Kalea Power's Blog

On Both Sides of Turkish Stream

July 20, 2015

Although Russia signed an enormous energy agreement with China last year, evidencing growing ties between Russia and the east, there remains in Russia’s policies an underlying pull towards Europe. After canceling the South Stream pipeline project, in response to strong EU and U.S. objections, which would have supplied southern-eastern Europe with Russian natural gas, Russia sought an alternative route to maintain Gazprom’s stronghold in European energy markets – under the Black Sea and through Turkey.



Turkish Stream is an undertaking of four lines, the first of which would deliver gas solely to Turkey, while the remaining three would expand to Europe via an energy hub on the Greek-Turkish border, although their ultimate destinations remain undecided. The pipeline has the annual capacity of 63 billion cubic units (bcm) of Russian gas and would supply Turkey with a quarter of that figure.[1]



Photo: Gazprom  Photo: Gazprom



Considering its lack of energy resources within its own borders, this is an enticing deal for Turkey. Turkish Stream offers an opportunity for the nation to become the regional energy hub of Europe, which it has long sought to achieve.[2] With Russia’s backing, the hub will be established on Turkey’s shared border with Greece, which would bolster Turkey’s status as a competitive, geopolitical player in the EU. In theory, this would benefit Turkey, especially if it all comes at a discounted price. Putin agreed to a 6% discount on gas in December 2014 and, three months later, upped the discount to 10.25%.[3] [4]



However, Turkey’s agreement with Russia exacerbates its already rocky relations with the EU. It is a step in the opposite direction from Europe’s move towards alternate suppliers to ease off Russian energy imports. The EU’s Southern Gas Corridor (SGC) initiative, which will deliver Azerbaijani gas to Europe, is a realization of Europe’s diversification efforts and a statement emphasizing the essential role Turkey plays as an energy partner for Europe. The central link of the SGC is the Trans-Anatolian Natural Gas Pipeline (TANAP), whose entire length runs through Turkey.



Photo: TANAP  Photo: TANAP



Turkey’s simultaneous deal with Russia undermines any prospect of strengthening ties between Turkey and the EU that would result from SGC. The unexpected agreement during the beginning of TANAP’s construction only serves to aggravate Turkey’s relations with its western allies. Additionally, Turkish Stream will amplify Turkey’s reliance on Russian gas exports, which have already more than doubled between 2003 and 2013.[5] This effect directly opposes the driving force behind the SGC to reduce dependence on Russian energy. In this moment, Turkey’s priorities are brought into question. What are the factors motivating Turkey to look both east and west at the same time?



Looking more closely at TANAP, the pipeline’s route runs through Turkey. On its western border, the Trans-Adriatic pipeline (TAP) connects it to Europe, while in the east, the South Caucasus pipeline (SCP) links it to the Caspian Sea. While Turkey is undoubtedly indispensable to the SGC project, it must be emphasized that its significance is defined as, and limited to, an international ‘energy corridor,’ which Heinz Kramer explains is different from an ‘energy hub,’ in that it does not participate in the decisions regarding delivery conditions of energy resources and demand provisions.[6] Thus, in the SGC, Turkey will not exercise any authority over resources being supplied to the west; it will only provide transit services. 



In contrast, Turkish Stream is not subject to EU energy regulations, for it is not an EU initiative and Turkey is not a member of the EU. The pipeline will bring Russian gas to the Turkish-Greek border, which, in theory, will act as a delivery point to European countries.[7] Turkey’s geopolitical position in Turkish Stream outlines a more realistic possibility of Turkey becoming a regional energy hub, in that it offers Turkey distributive authority and revenue.[8] The only way in which Russian gas will continue west is through this Turkish-Greek checkpoint, which gives Turkey the upper hand in the Turkish-Russian relationship. However, potential European buyers have yet to agree to Turkish Stream, which is only one of the many elements delaying the agreement process.



Russia is trying every key in the door to continue supplying energy to Europe, while striving to bypass the existing route to Europe via Ukraine.[9] Having manipulated Gazprom’s monopoly on European energy markets in the past by heightening prices and using supply as political leverage, it is clear that the order of influential players has been rearranged. Russia is now desperate to remain in the loop – it has agreed to an enormous discount on gas deliveries to a single nation, although the countries remain at a standstill over the fixed price, in a situation that has so far attracted zero European buyers. Russia’s future in European energy markets depends on the willingness of western countries to connect their pipelines to Turkish Stream and the ability of Turkey to straddle both energy deals, while keeping both sides a priority. 

[1] “Russia, Greece sign 2bn euro deal on Turkish Stream gas pipeline,” RT. June 2015. URL: http://rt.com/business/268279-russia-greece-turkish-stream/

[2] Jones, Dorian. “Russia-Turkey Pipeline Has Economic, Strategic Motives,” VOA. Dec 2014. URL: http://www.voanews.com/content/russia-turkey-pipeline-has-economic-and-strategic-motives/2554995.html

[3] “Putin Drops South Stream Pipeline to EU, Courts Turkey Instead,” VOA. Dec 2014. URL: http://www.voanews.com/content/reu-south-stream-pipeline-putin-turkey/2542004.html

[4] “Turkey Eyes Closure on Gazprom Price Deal Within 2 Weeks,” The Moscow Times. July 2015. URL: http://www.themoscowtimes.com/business/article/turkey-eyes-closure-on-gazprom-price-deal-within-2-weeks/524842.html

[5] “Reducing European Dependence on Russian Gas: distinguishing natural gas security from geopolitics,” Oxford Institute for Energy Studies. October 2014.

[6] Kramer, Heinz. “Die Türkei als Energiedrehscheibe: Wunschtraum und Wirklichkeit. SWP Studie,” 2010. Berlin: Stiftung Wissenschaft und Politik. (As cited in Krauer-Pacheco, Dec 2011).

[7] Gazprom Priority Projects, Gazprom. URL: http://www.gazpromexport.ru/en/projects/6/

[8] Eurasianet. “Russia Hopes To Win Turkey Over With New Pipeline Deal,” Oil Price. Dec 2014. URL: http://oilprice.com/Energy/Natural-Gas/Russia-Hopes-To-Win-Turkey-Over-With-New-Pipeline-Deal.html

[9] “Russia’s Gazprom Could Build First Line of Turkish Stream Pipeline Solo,” The Moscow Times. June 2015. URL: http://www.themoscowtimes.com/business/article/russias-gazprom-could-build-first-line-of-turkish-stream-pipeline-solo/524410.html


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