Russia’s assertive campaign to derail Turkey’s plans to become a major energy transit hub has the Turkish government rethinking its decision to suspend talks with Moscow on building a second natural gas pipeline parallel to an existing one with the aim of carrying Russian gas to Israel and even India.
The energy re-think emerged yesterday on the sidelines of a summit of Black Sea states, known as the Black Sea Economic Cooperation (BSEC). The summit brought leaders to meetings Monday in Istanbul, which included Russian President Vladimir Putin, where he and Turkish leaders began to reshuffle the players on the regional energy chessboard.
To date, the “King” on that chessboard has been a Russian pipeline beneath the Black Sea, known as Blue Stream, with the terminus in the northern coastal city of Samsun. The Russians have been urging a parallel pipeline, “Blue Stream II” but Turkish officials have been wary, preferring a strategy that will bring Central Asian gas into the pipeline mix, effectively challenging Russia’s monopoly on the gas transit to Europe. But diplomats attending the meeting told the Turkish Daily News that the political winds are shifting, and conversations at the summit revealed a new willingness by Ankara to play the game by Russia’s rules.
“By reviving that plan, Ankara aims to deviate Russian gas from European markets to the Asia-Pacific region, and curb Russian ambitions of tapping gas export markets in Europe,” said one insider source, who spoke on condition of anonymity.
Recently, Turkey suspended plans for extending Blue Stream II after Russia signed a deal with Greece and Bulgaria to build an energy pipeline between a Bulgarian port on the Black Sea and Alexandroupolis on Greece’s Aegean cost – effectively cutting Turkey out of the deal.
But Turkey signalled a revision of that decision during a meeting between Russia’s Putin and Turkish Prime Minister Recep Tayyip Erdoğan. Separately, Putin met with Turkish President Ahmet Necdet Sezer.
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The meeting came on the heels of a series of deals sealed by Russia this year to scuttle the Nabucco project, a plan to link Caspian fields to Europe via Turkey and reduce European dependence on Russian gas.
A plan by Gazprom and Italian Eni for a pipeline taking Russian gas to western Europe, one threatening the Nabucco project led by Austria, was unveiled on Saturday. The 990 km “South Stream” pipeline will come ashore in Bulgaria, then branch to Austria and Slovenia in one direction and southern Italy in another. Russia, Turkmenistan and Kazakhstan agreed a landmark gas pipeline deal, to transport Turkmen gas to Russia via Kazakhstan in May. The deal represented a major triumph for Moscow and a setback for Nabucco.
“Russians are not against the construction of the Nabucco pipeline. But they don’t want any alternative to Russian gas being transported via this East-West corridor, because they do not want to loose their influence in the European market,” said a Turkish diplomatic source. “We will try to divert Russian gas from the East-West corridor to the North -South corridor,” said the same source.
“Use North-South instead of East-West corridor”
The Turkish Premier Erdoğan talked to Putin about plans to build a natural gas pipeline linking Samsun on the Black Sea coast to Ceyhan, on the Mediterranean coast, the TDN learned. “We are then planning to extend the pipeline to Israel and from there it could be extended as far as India,” Erdoğan was quoted as saying by Turkish sources. This implies a revision of Turkey’s earlier decision to shelve the Blue Stream II project.
Erdoğan also made clear that Turkey expects Russian participation in a separately planed Samsun-Ceyhan pipeline for oil. Russia has so far been unwilling to transport its oil via Samsun-Ceyhan. According to Turkish sources Putin remained silent when Erdoğan voiced his views on the energy corridor issues. Putin and Erdoğan also met in a private tete-a-tete, the details of which are not known.
Putin “Don’t discriminate against Russian firms”
The Russian president’s talks with his Turkish counterpart Ahmet Necdet Sezer focused on economic relations. Putin complained about the exclusion of Russian firms from Turkish bids. “Don’t discriminate against Russian firms,” said Putin to Sezer, according to diplomatic sources. But Sezer replied that the judiciary is independent and can interfere in any privatization scheme, a reference to an early Turkish-Russian partnership that was canceled by a court order. The Turkish judiciary’s decision should not be interpreted as a political attitude toward Russia, Sezer told his Russian counterpart, emphasizing the fact that Russian firms are not the only foreign firms affected by such domestic decisions.
The Turkish Zorlu Group participated in the tender in 2004 for the privatization of Turkey’s biggest petro-chemical complex, Tüpraş. The winning bid resulted in 65.76 percent for Zorlu, in partnership with Russian Tatneft for a price of $1.976 billion. However, the tender that was approved by the Privatization High Commission (ÖYK) was cancelled upon the decision of the Council of State.
The facility ultimately was successfully privatized last year. A consortium of the Koç conglomerate and Shell Group of Companies won that tender in September last year for a price of $4.14 billion. The bid by the Koç-Shell partnership was 80 percent above the market price and three-and-a-half times higher than the first tender price.
(Turkish Daily News, 27/06/2007)