Natural gas: Putin-Erdogan meeting, cooperation, the Turkish hub –

At the end of the year, the 5-year contract between Kyiv and Moscow for the transit of Russian gas through Ukraine expires, with significant implications for the rest of Russian gas exports to some European Union countries. Despite the war in Ukraine, natural gas has continued to flow through the pipeline and so far there has been no major disruption.

And in fact, in countries like Greece, Russian natural gas still plays a leading role in the energy mix, although it does not enter our country through the Ukrainian pipeline, but through Turkstream. It is worth noting that of all the fossil fuel we import (natural gas and LNG) approximately 60% is of Russian origin.

The end of the transit agreement will mark a significant change, because gas covered by this agreement currently accounts for half of Russia’s remaining gas exports to the EU and a third of total Russian gas exports, including LNG .

Within this context and given the availability of alternative routes, Turkey wishes to play a central role, and according to analysts it is possible to provide Moscow with the “back door” it needs to make its gas available to Europe.

Already in 2023, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan have openly expressed their willingness to cooperate, announcing the creation of a natural gas energy center in the neighboring country.

This topic comes back to the fore on the occasion of the 16th meeting of the BRICS group of countries, which starts today in the Russian city of Kazan. Dozens of countries from four continents submitted their applications to join the annual summit, including, for the first time, a NATO member state, Turkey.

Natural gas plans go through Kazan

As the press service of the Russian president announced, the two leaders are expected to discuss in particular the possibility of creating a natural gas hub.

«Effective interaction with Turkish partners in the natural gas sector was established. The pipelines Blue Stream and TurkStream on the bottom of the Black Sea are operating in a stable manner. The heads of state will also consider the project of creating the international natural gas hub on the territory of Turkey within the framework of the meeting in Kazan“, says the announcement.

Analysts estimate that Erdogan’s stay in power for a third decade could bring Turkey even closer to Russia’s sphere of influence

And as the Russian news agency Tass writes, the meeting will take place on October 23 on the sidelines of the BRICS Summit. The multi-level cooperation between Russia and Turkey is developing dynamically in all key areas and has a corporate and mutually beneficial nature, the Kremlin said.

«Prospects for the development of trade and economic ties will be discussed during the negotiations, the volumes of which reached $55.4 billion in 2023“, the press service noted.

Closer to Putin’s chariot

Analysts estimate that Erdogan’s stay in power for a third decade could bring Turkey even closer to Russia’s sphere of influence. Before the polls, Moscow supplied Turkey with natural gas on credit and discounted crude oil and oil products.

Russia supplied 39.5% of Turkey’s 54.66 Bcm of natural gas imports last year. Most of these imports are made under long-term legacy crude-indexed contracts. Its two largest contracts — for 16 Bcm from Russia and 9.6 Bcm from Iran, expire in late 2025 and July 2026 respectively.

Putin’s plan

They even emphasize that behind Erdogan’s promise to make Turkey an energy hub for all of Europe, there is a “back door” which could pave the way for Moscow’s exports. Following the destruction of the Nord Stream pipelines from Russia to Germany under the North Sea last year, Putin and Erdogan quickly sought to shift attention to the idea of ​​a hub.

Russia has forged closer energy, political and economic ties with Turkey

«Their understanding of a node is certainly not our understanding of a nodesaid Aura Săbăduș, senior fellow at the Center for European Policy Analysis who covers energy for market intelligence firm ICIS.

«This idea is in vogue because Russia is interested in selling more natural gas to Turkey. Turkey will accumulate gas from various producers — Russia, Iran and Azerbaijan; [υγροποιημένο φυσικό αέριο] and its own natural gas from the Black Sea — and then flush it out and rebrand it as Turkish. European buyers would not know the origin of the natural gas“, he pointed out.

Closer ties

Russia has forged closer energy, political and economic ties with Turkey following a sharp deterioration in relations with the European Union following the war in Ukraine. As early as 2022, President Vladimir Putin presented plans to create a gas trading hub in Turkey, including the possibility of laying more undersea gas pipelines along the Black Sea. The new pipelines could become Russia’s main gas export route to Europe, Putin said at the time.

New players in natural gas

At the time, Russian news agency TASS, citing a strategic planning source in Turkey’s energy sector, had revealed that Ankara plans to involve many other players in trade through the hub in the future, adding that large volumes of natural gas flowing there, with for Russia to be able to provide most of it, “will ensure a stable initial development of the project which will also allow the formation of an attractive price”.

In Sochi

In fact, during the meeting he had with Russian leader Vladimir Putin in Sochi on September 4, 2023, Turkish President Recep Tayyip Erdogan reiterated Turkey’s ambitions to become one of the most important energy hubs in the world, connecting the country to energy markets. to Europe for the transport of Russian natural gas.

«We consider her [συνεργασία στον] energy sector in different chapters. We will carry out various projects to supply energy products to Europe and the world through our country. With the establishment of the natural gas center in Turkey, progress will be made in both energy supply and pricingErdogan told reporters on his return from Sochi in Turkey.

Erdogan described Turkey’s cooperation with Russia in the energy sector as strategic.

«We have already said that we will make the country an energy hub. […] We will turn the country into a major natural gas center thanks to our investments in recent years“, he said.

Gazprom‘s role in natural gas

In fact, at that time Putin had stated that the Russian Gazprom and the Turkish companies BOTAŞ are working on a road map for the implementation of the energy hub on the territory of Turkey.

Erdogan said Turkey’s ambitions include being a global gas hub rather than a regional one, stressing their commitment to continue energy cooperation with Russia to that end based on the win-win principle.

The… revelations of intentions

A foretaste of Turkey’s intentions was given last August 21 when Ankara unveiled its plans for what could be called TurkStream 2.

According to the country’s energy minister, Alparslan Bayraktar, state gas monopoly BOTAŞ will now be able to export around 7 to 8 billion cubic meters (bcm) of natural gas through Bulgaria to Central Europe under a new brand called “Turkish Blend ”, i.e. mixing of gas from various sources.

And as analysts estimate, while Russia is set to have a 40% share of that mix, the actual figure could be higher as Gazprom and BOTAŞ work out the details of a Russian gas hub in Turkey from early 2023.

This will build on TurkStream’s existing European expansion, as well as a 2023 agreement between Bulgarian public gas supplier Bulgargaz, Bulgarian system operator Bulgartransgaz and BOTAŞ, which allows the Turkish company to export around 3.6 bcm per year to the EU .And as Politico wrote at the time, maximizing the TurkStream pipeline network in this way would add another 4 bcm of camouflaged Russian gas exports to Europe.

Despite efforts by major European gas consumers to reduce dependence, Russian gas still accounts for 15% of total EU gas imports, even surpassing US LNG supply to Europe this year.

According to Politico, “in addition to Russian LNG exports to Europe, natural gas flows through Ukraine and TurkStream also deliver Russian gas to Austria, Italy, Slovakia, Hungary, Slovenia, Croatia, Greece, Bulgaria and the Western Balkans».

Source: ot.gr