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Russia vs Turkey : The Geopolitics of the South and the Turk Stream Pipelines
This essay is the the second part of a series, with the first part being “USA Russia & China in the Middle East: Alliances & Conflicts”.
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Table of Contents
In December 2014 the Russian President, Vladimir Putin, announced the cancellation of the South Stream pipeline, and its replacement by the Turk Stream pipeline. Before examining the geopolitical consequences of the cancellation of the South Stream and its replacement by the Turk Stream one needs to examine the geopolitical framework of the Russian-Turkish relations. This basically means to examine Russia’s and Turkey’s main geopolitical objectives, and to examine how the objectives of one country affect the objectives of the other.
Russia’s most important geopolitical objective is to maintain her dominant role in the European oil and natural gas markets. Russia is the largest exporter of natural gas in the world, and one of the largest exporters of oil. Approximately one third of Europe’s oil and natural gas imports come from Russia.
Turkey’s most important geopolitical objective is to ensure the country’s energy security, because Turkey is very poor in oil and natural gas reserves. In addition Turkey wants to become the absolute energy hub between the Middle East and Europe, in order to generate huge revenues in transit fees, and to be able to bargain for better prices with the rich in oil and natural gas countries, which will depend on Turkey for their sales. By doing that Turkey will also increase her geopolitical might, because Europe will increase her dependence on Turkey.
Which are the main threats for Russia and Turkey? Which are the main obstacles to their geopolitical objectives? For Russia the main danger is the construction of a pipeline network that will connect Europe with the Caspian Sea and the Middle East through Turkey. This pipeline network would send to Europe the natural gas and oil of Iran, Iraq, Turkmenistan, Qatar, Saudi Arabia and Azerbaijan, which are all very rich countries in oil and natural gas. This would mean lower prices and lower market share for Russia’s oil and natural gas industry, which account for approximately 70% of the Russian government’s revenues.
For Turkey the main danger is the connection of Europe with the Middle East and the Caspian Sea with a pipeline network that will bypass Turkey as an energy hub. This would reduce Turkey’s ability to bargain vis a vis the rich in oil and natural gas countries, and it would also reduce Turkey’s geopolitical significance, because it would reduce Europe’s dependence on Turkey.
In the past there have been two main efforts to bypass Turkey as the absolute energy connection between Europe and the Middle East. The first one was the Iran-Iraq-Syria pipeline, see the red line on the above map, and the other was the East Med pipeline (Israel-Cyprus-Greece), see the yellow line on the above map. Turkey attacked both Israel and Syria. Turkey attacked Syria with the help of Saudi Arabia, Qatar and UAE, and Turkey attacked Israel with the help of Qatar and Iran. Turkey and Qatar support Hamas, the Muslim Brotherhood affiliate that runs Gaza, and Iran supports Hezbollah, the shite military organization that operates at the borders of Israel and Lebanon. For more information see “USA Russia & China in the Middle East: Alliances & Conflicts”.
The above represent the main geopolitical objectives of Russia and Turkey, and the main threats to their geopolitical objectives. What is very important is that Turkey is the main threat for Russia’s geopolitical objectives, and Russia is the main threat for Turkey’s main geopolitical objectives. It is mainly through Turkey that a competing to Russia pipeline network can be constructed, in order to send Iranian, Iraqi, Qatari, Azerbaijani and Turkmen natural gas to Europe. At least that’s the best option, because the other options require the construction of long underwater pipeline networks, which are much harder to construct and they also cost a lot more.
Russia is behind the Iran-Iraq-Syria and the East Med pipelines. Gazprom agreed to construct and manage the Iran-Iraq-Syria pipeline, which would bypass Turkey (red line at the following map). An LNG plant would be built in Syria or Lebanon, which would liquefy the natural gas and send it to Europe or Africa with LNG carriers (ships). The pipeline would carry Iranian and Iraqi natural gas. In addition Russia agreed with Syria to exploit Syria’s off-shore natural gas fields in the Mediterranean Sea (purple circle at the following map).
Moreover Russia formed an alliance with Cyprus and Israel in the East Mediterranean Sea. Both Israel and Cyprus have found natural gas reserves in the Mediterranean Sea (see black and yellow circles on the above map). Cyprus and Israel would be very happy to sell their natural gas to Europe through the East Med Pipeline (Israel-Cyprus-Greece), or by liquefying their natural gas at an LNG plant, which would be built in Cyprus, and then ship it to Europe.
With the plans for the Iran-Iraq-Syria pipelines, and the alliance with Cyprus and Israel, Russia managed to become for Turkey what Turkey was for Russia i.e. a geopolitical headache. Russia managed to become a geopolitical headache at the south of Turkey, in the same way that Turkey was a geopolitical headache at the south of Russia. In the same way that Turkey bypasses Russia from the south, with the TANAP and TAP pipelines (purple lines), Russia can bypass Turkey from the south with the Iran-Iraq-Syria and the East Med pipelines (red and yellow lines).
It must be mentioned that the East Med pipeline is not completely controlled by Russia, as it would have been the case with the Iran-Iraq-Syria pipeline, but Russia’s alliance with Cyprus and Israel makes life for Turkey much harder.
The last factor that must be taken into account when examining the Russian-Turkish relations is the large trade in the energy sector between the two countries. Turkey is the second largest importer of Russian natural gas, with Germany being the largest, as you can see at the following table from the site of Gazprom.
Πηγή:: Gazprom http://www.gazpromexport.ru/en/statistics/
Russian natural gas accounts for 56% of the Turkish imports, as you can see at the following pie chart of the Energy Information Administration.
The above 5 points are the main elements of the geopolitical framework that should be used in order to analyse the Russian-Turkish relations. The first one is the energy corridor Turkey-Europe i.e. (TANAP-TAP). The second one is the energy corridor Middle East-East Mediterranean Sea-Europe (Iran-Iraq-Syria and East Med Pipelines). The third one is Turkey’s energy dependence on Russia. The fourth one is that Turkey is Gazprom’s second largest customer. The fifth one is that most of Russia’s income comes from her oil and natural gas sales in the European markets.
The 21st Century Conflicts Between Russia & Turkey
In this section I will describe in more detail the conflicts between Russia and Turkey. As you can see at the following map, both Russia and Turkey are of strategic importance for the energy security of Eastern European countries.
The countries of Western and Southern Europe have alternatives to the Russian natural gas and oil. They can import oil and natural gas from Algeria and Libya, through pipelines, but also with the use of ships from Saudi Arabia, Qatar, Iraq, Iran, Kuwait and the United Arab Emirates, which are among the largest producers and exporters of oil and natural gas in the world.
On the contrary it is very difficult for the countries of Eastern Europe to find alternatives to the Russian natural gas and oil. Therefore they have to pay higher prices and they are vulnerable to Putin’s political manipulations. Their main alternative is Norway, which has 2 trillion cubic meters of natural gas reserves, but Norway is facing a falling production due to overexploitation of her reserves and due to the aging of her gas fields. Their other alternatives are the UK, which already imports more natural gas than it exports, and has become a net importer, and the Netherlands, which have small reserves and also face a falling natural gas production.
For the natural gas production of the European Union see page 8 of the following table from an article of the American Congress, titled “Europe’s Energy Security: Options and Challenges to Natural Gas Supply Diversification”, August 2013. Figures are given in cubic feet, and they must be divided by 35 in order to be converted to cubic meters. As you can see it is only England and the Netherlands which have satisfactory production levels, but it is only the Netherlands which produces more than it consumes, making the Netherlands the only net exporter of natural gas in the European Union.
The article was written in 2013, and it refers to 2012, and it gives the Dutch production at 65 billion cubic meters (2.257 billion cubic feet). However the Dutch production has fallen, as you can read at the following Reuters article, titled “Dutch to cut output from huge Groningen gas field”, January 2014. The reason for the fallen production is that the Dutch are wary about the earth tremors that are taking place near their largest gas field, Groningen, which is also the largest gas field of Western Europe.
The Netherlands will cut gas production at Groningen, the largest gas field in western Europe, by about a quarter over the next three years, the Economics Ministry said on Friday, bowing to public concerns over earth tremors in the area.
The ministry said production would be cut in 2014 and 2015 to 42.5 bcm and in 2016 to 40 bcm, adding that it was technically possible to reduce Groningen’s output to 30 bcm a year and still meet domestic demand.
At the 10th page of the Congress article I just mentioned, you can see a table with the dependence of the individual countries of the European Union on Russian natural gas. There are 6 countries of the EU which import 100% of their natural gas from Russia i.e. Estonia, Latvia, Lithuania, Sweden, Finland and Bulgaria. Please note that Lithuania recently built a floating LNG terminal in the Baltic Sea and now has a minor alternative.
Norway, which is not a member of the European Union, also faces a falling oil and natural gas production, due to the aging of her oil and natural gas fields, as you can read at the following International Resource Journal, titled “Norwegian Oil and Gas: Managing Decline of a Sunset Industry”.
1st, 2nd , 3rd Paragraphs
With Norwegian production now passed its peak, oil and gas output is expected to drop rapidly within relatively few years, combined with the absence of major discoveries over the last decade, this will present a considerable challenge for maintaining value creation and a sustainable level of activity on the Norwegian Continental Shelf.
The remaining resource potential is large but will this decline be adequately met by the commercialisation of many smaller finds in mature areas of exploration?
Opportunities for future output growth rest primarily on large new discoveries but this is an unlikely prospect at best. In light of this reality how is the Norwegian oil industry seeking to manage its decline?
At the following Financial Times article, titled “UK warned over dependence on Qatar gas”, January 2012, you can read about the problems that England is facing due to the falling production of natural gas in Norway, England and the Netherlands. You can also read that England has to find alternatives, either in Russia or Qatar, and England is currently over dependent on Qatar for natural gas. The article says that so much dependence on Qatar is very risky for England, because Qatar can find better prices in Asia, but also because Qatar would cut supplies if a war in the Persian Gulf was to break out.
1st, 2nd , 3rd, 4th, 5th, 6th , 7th, 8th Paragraphs
Britain’s dependence on Qatari liquefied natural gas has grown so stark that, last year, all but two cargoes of the product shipped into the UK came from the small Persian Gulf state.
The situation is about to get worse, analysts say, raising profound questions over UK energy security.
Not only is Iran threatening to cut off all Qatar’s LNG exports by blocking the critical Strait of Hormuz waterway, but even if that does not happen, the UK will be unable to rely so heavily on Qatar in the coming years.
Unlike other European nations, Britain has not guaranteed its LNG cargoes with long-term fixed contracts. Deutsche Bank calculates that only 24 per cent of the UK’s LNG coming from Qatar is secured under fixed contracts, meaning the rest can be diverted to the highest international bidder.
The Qatari gas the UK relies on has in part taken the place of more reliable gas from the UK’s own North Sea, whose production is quickly declining because of the age of the fields and dwindling investment.
In fact, Qatar’s supply to the UK grew 67 per cent from 2010 to 2011, according to the Department of Energy and Climate Change.
In contrast, the UK’s indigenous production has fallen at an average annual rate of 6.2 per cent since 2005.
Imports from Norway, Britain’s second-biggest foreign supplier after Qatar, fell 17 per cent from 2010 to 2011, and LNG from suppliers other than Qatar all but dried up amid increasing competition from rival customers, such as Argentina and South Korea.
I must say that England’s energy dependence on Qatar is one of the reasons that England supports the Hamas, the terrorist organization that runs Gaza and attacks Israel. Hamas is funded by Qatar, and therefore England has to support Hamas, at least partially, in her conflicts with Israel. Another factor that explains the English support to Hamas is the billions of dollars that the Qataris have invested in England. You can read about the Qatari investments in England at the following Guardian article, titled “How much of London is owned by Qatar’s royal family?”, December 2014
You can also read about Britain’s problems in finding energy sources at the following Oil Price article, titled “Britain Faces Difficult Winter Due to Tight Norwegian Natural Gas Supplies”, September 2013.
1st, 2nd, 3rd Paragraph
Britain is likely to face a tight winter for natural gas as it finds itself with few alternative sources of cheap natural gas, forcing it to rely heavily on Norwegian supplies, where production is already lower than normal.
The problem is that the Troll field, Norway’s largest natural gas field which produces 35 percent of the country’s natural gas output, has had to reduce its capacity for most of the year, and the field’s operator Statoil expects this lower production level to continue into next year.
Morten Eek, of Statoil, said that they “expect to see somewhat reduced capacity into the winter at the Troll field due to technical issues at Troll A.”
6th, 7th and 8th Paragraphs
Britain has always been reliant on Norwegian imports, but this is set to increase as Russian gas is expected to go to continental Europe, and LNG imports from other countries will be sent to the Asian markets.
Should the Norwegian supplies fail to meet British demand, then more gas could be imported from Russia, but this will come at a high cost, as Russian prices are much higher than those offered by Norway. Russian gas would cost an estimated 74-78 pence per therm, compared with current UK prices of 65 pence.
Britain could also import LNG from places such as Qatar, but again, prices will be much higher as demand from Asia is high, and forces prices up. LNG would cost around $15.5 per million Btu, equivalent to 155 pence per therm.
Therefore it can be seen that there are many energy security issues in the European Union, and therefore both Russia and Turkey are of high strategic importance for the European energy security, but they are even more important when it comes to Central and Eastern Europe. Russia is very important because of her huge oil and natural gas reserves, and Turkey is very important because of her geographical location, which is the only way to connect the Middle East and the Caspian Sea to Europe with a pipeline network, in order to avoid the sea and reduce European dependence on Russia. When natural gas is sent in liquefied form (LNG) by ships it costs a lot more than natural gas supplied by pipeline networks.
The above situation increases the rivalry between Russia and Turkey, two countries which have been competing for regional hegemony during the last centuries, from the times of the Ottoman Empire and the Russian Empire. Today their rivalry manifests itself mostly in two regions. The first one is the region of Central Asia and the Caspian Sea. Russia and Turkey are competing for influence over Azerbaijan, Georgia, Armenia, Kazakhstan, Turkmenistan, and Uzbekistan, which are all ex-members of the Soviet Union, and they are all very important for what is called the Southern Energy Corridor, which is promoted by the EU, the US and Turkey. The Southern Energy Corridor means a lot more competition in Europe for the Russian oil and natural gas.
Turkmenistan is very rich in natural gas reserves, Kazakhstan is very rich in oil reserves, and Azerbaijan has some descent reserves of both oil and natural gas. Turkey wants to use the oil and natural gas of these countries, together with the reserves of Northern Iraq (Iraqi Kurdistan) and Iran, in order to supply the Southern Energy Corridor. Russia wants to prevent Turkey from sending this oil and natural gas to Europe. Turkey’s plans are supported by the EU and the US, and Russia’s plans are supported by many corrupt European politicians who are under Russian influence.
As you can see on the map, Azerbaijan is very important for the Southern Energy Corridor, and is backed by Turkey. In the past Azerbaijan had many military clashes with Armenia, which is a Russian satelite. The Southern Energy corridor is also the main cause of the military confrontations between Russia and Georgia. Azerbaijan and Georgia are two ex-members of the Soviet Union, and they both wish to join NATO. If the two countries were not afraid of Russian retaliations they would have already joined NATO. Azerbaijan is the first ex-member of the Soviet Union which dared to sell its natural gas to Europe without using Gazprom’s pipeline networks.
With red at the following map you can see the alliance between Turkey, Azerbaijan and Georgia, and with blue the alliance between Russia, Armenia and Iran. Russia and Turkey are also fighting diplomatic wars at the other side of the Caspian Sea, for the influence of the rich in natural gas Turkmenistan, and for the rich in oil Kazakhstan.
As you can see at the above map, due to geographical factors, Turkey cannot support Kazakhstan and Turkmenistan as much as she can support Georgia and Azerbaijan. Both Turkmenistan and Kazakhstan have a motive to cooperate with Turkey, in order to send their natural gas and oil to Europe, reducing their dependence on China, which is currently their main customer, but also reducing their dependence on Russia.
However they have to be very careful when hurting Russia’s economic interests, because in the past the Russian President Vladimir Putin has openly threatened them in numerous occasions. In the past Russia did not hesitate to attack Georgia, in order to increase her military presence in South Ossetia and Abhazia, which you can see at the following map. Therefore Turkmenistan and Kazakhstan cannot rule out the possibility of a Russian military intervention in their territories.
On top of their indirect clash in the Azerbaijani-Armenian wars, in the past Turkey has helped the Chechen separatists in Russia, and Russia has helped the Kurdish separatists in Eastern Turkey (see red regions in the following map).
The Southern Energy Corridor is the reason there is so much tension in the Caucasus area, which you can see at the following map.
On top of the Armenia-Azerbaijani wars and the Chechen-Kurdish issue, Russia and Turkey are fighting in Syria and Iraq. Russia and Iran are supporting the Syrian dictator Bashar al-Assad, and Turkey, Qatar, Saudi Arabia and the UAE are supporting the Syrian rebels. Assad, the Syrian dictator, did not agree to the construction of the Qatar-Turkey pipeline, which would have to pass through Syria, while he agreed to the Iran-Iraq-Syria pipeline, which would have been constructed and managed by Gazprom, and which would bypass Turkey. For more information see “USA, Russia & China in the Middle East: Alliances & Conflicts”.
For the Qatar-Turkey and the Iran-Iraq-Syria pipeline see the green and red lines at the following map. Both pipelines would be mainly supplied by the South Pars/North Fields, which is the largest natural gas field in the world. It is located in the Persian Gulf and it is jointly owned by Qatar and Iran.
Moreover Russia and Turkey are facing each other in Eastern Mediterranean Sea, with Russia standing next to Israel and Cyprus. Israel and Cyprus have found natural gas reserves in their waters. Leviathan and Tamar are the two largest Israeli gas fields, and Aphrodite is the largest Cypriot gas field (see following map).
For a very good article about the Israeli and Cypriot gas fields and the disputes between Israel, Cyprus and Turkey, with an exact map, see Foreign Affairs’ “Trouble in the Eastern Mediterranean Sea-The Coming Dash for Gas”, March 2013.
Syria, a very loyal supporter of Iran and Russia, also found off-shore natural gas fields, and gave Russia the exclusive right to exploit these gas fields, as you can read at the following Financial Times article, titled “Russia tightens links to Bashar al-Assad with Syria energy deal”, December 2013:
2nd and 3rd Paragraphs
The state-controlled Russian group Soyuzneftegaz and the Syrian regime this week signed a deal that allows for the exploration and drilling, development and production of oil and gas in a 2,190 sq km area off Syria’s coast, the first-such deal for the country.
It might be years before the deal is implemented, analysts said. But the concession, which is to span 25 years, further solidifies Moscow’s ties to Damascus ahead of a highly anticipated January conference in Switzerland in which the future of Syria may be negotiated.
With much of Syria’s other oil reserves in the largely Sunni Muslim east and northeast of the country and currently under the control of rebel factions, the deal dangles the prospect of a potential source of revenue for President Bashar al-Assad’s Allawite co-religionists, which dominate the regime. It also gives Russia a stake in the scramble for Mediterranean energy reserves that already includes Israel, Lebanon, Turkey and Cyprus and other countries.
For the agreement on the Iran-Iraq-Syria pipeline between Russia, Iran, Iraq and Syria you can read the following CNBC article, titled “How Vladimir Putin and Russia Hope to Win Big in Syria”, February 2013.
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“What Russia lost through the anti-Al-Assad alliance was the possibility to control the natural gas market across Europe and the means to shape events on the continent. In July 2011, Iran, Iraq, and Syria agreed to build a gas pipeline from the South Pars gas field in Iran to Lebanon and across the Mediterranean to Europe. The pipeline that would have been managed by Gazprom would have carried 110 million cubic meters of gas. About a quarter of the gas would be consumed by the transit countries, leaving seventy or so million cubic meters to be sold to Europe”.
Violence in Iraq and the Syrian civil war has ended any hope that the pipeline will be built, but not all hope is lost.
Israel also gave Gazprom the exclusive right to purchase the natural gas of Tamar, which is Israel’s second largest gas field, as you can read at the following article of Sputnik News, a state owned Russian news agency, titled “Gazprom Signs 20-Year LNG Purchase Deal with Israel, February 2013.
A subsidiary of Russian energy giant Gazprom has signed a 20-year deal with Levant LNG Marketing Corp. to exclusively purchase liquefied natural gas (LNG) from Israel’s Tamar offshore gas field in the Mediterranean, Gazprom said on Tuesday.
Moreover Russia and Cyprus are traditional allies, and Russia gave Cyprus a 3.5 billion dollar loan, which is a huge amount for the tiny Cypriot economy, guaranteeing Russia a major role in the Cypriot energy sector, as you can read at the following Commentator article, titled “Russia’s new Middle East energy game”.
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Discovered in 2009, the Tamar and Dalit offshore fields hold around nine trillion cubic feet (tcf) of gas. Due to come online in 2017, the Tamar LNG Project is expected to produce a cool three million metric tons of LNG annually. A multi-billion dollar floating LNG terminal is to be built near Cyprus to handle the conversion to LNG. And that will also bring into play gas piped from the island’s own Aphrodite field – another seven tcf.
That Moscow is in this for the long haul with its Israeli-Cypriot partners is plain enough. Moscow has already advanced a $3.5 billion loan and attempted to gain more leverage over Cyprus’ economic and energy assets during the recent bitter negotiations in the banking crisis.
Therefore Russia became an important player in the natural gas sectors of Israel and Cyprus, two countries that have the potential of sending natural gas to Europe through Greece, bypassing Turkey. Please not that the Israeli natural gas is not completely controlled by Russia. It is an American energy company, namely Noble Energy, which is the main player in the Israeli gas fields.