Valdai Club

The big Turkish Stream, which at the beginning of December 2014 replaced the South Stream, has already lost its relevance. Nevertheless, the issue of a regional gas pipeline through the Black Sea is still on the agenda.

President Erdogan's letter to Vladimir Putin and subsequent telephone call by the Russian leader to his Turkish counterpart allowed to normalize relations between two countries, frozen after the tragedy in Syrian sky. But the melting ice does not mean a quick return to the strategic partnership, which happened before the escalation of differences on the Syrian issue.

Ironically, in the area of energy cooperation the parties in fact continued to conduct "business as usual". Russia did not exploit the so-called Turkish gas dependence, on what it is often suspected or even accused by some politicians in the West. About 50% of gas supplies to Turkey are provided by Russia, which is almost in 1.5 times more than the Gazprom's share in the EU market. But gas supplies were in accordance with the contracts, despite the political "divorce" and sanctions that followed it. Erdogan's loud statements about his intent to take gas from other sources did not have any consequences in real life.

Of course, in those circumstances it would be pointless to talk about new investments in infrastructure development, so the Turkish Stream project was not formalized in written form, and was later set aside.

There are several factors, that do not promise a quick revival of the project, although the resumption of negotiations is very likely. The big Turkish Stream, which at the beginning of December 2014 replaced the South Stream, has already lost its relevance. Both projects presumed the construction of four strings of the pipeline under the Black Sea to supply gas not only to Turkey, Bulgaria, Greece and Macedonia, which currently receive Russian gas through Ukraine and the Trans-Balkan pipeline, but also to Serbia, Hungary, Slovenia, Austria and Northern Italy. The final point of the pipeline was supposed to be the Austrian Baumgarten hub. South Stream was stopped by Bulgaria, which could not withstand the political pressure from Brussels and Washington. At the same time the big Turkish Stream did not cause much enthusiasm among European companies, which offered to Gazprom an alternative - two new Nord Stream strings. It must satisfy the basic needs of North-Western Europe in the additional gas and simultaneously provide liquidity of the Austrian hub. The process was already launched in spring of 2015, and in September - a couple of months before the Russian bomber incident – the shareholders signed agreement on the North Stream-2 project.

The big Black Sea pipeline has lost its strategic importance, and Turkey has lost the opportunity to become a new Russian gas mega-transiter to Europe. Nevertheless, the issue of a regional gas pipeline through the Black Sea is still on the agenda. The question is whether potential customers are ready to guarantee its implementation. Turkey and Bulgaria can still compete for the right to get the pipe. Implementation of the Turkish Stream will mean for Sofia transit losses to Turkey and Greece, and thus depriving it hundreds of millions of euros of transit payments. On the other hand, for the return to a smaller South Stream the Bulgarian authorities will need to get political approval from Brussels and Washington. Moreover, Turkey or any other major market, such as the South Italy, will have to confirm the intention to buy gas on a long term basis.

Ankara's dreams of diversification and transformation into a major transit hub from the Caspian sea and the Middle East to Europe may collide with absence of such assurances. To get them in the present circumstances would be extremely uneasy. But to be one on one with promising alternative suppliers, should it be Israel, with whom Erdogan reconciled simultaneously with letter to the Kremlin, or Azerbaijan and Iran, apparently is not so comfortable for Turkey.