As Turkey’s relations with the West have been deteriorating, it has been trying to deepen its ties with Russia. Yet Ankara is about to suffer a major setback as the five Caspian littoral states (Russia, Azerbaijan, Iran, Turkmenistan and Kazakhstan) are getting ready to conclude their 27-year dispute.
The 14th article of the Caspian Sea convention that will be signed on Aug. 12 at a summit in Aktau, Kazakhstan, gives littoral states a say on the pipeline that will traverse their territorial waters.
Azerbaijan and Turkmenistan insisted the pipeline should be regulated by countries whose territorial waters are used, but Russia and Iran insisted on approval from all of the five states. Russian and Iran voiced their environmental concerns citing the decline in sturgeon and caviar production in recent years.
The accord that was agreed on in the previous 50 meetings appears to be removing barriers on the energy lines that will start from Turkmenistan and Kazakhstan and reach Europe through Azerbaijan and Turkey.
Ankara was hoping the European Union, which has been trying to reduce energy dependence on Russia, would make Turkey an energy corridor. But the Environmental Impact Assessment Protocol that will be signed as an annex of the convention makes all five littoral states equal partners, thus casting doubts on the strategic calculations of the EU and Turkey.
On July 20, Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan signed the protocol in Moscow. The protocol constitutes the basis of the 2003 Tehran Convention. Countries that stand to be affected by the project will have the opportunity to voice their concerns. They will also be entitled to receive an explanation as to how their concerns were taken into account. If they are unhappy with the outcome, they will have the right to go to international arbitration. This means Russia and Iran could delay the Trans-Caspian Project that will carry Turkmen gas and Kazakh oil to Europe in the following years.
According to Russian newspaper Kommersant, the Caspian pipeline project requires approval by all the littoral states. The newspaper noted that Russia and Iran will be able to delay the construction of the natural gas pipeline from Turkmenistan to Azerbaijan. Turkish experts agree with this assessment.
The status of the Caspian pipeline has been one of the most controversial topics of energy since the collapse of the USSR. The 1921 and 1940 agreements — Russo-Persian Treaty of Friendship — between the USSR and Iran are no longer adequate to meet the needs of the new littoral states. Russia and Iran are the two countries with the least energy resources in the Caspian, and they are not willing to give strategic advantages to others, so they are downgrading the importance of the Trans Caspian pipeline. Meanwhile, the other three littoral states that share the Caspian Sea’s rich natural resources are complaining of ambiguities.
With 17.5 trillion cubic meters in reserve, Turkmenistan is the fourth richest natural gas country in the world after Iran, Russia and Qatar. The Kashagan oil reserve in Kazakhstan has 13 billion barrels, and Kazakhstan extracts 570,000 barrels of oil daily from its Tengiz oil field.
Azerbaijan is experiencing serious problems with Turkmenistan and Iran on the exploration of oil and natural gas sources. Iran, which has 12% of Caspian resources, wants the sea to be divided into five equal shares of 20%, as it was in the Soviet era. Azerbaijan cannot refuse Iran’s demand if it wants to continue to operate in the Araz-Alov-Sharg oil basin. Azerbaijan is also having problems with Turkmenistan at the Serdar/Kapaz oil and gas field and Azeri-Chirag-Guneshli oil fields. Azerbaijan believes that with the new agreement, the joint basin problems will be solved, relations with the littoral neighbors will improve and Azerbaijan’s position as a transit country will be reinforced.
Kazakhstan also has problems with Russia in several fields, but because of their economic cooperation, they opted to stand by Russia during the discussions of the deal.
Russia and Iran’s giving up the condition of getting approval of the five states for the pipelines appears to be an important concession. It is important to know what motivates Russia to take that step back. One reason is the advantage it gained with Iran from the Environmental Impact Assessment Protocol. Another is Russia’s belief that it won’t be possible for Turkmenistan’s gas to reach Europe in the short term. According to current arrangements, two-thirds of Turkmenistan’s gas already goes to Russia. China is the buyer for the remaining one-third. At the moment, Turkmenistan cannot fulfill the amount it pledged to Beijing. The Central Asia-China line must have a 35 billion cubic meter capacity by 2020. Because of its existing commitments and low production capacity, it will be difficult for Turkmenistan to meet the Chinese demand and then pump gas to Europe.
A former senior official of BOTAS, Turkey's state gas importer, said that Russia has opted to reconcile in the Caspian to avoid the objections from the United States and EU to the Northern Stream project that goes to Germany via the Baltic Sea. The source said Russia can also deny access to alternative sources that would diminish the dependence of Russian natural gas.
What is important at this point is how all this will affect Turkey’s plans to be an energy corridor. “This strategy that Iran supports is delivering blows to Turkey’s plans to become a transit route for energy routes from the Caspian and the Middle East. The ‘twin lines,’ which would carry Turkmen gas and Kazakh oil together, was a project that would lower the dependence on Russia and enhance Turkey’s strategic standing,” the source told Al-Monitor, adding, “Now Russia and Iran by making use of the Protocol can delay these projects at least for 10 years. Of course the strategies to be followed will change according to what international agreement the littoral countries are parties to and which international mechanism they rely on to solve their disagreements.”
Turkey’s aspiration to be an energy corridor depends on the Trans Anatolian Natural Gas Pipeline (TANAP) project, which will bring gas from Azerbaijan’s Shah Deniz gas field to Turkey, the Turkish Stream, which was developed as a Russian move against the EU, a possible Israeli natural gas pipeline, Iran and Iraq. TANAP will carry to Europe 10 billion cubic meters to start with and later 25 billion cubic meters.
“When we look 10 years ahead, we see that our Caspian strategy has lost relevance, Iran doesn’t want us to be an energy corridor. We cannot get what want from Iraq,” the former BOTAS official said.
“We were hoping to be the East-West Energy Corridor, and we are confined only to Azerbaijan. Azerbaijan plays a double game. It has become expensive for it to produce gas and its capacity plummeted. They can meet only half of the 31 billion cubic meters of the TANAP capacity. Azerbaijan thinks it will take another 10 years for the Turkmen gas to be delivered, and in the meanwhile, it can find investors for its own fields. At the end, while we were dreaming of being an energy corridor, we became a country with increasing dependence on Russia,” he added.
Isn’t there anything Turkey and the Western camp can do? The official suggests using the US-EU solution plan for the Caspian as a deterrent to give the Russians a message: If you inhibit Turkmen gas and Kazakh oil, we can then impede Northern Stream in the Baltic and Black seas.
Countries that could best remind Russia of the Caspian model could be Ukraine and Denmark. It is interesting to note that despite the improvement of its strategic position, Turkey is choosing to keep silent. This silence could be attributed to Ankara’s reluctance to endanger the Turkish Stream and other important projects. Perhaps the Turkish Stream 1 that was started in 2016 with its underwater part now completed and now in the stage of land construction will not be endangered, but Turkish Stream 2 could be at risk.
If the international atmosphere changes with anti-Russia US-EU pressure, Turkey may find it easier to work together with the Western alliance. Ankara may use the Western pressure to bargain with Russia for joint projects.
Despite all, Russia has always managed to be several steps ahead in the energy war. Following the crisis with Kiev, Russia used the 50 billion cubic meter capacity Northern Stream 1 from the Baltic Sea to Germany to reduce the Russian gas sent via Ukraine by 80%.
With the 55 billion cubic meter Northern Stream 2 entering service, Ukraine will be totally sidelined. The Turkish Stream’s 32 billion cubic meter capacity was developed after Bulgaria withdrew from the South Stream project under EU pressure, and Russia has been able to make the Trans Balkan line from Ukraine and Moldova to Bulgaria idle and thus deny Bulgaria the transit fees it could have earned.