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Russia, Turkey sign major gas deal rival to EU gas project

At a meeting on 6 August between Turkish PM Recep Tayyip Erdoğan and his Russian counterpart, Vladimir Putin, the two countries clinched a series of agreements to boost their bilateral relations and energy cooperation. During the meeting, Putin got Turkey’s approval for the Moscow-backed South Stream gas pipeline to cross Turkish waters to Europe, which work will begin by next year at the latest. By doing so, Russia is countering the rival EU-backed Nabucco gas project.

“It’s clear now that the South Stream pipeline is particularly important in the context of providing energy security for the whole of Europe, and in developing complex relations between Russia and Turkey”, Putin said in Ankara. PM Erdogan emphasized that energy cooperation with Moscow had a special value because of its strategic dimension.

Russia, which supplies a quarter of Europe's natural gas, wants to bypass Ukraine – currently a major gas transit route to Europe – and the source of disputes that have cut gas flows to Europe. The Russian-led pipeline project would eventually run from Russia to Bulgaria and Italy before delivering gas to consumers in the EU. With Turkey’s permission, part of the South Stream pipeline would run through Turkish territory in the Black Sea while avoiding Ukrainian waters. The new situation would make it easier for Moscow to exert political pressure on Kiev by raising the price of its gas exports to Ukraine, yet without the fear of a potential knock-on effect on its EU customers.

Nabucco vs. South Stream
In July, the South Stream pipeline project appeared to be on the sidelines. In Ankara, European countries sealed a deal on the EU and U.S.-backed Nabucco pipeline project, which aims to bring natural gas from Central Asia and the Middle East via Turkey to Europe – a crucial route to reduce EU’s dependence on Russian gas. The Nabucco will, however, have merely half the capacity of the Russian project, which will nonetheless be far more expensive. During the meeting in Ankara both the Russian and Turkish officials emphasized that the two pipelines should nevertheless not be rivals to each other. PM Erdogan said “the pipelines should rather be seen as parallel”. “However, neither will be sufficient for Europe’s needs in the near future”, he said.

Moreover, the European Commission also officially rejects the idea the two projects are in competition. "We consider [South Stream] a complementary initiative to our ongoing Nabucco efforts," Commission spokesman Martin Selmayr said at a press briefing in Brussels.

Experts, however, warn that in case the South Stream will be built the EU will be forced to buy Caspian gas at a much higher price. "If South Stream is built, Nabucco will not be, for all that Caspian gas is going to pour into the South Stream," Zeyno Baran, a Turkish-American energy expert with the Washington-based Hudson Institute stated.

Turkey’s double game
Nabucco gives Turkey a foot in both energy camps, according to Andrey Kortunov from the New Eurasia Foundation. On one hand, the agreement has given Turkey an extra hand-hold in its attempts to join the EU. The South Stream deal with Russia, on the other hand, shows it is also keen to be a key strategic player at the crossroads of energy supply. “Turkey doesn’t want to become a hostage to Russia, therefore the Turks support the Nabucco project. The Turkish government, however, realises that Russia is a major strategic partner for Turkey, and therefore it should support initiatives specifically in the energy field that come from Moscow,” Kortunov said.

It is now to be seen whether the move will actually undermine EU’s attempts to reduce its gas reliance on Russia.


Sources: Hurriyet Daily; Ria Novosti; Reuters; EU Observer