Ankara is trying its best to diversify its energy consumption and reduce its dependence on foreign resources as the country’s transformation into the main gas hub of Europe have become the main goals of the new National Energy Program of Turkey.
As a result, during its implementation, Russia will lose almost a third of its share in the local market of blue fuel due to exports from Azerbaijan. This scenario seems gloomy for Moscow for the first glance, but there would be other options in Russia’s agenda.
Turkey’s National Energy Program
In early April, the Ministry of Energy of Turkey, headed by the department of Berat Albayrak, presented the National Energy Program, “not a revolution, but evolution,” the first significant results of which will be achieved within the next 15 years.
He also emphasized that the main goal of the doctrine is to win the title of leading energy hub of the region and “to reduce Turkey’s dependence on foreign resources.”
Although Russia was not mentioned, but it is obvious that it will be one of the main countries which will be negatively affected by the program implementation.
According to the Turkish state monopoly Botas, a state-owned crude oil and natural gas pipelines and trading company in Turkey, the Russian Federation is leading in the gas import scheme of the country with a colossal share of 56%. Next comes Iran (19%), Azerbaijan (9%), Algeria (9%) and Nigeria (7%).
But it seems that Russia’s dominance may come to an end in the foreseeable future.
According to analysts of the authoritative Institute of Energy Economics at the University of Cologne, during the 15 years specified in the Albaiar doctrine, the share of Gazprom in the Turkish market will drop to 38.9% (35.3 billion cubic meters per year).
At the same time, due to the introduction of the TANAP pipeline, Azerbaijan will increase its weight by 34.8% (31.5 billion cubic meters).
European analysts wrote,”Turkey’s total gas imports will grow from 54.1 billion cubic meters in 2017 to 90.5 in 2030.”
This volume takes into account not only the needs of Turkey itself, which will grow to 67.2 billion cubic meters, but also in the EU countries – primarily Greece and Bulgaria.
By 2030, according to experts, Turkey’s share in the EU energy supply will be 6.8%, even though it is now zero.
In comparison with Russia or Norway, this is not enough. But for the gas market of South-Eastern Europe, Turkey’s contribution will be significant in the future.
In addition, Ankara intends to seriously engage in its own production.
The Ministry of Energy of Turkey announced the first-in-its-history purchase of a drilling vessel from Russia which would help Ankara to be the largest “transit sultanate” on the gas map of Europe.
Will Russia Seek “Revenge” through Egypt?
The question is: Will Russia leave Turkey to be fully independent? In fact, analysts of the authoritative research center Turkish Energy Fund (TENVA) wrote in their recent report, Egypt can prevent Turkey from becoming the main hub in the region.
This is primarily because of al-Zohr gas field, one of the world’s largest deposits of blue fuel.
The real situation is attached to the strained relations between the leaders of the two countries- it’s no secret that the Turkish president still refuses to recognize the former military defense minister Abdel-Fattah al-Sisi, who lead a military coup against Egypt’s first democratically elected President Mohamed Morsi in 2013.
According to Italian geological department Eni, which is developing Zohr, an open field of 100 square km can store up to 30 trillion cubic feet of dry gas within.
For comparison, the stocks of the Israeli Leviathan oil advertised by the European press are “only” 14-20 trillion cubic feet.
In this context,Russia made sure to get its hands on a part of that grandiose project and at the end of last year, Rosneft bought about 35% of the concession agreement for the development of Zohr from Eni. Another 15% was purchased by British Petroleum (BP).
According to analysts, cost of the Rosneft stake is about $1.12 billion, while Igor Sechin’s (Head of Rosneft) total investment in the project over four years could reach $4.5 billion.
This is why the Russian energy expansion in the Mediterranean through Egypt is ongoing, according to analysts.
At the beginning of 2017, Rosneft Trading SA (RTSA) and the Egyptian State Gas Company Egyptian Natural Gas Holding Company (EGAS) signed a contract for the supply of ten LNG tankers, with a total volume of 600,000 tons.
As a result of these investments, Russia is becoming an even more significant player in the energy market of the region and this quite significantly would limits the prospects for the growth of Turkish influence as the main gas hub in Europe.
However,an increase in demand for blue fuel in the EU is the only thing that could make the situation more profitable for Ankara, but such scenario depends not only on the dynamics of demand, but also on the policy of Brussels.
Igor Yushkov, a leading expert of the National Energy Security Fund and lecturer at the Finance University under the Government of the Russian Federation,said,”Turkey has plans to create a gas hub, so the Turks want to concentrate as many gas pipelines as possible.”
He added,”It is unprofitable for them if Russia resumes the South Stream project in Bulgaria. Although, for Russia itself, this would be the most attractive route. Further, the EU does not want to fall into additional dependence on transit through Turkey- and Azerbaijani gas is already to go through it. And then Ankara wants to “drag” in the Iranian transit. However, Tehran, as I understand, is not rushing to Europe with its gas pipelines.”
In addition, after the referendum held in Turkey a few days ago, the results of which for Europe were not positive, Turkey can expect to receive a much smaller supporting pack from West Europe. Thus, Russia would try to take advantage of this condition.
In fact, despite the warming of recent months, relations between Moscow and Ankara are far from trusting. Both countries stances differ both in Syria and Crimea. The main problem in the Russia and Turkey scenario is that a wolf is no comrade to a bear.