- Turkey is keen to invest in the construction of gas pipelines from Russia and the Caucasus as part of its long-term goal to become an energy hub connecting energy-rich countries with western Europe.
- The country is expected significantly to increase its gas-transmission capacity once two pipeline projects—the Southern Gas Corridor and Turkish Stream (or TurkStream)—are completed in 2020.
- Turkey’s dependence on Russian gas imports as its primary energy source will continue for the foreseeable future. However, the new transit pipelines are likely to strengthen Turkey’s hand in the negotiations of future long-term gas contracts.
- Given the mutual dependence in Turkish-Russian energy relations, co-operation is expected to continue in 2018-22, despite disagreements in other policy areas.
Natural gas is the main energy source in Turkey (it represents around 30% of the energy mix), which depends heavily on gas imports to meet growing demand. In 2017 Turkey’s natural-gas import volumes increased by almost 20%, to 55.2bn cu metres. More than half of these imports came from Russia (making Turkey the second-largest export market for Gazprom, the Russian state-owned gas monopoly), followed by Azerbaijan (16.7%) and Iran (11.9%).
Turkey’s concerns regarding its potential over-reliance on natural-gas imports—especially from Russia—have fuelled recent government initiatives to diversify the energy mix by promoting local sources such as renewables and nuclear energy (also in collaboration with Russia). Meanwhile, Turkey is keen to invest in the expansion of its gas infrastructure to diversify its sources of gas and to establish itself as an energy hub serving western Europe.
Expanding gas transit capacity
In June Turkey began to import gas from Azerbaijan via the Trans-Anatolian Natural Gas Pipeline (TANAP), which has an initial annual target capacity of 16bn cu metres (scalable to 32bn cu metres). About 6bn cu metres of the initial capacity is reserved for Turkey’s domestic consumption, while the rest will be exported to Europe once the Trans-Adriatic Pipeline (TAP), from the Turkish-Greek border to Italy through Greece, Albania and the Adriatic Sea, is completed in 2020. The EU sees this as an opportunity to reduce its reliance on Russian gas imports (around one-third of EU gas imports come from Russia) through the creation of the Southern Gas Corridor. Over the last few years, and especially since 2014, the EU has been increasingly concerned about its dependence on Russian gas imports. This is all the more so because the Nord Stream 2 gas pipeline project that connects Russia to Germany will become operational in 2019-20, increasing Russia’s gas export capacity to the EU. However, owing to opposition to TAP from part of the Italian government—the ruling Movimento 5 Stelle has voiced environmental concerns—the project will probably face delays.
In addition, the Turkish Stream gas pipeline project plans for annual shipments of 31.5bn cu metres of gas from Russia to Turkey (across the Black Sea), also by 2020. Half of the pipeline capacity will be dedicated to the Turkish domestic market, while the rest will serve European countries. This project represents an alternative to the former South Stream project connecting Russia to Bulgaria and onwards to Austria, also via the Black Sea, which was cancelled in 2014 following Russia’s illegal annexation of Crimea and the lack of political appetite within the EU for such a project.
Turkey and Russia have every interest in building Turkish Stream
Although it currently appears to be on track, the completion of the Turkish Stream project will depend on future bilateral ties between Turkey and Russia. The two countries pursue competing agendas in Syria, which could put bilateral relations under strain. In addition, Russia looks keen to develop its gas exports to Asia, for instance with the construction of the Power of Siberia pipeline or through the realisation of several liquefied natural gas (LNG) projects; as a consequence, the Russian government may not regard the construction of Turkish Stream as a top priority.
The Turkish Stream project has already been halted once, in fact, in 2015, owing to disagreements over gas pricing. Turkey’s downing of a Russian fighter-jet, also in 2015, then prevented any progress on the project until late 2016, when bilateral ties finally started to improve and the two countries signed an intergovernmental agreement that laid the legal framework for the construction of Turkish Stream.
Turkey’s relationship with Russia regarding the completion of Turkish Stream is one of interdependence, as Russia has every interest in increasing its gas exports to Europe and in minimising transit through Ukraine. Meanwhile, Turkey is keen to position itself as a major energy hub and could offer (in addition to the Nord Stream 2 gas pipeline) a viable alternative to gas transit through Ukraine. As a result, both countries will probably be keen to ensure that co-operation on energy matters continues even if other disagreements were to emerge, as illustrated by the fact that Gazprom never stopped gas exports to Turkey in 2015-16—when bilateral relations were under heavy strain.