Five years ago, a coup attempt in Turkey would have had a totally different impact on regional affairs than it does today. From about 90$/barrel in 2011 the oil price dropped to about $50/barrel in 2016. This has translated into a relative weakening of the producing countries (like Russia) while consumers have seen their power increase. Turkey has become less vulnerable than it was, even if its energy consumption rate was similar and even grew. Pipeline construction projects became, all of the sudden, less urgent as its position relative to producers in Russia and the Arab world grew stronger. This is the environment building on the momentum and the aftermath of the coup tentative on July 15.
The stronger Turkey becomes, the more it is building up its regional posture. One of the power veins for Turkey is its energy hub status. Ankara is aware of its ascending potential as it is aware of its vital role for Europe’s energy security (among other areas related to security). It is also aware that an unintended effect of its growth relates to the diminishing importance of projects launched by neighboring stagnant markets such as Greece and Bulgaria. The only exception to this rule is Romania – an energy producer with whom Turkey could eventually partner. But this depends on the way Turkish relations outside of its immediate region will emerge post-coup – mainly Tukish relations with the US, the EU and Russia.
Romania currently seeks to develop the new pipeline project BRUA – linking Bulgarian, Romanian, Hungarian and Austrian markets and it is continuing supporting exploration activities in the Black Sea. Both Romania and Turkey have been discussing various energy projects, including developing subsea interconnectors in the electricity sector. Both Ankara and Bucharest have an interest in maintaining a peaceful environment in the Black Sea. Romania and Turkey both have developed strategic relations with the U.S. In the aftermath of July 15 coup, tensions are returning in the bilateral relations between the U.S. and Turkey – and while such tension ensures for a more independent Turkish foreign policy, they will not lead to dramatic outcomes. Considering its current position, Romania could play a role in reducing the tension while also becoming a reliable energy source for Turkey outside the structure of Turkey’s strategic competitors.
Ankara currently seeks to enforce its regional power status. The recent events are showing that the Turkish government matrix on making decision is no longer relating to other powers’ agenda – the US or the EU, but only Turkish agenda. As the first imperative for any country is controlling its territory so that it may be secured against external forces, president Recep Tayyip Erdogan recent actions relate to the matter of authority. We learn from “The Prince” of Machiavelli that effective leadership is either supported by love and respect of the leader or fear of him. While the latter is largely contested, it may work even for the medium to long term. The Turkish social landscape divisions have however been deepened by current events, something that the government needs to make sure doesn’t have dramatic repercussions for the country’s stability. The high degree of polarization within the Turkish society has created the situation where the Kurdish separatism could not be tackled or eliminated. The Kurdish problem has been the core of the reason for which Turkey cannot simply follow the U.S. lead in international war against the Islamic State (IS), building, for the first time, significant resistance to the American strategy in the region. The Turks are opposed to the American reliance on the Syrian Kurds as strategic partners on the ground in Syria because while the IS a serious threat, Kurdish separatism at home is a higher threat for Turkey – and intimately linked with the country’s energy security.
This matter also shapes the way Turkey and Iran interact regionally. Turkey is not willing to fully follow the U.S. policy towards Iran because Turkey must deal with it in a complex way. Turkey’s position is closer to the EU on the matter, considering that Turkey doesn’t only see Iran as a competitor in the region, but it also needs to reach an understanding with Iran considering its influence in both Syria and Iraq.
Considering the immediate threats Turkey faces on its Southern flank, but also its dependence on Russian gas, it is likely that Turkey will continue to avoid getting entangled in the U.S. and European conflict with Russia. Russia influences the Turkish Northern flank, but it also understands that a weak Russia doesn’t pose a similar threat for Turkey as for the Eastern Europeans. Turkey sees an opportunity in the weakening of the Russian economy – one that is first and foremost relating to Turkish energy security and its regional energy hub status, which ultimately fuels Turkish power.
Energy Hub Relevance and Composition
A stable Turkey is essential for the energy markets: massive volumes of oil and gas pass through Turkey from Russia, Azerbaijan, Iran and Iraq every day. Turkey has a maximum transit capacity in its territory of around 110 bcm per year, along with around 3 million barrels of oil per day, which can be further increased by any new deals with Iraq and Iran and positive developments for Ankara regarding the Eastern Mediterranean.
After the attempted coup, Erdogan’s moves are not meant to only consolidate his power internally, but they will also have a decisive effect on Turkish regional posture. The events taking place both before and after the attempted coup show that Ankara seeks a more independent foreign policy. This is striking when looking at the energy strategy that Turkey conducts regionally. In an attempt to secure its growing energy needs, Turkey has developed into an energy hub. Since the 2000s, Turkey has been part of key infrastructure projects meant to bring oil and gas from Central Asia, the Caspian and Middle East to the European market. Ankara enjoyed the West – both the US and the EU support in developing alternative routes to Russian energy to Europe. Today, Azerbaijan, Turkmenistan, Iran, Iraq, producers in Eastern Mediterranean but also Russia want to send their gas to Europe via Turkey, while Ankara encourages all potential projects that would strengthen its position as an energy hub.
In the same time, Turkey sees this as a way to project power. When it recently opened up diplomatic relations with Israel, Turkey also opened the door to energy and other business opporutnities for iteself. Simultaneaously, it has also sent an apologetic letter to Moscow. The former CEO of Turkish state-owned BOTAŞ Petroleum Pipeline Corporation, Gokhan Yardim said on the sidelines of a conference on June 29 that “Turkey-Israel negotiations were going on and America was supporting to establish these relations again. But if we established the relations and made the agreements with the Russians before the Israelis, I’m sure the Americans would be sad. But the timing was very good and very proper way this happened.” His words underline the immediate importance of the Russian-Turkish relations as well as the prospects for good business coming from the Israeli recent deal, also supported by the US. But both mean business in the energy field.
The energy web under construction – natural gas
Turkey has been long supported by the US to be the alternative transit route to Russia for natural gas coming from the Caspian and the Central Asian countries. The Baku-Tbilisi-Erzurum natural gas pipeline becoming operational in 2007 has been interconnected with the Greek gas transmission system in the first successful attempt to open up the Southern Corridor. With a maximum capacity of 25 bcm per annum, it is the backbone of the Trans-Anatolian Pipeline, the larger project meeting the resources in Shah Deniz to European needs. Once finished (2018), Trans-Anatolian pipeline will connect in Turkey to Trans-Adriatic-Pipeline (connecting Turkey-Greece-Albania-Italy). The Ioanian Adriatic Pipeline will also connect to the system in Albania to connect to Montenegro, Bosnia and Croatia systems.
After Turkey signing the reconciliation deal with Israel on June 26, Turkish private energy companies got enthusiastic about Israel’s offshore Leviathan project, where there seems to be enough reserves for two projects: one involving Egypt and the other Turkey. However, negotiations as well as projects are at the very first stage. But Turkey is looking to get a hold of the offshore reserves in East Mediterranean and be able to launch a pipeline that will attract Israeli offshore fields into its own domestic transmission system.
Just a day after restoring diplomatic ties with Israel, Erdogan sent a letter to Putin to apologize for downing the Russian jet on November 24 last year. On July 17, just after the attempted coup on July 15, Moscow and Ankara announce that Erdogan and Putin will meet in August. Turkey is opening up to Russia and doing that may also signal the revival of Turkish Stream project across the Black Sea, which seemed killed after the downing of the Russian warplane last year. It is notable that just hours before the news on a potential coup taking place in Turkey on July 15, PM Yildirim said that “it is important for Russia and Turkey to restore and implement Turkish Stream pipeline and Akkuyu NPP construction projects as well as to focus efforts on attracting greater numbers of Russian tourists to our resorts and of our citizens to Russia.” Igor Shatalov of Gazprom also said on June 27, as the apologies letter was received in Kremlin that “the Turkish Stream project has been meticulously worked out. The cost of the four lines was estimated approximately at €11.4bn. The level of readiness to attract project financing is very high.” Turkish Stream would not only provide gas for Turkish consumption but it is also intended to deliver to Bulgaria, Greece and Italy (two string delivery system – and potentially developed to accommodate 4 strings delivery system). The Turkish Stream is a version of the cancelled South Stream that is compliant with the EU regulations – geographically, it is going on a similar route as South Stream did, until getting towards South, to Turkey.
With Iran opening up for business for the European, Turkey may become an important transit state for the Iranian gas as well. Currently, the pipeline from Tabriz to Ankara only delivers about 11 bcm per year but may accommodate 2-3 bcm more if the Europeans are interested in Iranian gas. It can accommodate 14 bcm pe year and can be easily interconnected with existing infrastructure that gets gas to the EU. In the same time, the Director of International Affairs of National Iranian Gas Exports Company Azizollah Ramazani said on a conference on June 30 that as Iranian production will increase in the coming years, new pipeline projects may be discussed with the Europeans, indicating Turkey and the Mediterranean as major routes for the delivery to Europe. Baring in mind geography, as well as the fact that building subsea pipelines is undoubtedly more expensive that building land infrastructure, Turkey remains the most logical country for transit pipes.
The oil supply network and transit routes
Turkey imports about 89% of its oil supplies, mostly through pipelines from Iraq, Iran, Russia, Saudi Arabia, Kazakhstan but also oil tankers from Colombia and Nigeria. The two main pipelines connecting Turkey to its main suppliers are the Baku-Tbilisi-Ceyhan and Kirkuk-Ceyhan pipelines.
The Baku-Tbilisi-Ceyhan pipeline has been operational since 2000 with a capacity of 1 million barrels of oil per day. It is the main axis for the opening up of the Caspian market to the international terminals, having elevated Ankara’s posture in the West.
The Kirkuk-Ceyhan oil pipeline is connecting Iraq with the international markets via Turkey with a maximum capacity of 1.6 million barrels, making it the main export corridor for the Iraqi oil. Recently it was announced that its capacity is planned to be enhanced, further cementing Turkey’s role as a transit state for oil coming from the Middle Eastern countries.
Geography has provided for more logistical advantages to Turkey. The Turkish Straits, which includes the Bosporus and Dardanelles waterways, dividing Asia from Europe, are listed among the world’s chokepoints for maritime transit of oil by the U.S. Energy Information Administration. About 2.9 million bbl/d flowed through the Turkish Straits in 2013, as it is one of the main avenues for the Russian, Azeri and Kazakh oil exports to get to Western and Southern Europe.
More investment needed: LNG terminals and natural gas storage capabilities
Turkey has two operational LNG terminals in the Mediterranean. Its main suppliers are Qatar, Algeria, Nigeria and since March this year, the US. Smaller amounts are received from Norway and Egypt. A diversified pool of LNG suppliers increases Ankara’s energy security, giving it more flexibility. Growing consumption that would make Turkey the major European gas consumer by 2025 is one of the reasons for which Turkey considers building additional terminals in the Gulf of Saros near the Dardanelles and in Iskenderun on the Mediterranean coast. The same is driving the need to invest in natural gas storage facilities – they contribute to seasonal balance, daily and hourly changes in demand and is essential to maintain the gas flow to the consumer in the event of supply interruptions. In the same time, investment in both LNG terminals and storage facilities increases Turkey’s capabilities as transit country, reinforcing its infrastructure.
The coup – threats to energy infrastructure?
No cargoes have been halted since large tankers were barred from sailing in the Bosphorus waterway near Istanbul for several hours on July 16, the morning, right after the coup attempt. Oil and gas has flown uninterrupted. The event was not felt by the oil market – while an eventual coup would have made for sustained increase in the oil price, the current power consolidation keeps the price down, something that serves well the Turkish interest. In the same time, maintaining a viable energy hub is in the country’s best interest as it allows Ankara to assert its foreign policy.
While on the short term, media may portray Turkey as a country still at war, one of the key goals for Erdogan is make sure he establishes control over both the Sea of Marmara area (Istanbul) and the Anatolian peninsula, bridging the gap between the European inspired, cosmopolitan Turkey and the more regional and traditional Turkey. In the same time, the leadership in Ankara seeks to weaken the threat of Kurdish separatism in South East, eliminating the risk of attacks over the oil pipelines. Considering that keeping a working energy infrastructure is in the best interest of the Turkish leadership, it is likely that it is thinking about best ways to increase the government’s ability to conduct its war with the outlawed militants of the Kurdistan Workers’ Party (PKK). Erdogan must show that the security forces fighting the PKK are loyal to him.
Turkey’s role in international oil and gas transit is of crucial importance. Caspian crude, mainly from Azerbaijan but also from Kazakhstan and Turkmenistan crosses the country through Baku-Tbilisi-Ceyhan pipeline. Iraqi Kurdistan oil is also delivered to Ceyhan through Kirkuk-Ceyhan pipeline. Turkey’s role in natural gas transit is limited – with limited volumes currently being of Azeri gas being resold to Greece since 2007 through the Baku-Tbilisi-Erzurum natural gas pipeline connected to the Greek market. But starting 2020, TANAP will become operational and deliveries are to reach Italy and the Western Balkans. All this summarizes reasons for which Turkey will work to make sure uncertainty in what regards energy infrastructure is reduced, as this is a key element on which it builds it regional posture, giving Ankara the ability to set its own agenda on foreign policy issues.