Turkey and Russia Work on Normalizing Relations, Sign Agreement on Scaled-Back Turkish Stream Pipeline

Turkey and Russia Work on Normalizing Relations, Sign Agreement on Scaled-Back Turkish Stream Pipeline

Publication: Eurasia Daily Monitor

By: Orhan Gafarli

The Jamestown Foundation

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Earlier this month, Turkey hosted the 23rd World Energy Congress in Istanbul. The theme of the Congress, held on October 9–13, was “Embracing New Frontiers.” The participants—who included 3 presidents, 56 ministers, as well as academics and energy experts from 82 countries—came together to address global energy-related issues and innovation in the field (see EDM, October 19). One of the most important developments to come out of this event was the attendance of Russian President Vladimir Putin—his first visit to Turkey since the downing of a Russian jet on the Turkish-Syrian border on November 24, 2015. While in Istanbul, Putin met with his Turkish counterpart, President Recep Tayyip Erdoğan. The two leaders signed a long-awaited intergovernmental agreements on the proposed Turkish Stream natural gas pipeline, which would stretch along the bottom of the Black Sea and across the European section of Turkey (Yeni Şafak, October 10). In their face-to-face talks, the two leaders also discussed the Akkuyu nuclear power plant project, which is being built and largely financed by Russia; improving defense-sector cooperation; cooperation in launching Turkish rockets into space; and lifting the Russian embargo that was imposed on Turkish goods following last year’s crisis (Sabah, October 10). The two also broached the subject of humanitarian aid for the besieged Syrian city of Aleppo (Hurriyet, October 14).

After Erdoğan sent Putin a letter, on June 27, apologizing for the death of the Russian pilot shot down by a Turkish F-16 last November, both leaders agreed to restore bilateral relations. They held their first post-crisis meeting in St. Petersburg, on August 9 (Deutsche Welle—Turkish service, August 9). Since then, bilateral relations have been gradually improving. But some of the most significant signs of the thaw came out of this month’s Putin-Erdoğan meeting in Istanbul: Russia partially lifted its ban on fruit and vegetable imports from Turkey and the two sides agreed to launch a $500 million Turkish-Russian investment fund. And perhaps most notably, Moscow and Ankara signed an intergovernmental deal on Turkish Stream (Habertürk, October 14).

Looking at the details of the October 10 agreement on Turkish Stream, it is clear that this gas pipeline project has been seriously downsized. When the proposal was first floated by Putin on December 1, 2014, Turkish Stream was supposed to annually deliver 63 billion cubic meters (bcm) of Russian gas—15.75 bcm was to be imported by Turkey, and the other 47.25 bcm would be marketed to Europe (see EDM, February 26, 2015). But according to the agreement just signed by Putin and Erdoğan, Turkish Stream would now be reduced to two pipelines with an annual capacity of 15.75 bcm each. Accordingly, the first line of the gas pipeline would be used to transport gas to Turkish consumers, and the second—to Europe. In return, Russia agreed to offer Turkey a discount of 10.25 percent on Russian gas supplies (Carnegie.ru, October 14).

Russian natural gas exported to Southeastern Europe via the second pipeline of Turkish Stream might face obstacles in the form of the European Union’s energy-sector anti-monopoly legislation, however. Dr. Volkan Özdemir, an energy specialist at the Institute for Energy Markets and Policies, argued that, presumably, the monopoly problem could be overcome through the establishment of an associated Turkish-Russian joint company to export this gas. “But Gazprom is not open to this,” he said (Kommersant, October 11).

It is not a coincidence that the Turkish Stream project is slated for completion in 2019. That is the same year that Russia’s contract with Ukraine on the transit of Russian gas shipments to Europe will expire. With Turkish Stream, Russia is clearly planning to reroute gas exports to Turkey, Ukraine, Romania and Bulgaria—currently being shipped via the Ukrainian pipeline network—through the planned pipeline across the Black Sea and Turkey (Carnegie.ru, October 14). But to what degree will Turkey be able to take advantage of this new pipeline on its territory to boost its geopolitical role as a regional energy hub? According to Dr. Özdemir, “Turkish stream will make Turkey an energy corridor for Russia in the same way the Trans-Anatolian Natural Gas Pipeline [TANAP] has already made it for Azeri natural gas. Yet, there is a confusion of concepts in Turkish foreign energy policy: Ankara will have a difficult time using international projects [like Turkish Stream] to properly transform the country into a gas hub, despite [the government’s rhetoric] about Turkey becoming a regional energy hub. If negotiations between the EU and Russia fail, only the first line will be constructed; and most probably this will make Turkish Stream another Blue Stream pipeline between Turkey and Russia” (Author’s interview, October 13). Blue Stream carries up to 16 bcm of Russian gas, under the Black Sea, directly to the Turkish market.

At the same time that the Turkish Stream deal was signed, a joint Russian-Turkish investment fund was created and Russia’s ban on fruit and vegetable imports from Turkey was partially lifted. Turkish Economy Minister Nihat Zeybekci announced the economic sanctions were only lifted on fruit (Dha.com.tr, October 12). Thus, a partial ban Turkish produce still stands. Moreover, problems remain in terms of abolishing visa requirements for Turkish citizens wishing to travel to Russia.

Another serious bilateral bone of contention has been the war in Syria. Moscow and Ankara have been engaged in a dialogue on this issue after Turkey launched its “Euphrates Shield” military operation in Jarablus, Syria, on August 24. Turkey seeks to create a safe zone along the Turkish-Syrian border, 98 kilometers long and 45 kilometers deep (Anadolu Agency, February 26). The question of the safe zone does not appear to have been mentioned during the recent Putin-Erdoğan meeting in Istanbul, on October 10. However, the two sides did address the option of Russia delivering humanitarian aid to Aleppo over the Castillo Highway, with Turkey’s support (Sabah, October 10). Turkish-Russian negotiations on Syria continue (İnforu News, October 14).

Bilateral trade relations between Turkey and Russia remain fragile, and they are closely linked to developments in Syria. Indeed, events in the Middle East explicitly affect Moscow-Ankara ties. Their bilateral relationship can thus be expected to suffer from a lack of confidence as long as the Syrian crisis remains unresolved.

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Photo source: Presidents Vladimir Putin and Recep Tayyip Erdoğan meet in Istanbul at the 23rd World Energy Congress (Source: UPI)

Balkans, Europe, Geopolitics, Russian Federation