucially upon favourable relations with Turkey, for it is the key transit state of the project. Turkey has ambitions to be a leading regional gas hub and it is well on its way to achieving such status. However, Russia can frustrate the competition's energy projects, and TurkStream represents such an effort by the Kremlin. Turkey could be swayed by Putin to shift attention to the development of TurkStream, thus delaying or potentially shelving the SGC project. There would be little recourse available to the EU if this was to happen; it could not block TurkStream like it did South Stream on Third Energy Package (TEP) grounds, as neither Turkey nor Russia are EU members and are thus not bound by the TEP.
But Greece is, and this is where the concept of TurkStream as a game changing route for Russian gas into Europe comes somewhat undone. As discussed in part 1, under the TEP terms, pipeline ownership must be decoupled from the gas product ownership. Gazprom would own the pipeline as well as the gas and therefore it can’t actually extend the pipeline to the Greek (EU) border. That said, there are various ways to manipulate the TEP. There is potential for TurkStream to link up with existing pipeline infrastructure in Greece as a means to transport Russian gas further into Europe. This would not be breaking TEP agreements, for Russian gas would no longer transported via a Russian pipeline.
TurkStream has the potential to fall short of becoming the strategic threat to European energy security it is currently touted to be; it will likely supply Turkey’s domestic gas market, with the extension via Greece to Central Europe failing to get off the ground. That said, EU member Greece might well be the driving force that brings the turkstream into Europe. Humiliated by EU treatment throughout its protracted economic woes, Greece has found some solace with Russia. Certainly, the potential windfalls of transit tariffs from the TurkStream project are appealing to debt-riddled Athens.
For now, Putin maintains the upper hand, with not one but two insurance policies should the TurkStream project fail. First, South Stream still has potential to be reworked and dangled in front of Bulgaria; the Bulgarian President recently publicly urged restoration of ties with Russia. Following similar calls from EU leaders to drop sanctions and return to business as usual with Russia, Bulgaria could go a step further, abandoning the TEP and moving forward with South Stream. Back in 2014 (during the height of consensus support within the EU for Russian sanctions), Bulgaria was quietly considering the ramifications of defying the TEP constraints on the South Stream project.
Second, Russia holds the world’s largest gas reserves and the realities of global development necessarily mean that the reserves will be tapped. This leaves Europe to ponder whether diversity of transit routes for its gas supplies is more important than the geopolitical concerns surrounding the origin of the gas. With much of Europe facing internal domestic challenges stemming from rising nationalist sentiments, and with the US preoccupied with its presidential election, it is unlikely there will be a consensus in the West to push back against TurkStream any time soon.
The central challenge to TurkStream will stem from the Russia-Turkey relationship. It is a partnership marked by tensions and conflict, rekindled by the lack of alternative viable partners for Russia. All it took was a written apology from Turkey for shooting down a Russian military jet to get things back on track. It is hard to determine whether or not Turkey’s long term aspirations of becoming the regional gas hub for Eurasia is compatible with Russia’s pipeline politics. A key feature of success as a gas hub would surely be supply security for Turkey’s customers. With Russia providing the gas, supply security will hinge upon efficient and predictable ties between Russia and Turkey. Yet as recent events illustrate, predictability is something neither Erdogan or Putin are capable of offering.
At its heart, TurkStream is a project aimed at further entrenching European dependence on Russian gas. The bonus for Putin is that the pipeline further enables Russia's divide-and-conquer approach towards the West. But the project’s potential for success lies in part within Erdogan and Putin's personal relationship.
Elizabeth Buchanan is a Europa Fellow at the Centre for European Studies, ANU. She has completed her PhD on Russian Arctic strategy under Putin, with a Honours thesis on Ukrainian-Russian natural gas relations. She was a Guest Scholar with The Brookings Institution, Washington DC, holds a Visiting Fellowship with the Institute of the North, Alaska, and has completed a Business Analyst internship with Royal Dutch Shell.
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