Putin's Visit To Turkey (II)

Russian President Vladimir Putin's visit to Turkey on Dec. 1 may become a game changer if the surprise decision to pull the plug on the South Stream pipeline that he announced during this visit comes to fruition. I will discuss in this article the implications of this decision, other than those that I discussed in my previous article of Dec. 10.
Putin's decision to cancel the South Stream gas pipeline project is more than an economic decision. At the beginning it looked like a technical problem: The Russian state-controlled company Gazprom was not allowing third-party gas producers to use its pipeline. On the other hand, EU legislation banned gas suppliers from owning transit facilities, such as pipelines. Therefore, on May 1, 2014, the Russian Federation filed a complaint with the World Trade Organization (WTO) against the EU claiming that the EU regulations were inconsistent with legitimate subsidies recognized by the WTO.
Putin's surprise statement seems to have put an end to this dispute, since he said that the new gas pipeline will now be redirected to Turkey. EU countries may have expected that Putin would not go as far as cancelling the entire project, but rather would find a way to comply with the EU rules.
However an impasse still lies ahead: Turkey is a candidate for EU membership and has the obligation to harmonize its legislation with the EU, including legislation related to the liberalization of the energy market. When this harmonization is carried out, Gazprom will again be faced with similar restrictions stemming from the Turkish legislation.
The Russian mentality, inherited from the tsarist and communist eras, may find it difficult to understand why the freedom of action of a state-controlled giant company is restricted for a trivial reason such as the liberalization of the energy market.
The consequences of this important decision will unfold as time goes by: The cancelled South Stream project would have had the capacity to carry 63 billion cubic meters of gas per year. This is more than the entire yearly consumption of Turkey at present. Therefore, Turkey will probably buy only part of it. This will increase Turkey's already very high (58 percent) dependence on Russian gas and the interdependence between Turkey and the Russian Federation. Increased interdependence is not necessarily a negative factor. On the contrary, if it is not misused, it may contribute to stability in relations between the states.
Another project, the Trans Anatolian Natural Gas Pipeline Project (TANAP), in which Turkey's pipeline giant Botaş is a shareholder, will also be affected by Putin's decision. In fact, TANAP was designed to carry, at the initial stage, 16 billion cubic meters (bcm) of gas per year from 2018 onward. It was also agreed to increase the volume to be transported to 23 bcm in 2023 and to 31 billion in 2026. Therefore, Putin's decision will affect the extension of the TANAP project after 2018. We do not know how Azerbaijan will react to this new situation.
With Putin's decision, Turkey will be moving from an acute shortage of sources of energy to a surplus on an unexpected scale. This change will enable Turkey to have relatively free hands to negotiate better terms with countries such as Iran, Iraq, Israel and the Greek Cypriots that are interested in using Turkey's territory for exporting their gas to European markets.
Putin's decision will unavoidably affect the EU's future energy plans. The 63 bcm of gas that was expected from the South Stream corresponds to more than 15 percent of the EU's present gas consumption. This quantity has to be found elsewhere now that the Russian source seems to be closed.
Putin's decision will have an impact on EU-Russia relations, as well. Gas is a commercial commodity after all, but an interruption in its supply may cause serious domestic and external political problems.
In light of all these considerations, the first question that has to be asked is whether the Russian Federation will be able to prioritize this project at a time of dwindling oil and gas prices and economic sanctions that Western countries are imposing on Russia.

YAŞAR YAKIŞ (Cihan/Today's Zaman)