Aletho News

The EU’s energy security now rests in Turkey’s hands

Europe has sought to bypass Russian gas with disastrous results. Turkey is set to reap the benefits.

By Karin Kneissl | The Cradle | October 24 2022

“Geography is the constant of history,” is a quote attributed to the German statesman Otto von Bismarck. Today, those words ring true as we witness geography altering global politics, finance, and alliances.

The geostrategic importance of Turkey has rarely been as clear to European politicians as it has been in recent months, as the continent grapples with a burgeoning energy crisis this coming winter.

Whether it is grain exports from the Black Sea region or the flow of energy supplies from the eastern producing countries, the Bosphorus and the links to Eurasia are once again playing a decisive geopolitical role, as they so often have throughout history. The fact is, Turkey is now crucial for the security of Europe.

Pipeline politics

On the occasion of Turkish President Recep Tayyip Erdogan’s meeting with his Russian counterpart Vladimir Putin in Sochi at the beginning of August 2022, the focus was mainly on bilateral cooperation in energy matters.

Putin told journalists after the tete-a-tete that Europeans should be grateful to Ankara for its gas supplies due to the reliability of the TurkStream pipeline.

Last year, Russian natural gas accounted for around 45 percent of European gas imports. But that share has fallen to less than 10 percent after supplies were halted via the eastbound Yamal-Europe pipeline and suspected US-backed operatives blew up Nord Stream, which also curtailed exports via Ukraine.

The Russian-Turkish TurkStream gas pipeline project was announced in December 2014 after Moscow realized that the long-planned SouthStream project – meant to deliver Russian natural gas via the Black Sea directly to European Union (EU) member state Bulgaria – was not feasible.

Russian energy giant Gazprom and the Italian energy company ENI were the main partners in the consortium. However, following the Crimean crisis in March 2014, the EU Commission blocked this major infrastructure project, citing competition rules.

As far as Moscow was concerned, this arrangement had already been completed in the form of terminals and pipeline routes. Thousands of work contracts had been issued between Bulgaria and Hungary at the time.

Construction was scheduled to begin in June 2014, but Brussels alluded to apparent violations of competition rules in the awarding of contracts by the Bulgarian authorities and brought everything to a halt.

Turkey as a Russian energy hub

Nine months later, during a joint press conference with Erdogan in Ankara, Putin remarked that “If Europe does not want to carry it out, then it will not be carried out.” Putin then announced the TurkStream project, which was formally launched in early 2020.

One pandemic and a war later, the world has experienced and continues to experience rising natural gas prices, while Russian-Turkish energy cooperation is intensifying. On 19 October, Erdogan said he had agreed with Putin to set up a comprehensive hub for Russian natural gas built in Turkey from where Europe could meet its energy needs.

“If Turkey and our potential buyers are interested, we could consider building another gas pipeline and creating a gas hub in Turkey for sale to third countries, especially in Europe,” Putin proposed. In addition, a gas exchange could also be created in Turkey to determine prices, he added.

Neither the EU nor the US have welcomed these developments or, in some cases, faits accomplis. Turkey makes no secret of the fact that it wants to expand its status in the China-led Shanghai Cooperation Organisation (SCO) and will probably soon become the tenth member of this important regional organization.

It should be noted that the SCO’s statutes stipulate energy and security – especially the fight against terrorism – as its essential agenda. The EU, it must be said, is only just discovering the importance of these issues.

Attempts to bypass Russian gas

In the recent past, governments and energy companies have looked to Turkey as an alternative to the existing transit routes for oil and gas between the east and west. In 2005, the 1750 km long Baku-Tbilisi-Ceyhan (BTC) pipeline was opened, transporting Caspian oil across the Caucasus to the Turkish Mediterranean port.

Crucially, this route had the backing of Washington, reinforcing the close connection between politics and the oil business. As per an apt saying from the early 20^th century US oil industry: “The oil business is too important to leave it to the oil people.”

The Nabucco pipeline project, intended to reduce Europe’s reliance on Russia’s gas, consisted of a consortium of six corporations based on the initiative of the Austrian partly state-owned OMV. The project was supported politically and financially by the European Commission, with the premise being that natural gas would be supplied from the Caspian region via Turkey to Central Europe to the Baumgarten hub in Austria.

Billions were spent on marketing this project between 2002 and 2014. However contractual agreements surrounding the deal never materialized. Though inconceivable now, Iran was also initially planned as an alternative supplier, yet these efforts failed from 2005 onwards due to UN Security Council sanctions on Iran from 2008 until the present.

Additionally, supply contracts with Iraq and Turkmenistan were targeted in vain, although these arguably had a lot to do with complete mismanagement. In the case of Turkmenistan, countless advisory opinions were commissioned on the status of the Caspian Sea under international law, sea, or lake, and the possible transit pipelines for landlocked Turkmenistan.

A failed strategy

After many years of mere marketing and a lot of hot air between Brussels and Vienna around the Nabucco project, OMV’s partners finally backed out in 2014. It was clear that there was no natural gas available.

In my book “Der Energiepoker” (The Energy Poker) I wrote in 2006: “If the managers had not gone to the State Opera to see Verdi’s Nabucco, but had seen the operetta by Johann Strauss “Wiener Blut” (Viennese Blood), then this natural gas pipeline would have been given a more appropriate name.

Now, in view of the Nord Stream 2 pipeline boycotted by the EU, OMV is facing further setbacks, as the contracts with take-or-pay clauses were drafted in such a way that payment would have to be made for the Russian natural gas, even if there was no physical delivery. These conditions apparently apply until 2040.

EU will buy Russian energy indirectly

While the EU wants to bypass Russian energy sources for political reasons, Turkey, India, and China, among others, will gladly fill in the consumer void. As described, Turkey already benefited in 2014 from the SouthStream project, which became TurkStream. The EU ultimately lost out, while Ankara stood to gain, with the EU presently buying Russian natural gas via Turkey.

This energy route is set to expand even further once the Russian natural gas hub in Turkey is established. Turkey thus becomes the safeguard of the EU’s energy security. While this was the case a few years ago with non-Russian natural gas and oil, it now looks as if Russia is merely adapting its role for the European market on a regional basis.

For some years, Ankara aligned its prospective role as a hub for BTC and the Nabucco project with its EU accession ambitions. Now it seems that Turkey will become a member of the SCO much faster, and despite its NATO membership, part of the security cooperation with Russia and China.

The EU is more dependent than ever on the goodwill of those it once created obstacles for, and Turkey and Russia are no exception. The coming months will show with all their force just how irresponsibly the EU governments handled the continent’s energy security needs.

October 24, 2022 - Posted by aletho | Economics, Malthusian Ideology, Phony Scarcity, Timeless or most popular | European Union, Russia, Sanctions against Iran, Turkey