Erdogan, Putin and the touchy Turkish Stream

Erdogan, Putin and the touchy Turkish Stream

0,,16429774_303,00The presidents of Russia and Turkey are expected to repair relations and revive a gas pipeline project at a meeting in St. Petersburg on Tuesday. There is, however, one key issue on the table, DW’s Andrey Gurkov writes.

The revival of the Turkish Stream pipeline project is expected to be the concrete outcome of the meeting between Russian President Vladimir Putin and his Turkish counterpart, Recep Tayyip Erdogan, in St. Petersburg on Tuesday. The presidents will also recommit to the construction of Turkey’s first nuclear power station, in Akkuyu, which is now severely behind schedule.

The main aim of this meeting, which was called at short notice, is to signal a thaw in relations betweenRussia and Turkey. In November 2015, there was a row over conflicting interests in Syria and the shooting down of a Russian bomber by Turkey’s air force. Putin and Erdogan will now be anxious to show their nations, the world and especially the European Union that their quarrel is over. They intend to send a message to Brussels, Berlin, Paris and, of course, Washington: We can be friends without you – and even against you.

The exchange of opinion and declarations of friendship will not be taking place on neutral terrain – on the fringe of a G20 meeting, for example. Erdogan, who apologized in June for the shooting down of the plane and the death of two airmen, will be meeting Putin in the city where the Russian president was born. This reinforces the impression that Putin has emerged from their short-lived conflict as the victor, both politically and economically. He wanted the Turkish Stream gas pipeline, and he’s going to get it.

But in what form? And at what price? This is where Erdogan could prove the victor. If the presidents decide to build only one pipeline along the route rather than two, it would be to Ankara’s advantage. Or to be precise: Moscow, and Gazprom in particular, would be at a disadvantage.

Substitute for another pipeline

For years, the Kremlin has made it a priority to put an end to the transit of Russian gas through Ukraine, from where it flows west to the European Union. But there is also a line that branches off southward. This line passes through Moldova, Romania and Bulgaria, and also supplies Turkey with Russian energy.

Initially, the pipeline through Ukraine was to be replaced by the South Stream, which consists of four strings with a total capacity of 63 billion cubic meters (82 billion cubic yards) per year. It was to run from the Russian port of Anapa along the floor of the Black Sea to Bulgaria and from there to Austria. However, the project contravened EU regulations.

And so, after a meeting with Erdogan in Ankara in December 2014, Putin suddenly announced that the Black Sea pipeline would be diverted toward western Turkey, where three of the four strings would continue on to the Greek border – the border with the main consumer of Russian gas: the European Union. This was the birth of the Turkish Stream.

Soon afterward, however, the project ground to a halt. All of a sudden Turkey wasn’t interested in the transit of large quantities of Russian gas anymore, and officials wanted only one string to cover domestic requirements. Then the jet was shot down, and for over half a year the project seemed to be dead in the water.

At Ankara’s insistence

No one is speaking of four strings anymore. But a single line with a capacity of 15.75 billion cubic meters would be the most expensive option for Gazprom – and therefore the least advantageous. The state-owned Russian company would have to spend several billion credit-financed dollars to lay a relatively small pipeline in the depths of the Black Sea and build all of the necessary infrastructure on the Turkish coast. And the sole purpose of this would be to replace an overland pipeline that already works perfectly well.

A second string would not, of course, make Turkish Stream cost-effective, but at least it would increase the turnover. Gazprom could then supply Greece and Italy via the planned Poseidon pipeline. However, during his recent visit to Moscow, Turkish Deputy Prime Minister Mehmet Simsek spoke only of a single string. It doesn’t sound like Ankara is in the mood for compromise.

So, it may well be that, by being totally focused on the geopolitical goal of taking the transit of gas away from Ukraine, Putin is imposing a burden on Gazprom that will stretch the state-owned company to the absolute limit – and at a time of empty coffers. Gazprom would have to invest a disproportionate amount of money into the Black Sea for a single Turkish Stream pipeline and potentially delay the Nord Stream 2 pipeline across the Baltic, which would have an annual capacity of 55 billion cubic meters.

At Russia’s expense, Erdogan would get a brand new underwater pipeline that is not subject to any transit risk – and thus, in the long term, Turkey would get even cheaper gas, as the transit costs currently imposed by several countries along the route would no longer apply.

Furthermore, Erdogan would be assured enduring gratitude from Azerbaijan. The close regional ally is already laying the TANAP pipeline to Greece via Turkey, and it has absolutely no interest in a competing Russian project to supply the southern European Union.

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