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Speaking of Turkey, I found this article interesting. It is just one of
many I have seen in the past few years that militates against a facile
analysis that posits geopolitical West-East conflicts as if the Cold War
never ended. Turkey is always depicted as an instrument of American
foreign policy, allowing jihadists to pour across the border to effect
regime change in Syria as part of a conspiracy orchestrated by Langley,
George Soros, Nicholas Kristof and John McCain. Meanwhile, Russia and
Turkey are about to conclude a major oil deal that thumbs the nose
against the exact forces that are supposedly pitting them against each
other.
NY Times, Jan. 22 2015
Russia Presses Ahead With Plan for Gas Pipeline to Turkey
By STANLEY REED and SEBNEM ARSU
LONDON — President Vladimir V. Putin surprised the world in December
when he aborted long-laid plans for a natural gas pipeline under the
Black Sea to Europe, saying Russia would run pipes to Turkey instead.
Many in the West thought it might be merely a bluff, to make the
European Union reconsider its opposition to the pipeline project, known
as South Stream. But in recent weeks, the Russian state-owned company
Gazprom has shown signs that it is serious about proceeding with what it
calls Turkish Stream.
Gazprom quickly bought out its European partners in South Stream
Transport, the Amsterdam company that was to build the Black Sea leg of
the pipeline. And the chief of that Dutch company has petitioned the
Netherlands government to let it keep working with Gazprom, despite
European sanctions against Russia over the invasion of Ukraine.
On the Turkish front, Gazprom is actively negotiating with government
officials — who are said to be driving a hard bargain — while trying to
buy into a leading Turkish gas distribution company.
And all the while, Gazprom is continuing to pay to keep two big
pipe-laying ships and their combined crews of 200 people on standby in
the Black Sea.
As if to dispel any lingering doubts about its intentions, Gazprom’s
chief executive recently made it clear that Turkey is its new focus —
and that if Europe wants more Russian gas then it will need to find its
own way to tap into it.
“Turkish Stream is now the only pipeline,” Gazprom’s chief executive,
Aleksei B. Miller, told reporters in Moscow last week. “There are no
other variants possible. Our European partners have been notified of
this, and their task now is to establish the necessary gas-transporting
infrastructure from the borders of Turkey and Greece.”
Rather than bluffing, Gazprom may be simply accepting the current
geopolitical realities.
Some European countries along South Stream’s planned route — including
Bulgaria, Hungary and Serbia — had initially welcomed the proposed
project as a source of transit fees and an alternative source of gas.
But the European Union had long been wary of the idea, and its
opposition stiffened last year after Russia’s intervention in Ukraine.
Brussels feared that South Stream would increase Russia’s dominance of
the European gas market and that Gazprom’s plan to shift the large
volumes of Russian gas that now flow to Europe through Ukraine to the
new pipeline would further weaken Kiev in its struggle with Moscow.
European Union officials had insisted that South Stream could not bring
gas into Europe unless it conformed to European energy competition
rules, which would include allowing other suppliers to put gas into the
pipeline. They also successfully put pressure on Bulgaria — where South
Stream would first enter the European Union after crossing the Black Sea
— to block it.
With European negotiations at an impasse, and expensive work on South
Stream contractually scheduled to commence, Mr. Putin turned to Turkey.
Energy economics played a role, too. The price of natural gas in Europe
has dropped along with the cost of crude oil, and slow industrial demand
is expected to mean sluggish growth for the European gas market.
Russia’s finances have been hit by falling oil prices. So a new pipeline
estimated to cost as much as $40 billion to deliver gas mainly to small
European countries like Hungary and Serbia made little sense.
Industry analysts estimate that the cost of Turkish Stream would be
about $10 billion for Gazprom, which so far has spent an estimated $4.7
billion on the Black Sea project.
The South Stream cancellation fits with other recent moves by Gazprom.
The company and the German chemical giant BASF in December scrapped
their agreement for Gazprom to take full control of their trading and
distribution joint venture. And earlier last year Gazprom signaled a
shift toward Asian markets by signing two big pipeline deals with China,
with one of them worth an estimated $400 billion.
While some analysts doubt the feasibility of Turkish Stream, others say
a route to Turkey makes strategic and economic sense. Russia would
solidify its position in that country, a fast-growing gas market that is
already Gazprom’s second-largest gas customer in the European region
after Germany.
“This makes far more sense than South Stream,” said Jonathan Stern,
chairman of the gas program at the Oxford Institute for Energy Studies.
“What Russia needs to do is nail this market down; everything else is
not growing.”
Photo
Pipes made for the South Stream pipeline, which has been called off in
favor of one going to Turkey. Some analysts say this route to an
emerging market makes more economic sense. Credit Sergei Karpukhin/Reuters
The pipeline to Turkey would also partly cut Gazprom’s dependence on
Ukraine as a transit route. About half of the gas Turkey imports from
Russia now comes through Ukraine and would be replaced by Turkish Stream.
As it proceeds, Gazprom is revamping its Amsterdam venture. The Dutch
company had already assembled an armada of skilled personnel and
billions of dollars of equipment to build the 930-kilometer, or nearly
580-mile, Black Sea portion of South Stream.
To avoid wasting years of preparation and lengthy contract negotiations,
Gazprom has quickly secured control of the Dutch company. In late
December Gazprom said it was buying out its Western partners: Italy’s
oil giant, Eni; the French utility Électricité de France; and BASF’s
Wintershall oil and gas subsidiary. The companies said they would be
compensated for their cash outlays so far, an estimated $750 million.
In addition, Gazprom is paying Saipem, the big Italian oil field
engineering company, to keep two huge pipe-laying vessels and at least
200 people ready to begin work in the Black Sea. The ships were poised
to start when Mr. Putin’s surprise announcement called off the South
Stream project. Saipem has 2.5 billion euros, or $2.9 billion, in
contracts with South Stream Transport.
The Dutch company is also seeking support from its home government for
the change of mission. Because of the sanctions imposed by the European
Union on Russia to punish Moscow’s actions in Ukraine, companies now
require permission to export oil and gas equipment to Russia.
On Dec. 19, Oleg Aksyutin, who is South Stream Transport’s chief
executive and a Russian, wrote to Lilianne Ploumen, the Dutch minister
for foreign trade and international development. The letter discussed a
license the company had previously obtained to provide €1.5 billion in
pipelines and technical assistance for South Stream.
In the letter, which a person involved in the discussions shared with
The New York Times, Mr. Aksyutin notified the Dutch official of the
possible change of route from Bulgaria to Turkey. He wrote that, in the
company’s view, the switch “does not impact the continued validity of
the license,” though it was willing to discuss the matter.
South Stream Transport declined to comment on the letter. A Dutch
Foreign Ministry spokeswoman said that the government was “still
studying the matter.”
Another potential sticking point is Turkey itself. For one thing, the
country obtains about 60 percent of its gas from Russia, a dependence
the government is not necessarily eager to increase.
Talks between Russian and Turkish officials on matters like the precise
route and financial terms of a deal are said to be proceeding slowly.
That is partly because the Turkish government appears to be trying to
use Gazprom’s need for a face-saving alternative to South Stream as
leverage to negotiate lower prices for Russian gas, according to a
Turkish official, who spoke on the condition of anonymity because of the
sensitivity of the negotiations.
Turkish officials also presumably have leverage because they know that
if Gazprom cannot proceed quickly with the Turkish route and continues
to pay idle contractors, a lot of the potential cost savings may be lost.
Mr. Putin already publicly offered a 6 percent reduction to Turkey. But
Ankara, which pays substantially more for Russian gas than Germany does,
is pressing for a better deal.
“Nothing is being discussed while we have not achieved a desirable
discount on gas prices,” the Turkish official said.
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