Why Has Russia Amended its Proposal to Establish a Russian Natural Gas Center in Turkey? – The Arab Wall
Why Has Russia Amended its Proposal to Establish a Russian Natural Gas Center in Turkey?

Why Has Russia Amended its Proposal to Establish a Russian Natural Gas Center in Turkey?

Russia’s proposal to establish a Russian gas center on Turkish soil has encountered various obstacles that hinder its execution. Hence, Russia has taken steps to amend its proposal where Turkey would serve as an electronic platform for gas trading. This amendment is driven by Turkey’s geographical location in an active seismic zone, which poses challenges in the establishment of a natural gas center and its accompanying infrastructure. Added to this is the recent strain in relations between Turkey and Russia, as a result of Turkish actions that conflict with Russian strategic interests.

Russian President Vladimir Putin announced on July 29, 2023 that the inclusion of a gas center in Turkey remains a priority. He clarified that this center would not consist of extensive gas storage facilities within Turkish territory, but rather an e-commerce platform designed to facilitate commercial transactions. Putin also emphasized that the Turkish government is fully aware of this proposal.

It is important to highlight that the Russian proposition, suggesting Turkey as an electronic platform for gas trading, represents an amendment to the previous proposal. Initially, Putin had suggested the establishment of a physical center for storing and exporting Russian gas to Europe during the “Russian Energy Week” forum on October 12, 2022. At that time, Putin had emphasized that this center would become the largest gas supply hub for Europe, situated in Turkey. On October 13, 2022, a discussion took place between Putin, the President of Russia, and Recep Tayyip Erdogan, the President of Turkey, regarding the potential establishment of a gas center on Turkish territory for the purpose of exporting to various countries, particularly in Europe. Following his meeting with Putin, Erdogan expressed the possibility of constructing the gas center in Thrace, a region located in northwestern Turkey near Bulgaria, with the aim of transforming it into an international distribution hub. This proposal is further supported by the presence of a national gas distribution center in the same region (refer to Figure 1). Subsequently, on October 19, 2022, Erdogan announced that he had reached an agreement with his Russian counterpart to establish a natural gas center in Turkey, with the European part of the country being identified as the most suitable location for its establishment.

Figure No. (1): Turkey’s natural gas supply network


(Source: Energy Systems Journal, Springer, July 2020)

The recent proposition by Russia to sell its natural gas to European nations via Turkey does not imply that the physical storage and distribution of natural gas will occur through Turkey. This is primarily due to the various challenges encountered in the initial proposal for Turkey to serve as a hub for storing and distributing Russian natural gas. The major obstacles can be summarized as follows:

1- Turkey’s Location in a seismic belt: Turkey’s geographical location places it within an active seismic belt known as the “Alpide Belt” situated in the southern part of the Eurasia region. This region is recognized as the second most seismically active area globally, accounting for approximately 17% of the world’s largest earthquakes. The recent occurrence of two significant earthquakes, measuring 7.8 and 7.6 on the Richter scale, on February 6, 2023, further highlights Turkey’s exposure to seismic hazards.

Considering Turkey’s susceptibility to earthquakes, the establishment of facilities for the storage and distribution of Russian gas within its territory becomes a matter of concern. The seismic activity in the region poses a significant threat to these infrastructural developments, thereby undermining their economic and commercial viability. The potential occurrence of earthquakes increases the risk of gas leakage, which not only compromises the integrity of the facilities but also poses a potential environmental crisis.

Figure 2: The affected area of the Alpide seismic belt


(Source: Earth Science Informatics, Springer Nature, September 2020)

On the contrary, the storage of Russian gas in Turkey for utilization in Turkish factories is susceptible to inefficiencies, a concern that has been exacerbated by the disruption of gas supplies to over 10 provinces following the earthquake in February 2023. The seismic event also had a detrimental impact on the “Kilis” natural gas pipeline. Moreover, the earthquake affected 10 cities, housing approximately 150 significant industrial facilities, with the highest concentration found in Gaziantep, many of which are esteemed industrial entities in Turkey. It is worth noting that JP Morgan has projected that the direct damage caused by the earthquake to Turkish facilities could potentially amount to 2.5% of the country’s GDP growth, equivalent to $25 billion. Based on these statistics, the pricing of Russian gas within the gas storage center is expected to be considerably lower when attempting to market it to other nations.

2- The exorbitant cost associated with the establishment of a natural gas center: The financial burden of this endeavor may surpass the financial capabilities of Russia and Turkey, particularly considering the economic downturn experienced by both regions. Moreover, the construction process itself is expected to span several years, further compounding the financial strain. Additionally, the creation of new pipelines to facilitate the transportation of gas supplies from Thrace to Bulgaria and subsequently to Europe poses another obstacle. This is particularly noteworthy as Greece has recently launched a new gas pipeline in collaboration with Bulgaria, aimed at supplying the latter with American liquefied natural gas since July 2022. Consequently, this development intensifies the competition faced by the proposed pipeline. Furthermore, an agreement was signed between Turkey and Bulgaria in January 2023, wherein Bulgaria, represented by the state-owned Bulgarian Gas, commits to importing approximately 1.5 billion cubic meters of gas annually for a duration of 13 years from Turkish export terminals and facilities. This agreement further diminishes the viability of establishing a pipeline between the two countries.

Turkey expressed its desire for the participation of global partners to secure the essential financial resources for the construction of a gas center within its borders. This was evident through the appeal made by former Turkish Foreign Minister Mevlut Cavusoglu to Qatar, urging their support for the Russian proposition to establish a gas center in Turkey. The minister conveyed this message during a joint conference with his Qatari counterpart, Mohammed bin Abdul Rahman Al Thani, on October 14, 2022. This significant event took place on the sidelines of the eighth meeting of the Turkish-Qatari Supreme Strategic Committee. However, Doha did not respond to this, particularly because it directly competes with Qatari exports of liquefied gas to Europe. This was evident from the predictions made by the “Standards & Poor’s” agency in their report released in March 2022. The report suggested that Qatari gas could potentially replace 13% of Russian gas imports to the European Union and the United Kingdom, which is equivalent to approximately 21 billion cubic meters. It is important to note that Qatar has an annual production capacity of liquefied gas of around 106 billion cubic meters. Furthermore, considering Qatar’s plan to increase production in the upcoming years, it is likely that Qatari gas exports to Europe will also increase.

However, the reliable and continuous supply of Russian gas to the European Union and Britain cannot be assured. Consequently, it is economically disadvantageous to involve Qatar or any other international partners in financing the establishment of a gas center in Turkey. This is due to the prevailing political dynamics between Russia and the Western bloc, particularly considering the existence of a European initiative, supported by the United States of America, aimed at reducing reliance on Russian gas even prior to the commencement of the Russian conflict. This retreat is evident in the declining situation in Ukraine, as depicted in the subsequent figure.

3- Instability in Russian-Turkish relations: The recent period witnessed tension between Russia and Turkey, due to the following:

  1. The Ukrainian President, Volodymyr Zelensky, was welcomed by the Turkish President in July 2023, during which Erdogan affirmed that Ukraine is deserving of a NATO membership. Furthermore, Turkey permitted the return of the leaders of the Ukrainian “Azov” battalion to their home country. This action drew the ire of Russia due to the existence of a prisoner exchange agreement between Russia and Ukraine, mediated by Turkey, that stipulated these leaders should remain in Turkey till the end of the war. Consequently, Russia lodged a protest, alleging a violation of the agreement.
  2. Signs of progress in the diplomatic ties between the United States and Turkey have emerged, leading to a more accommodating stance regarding Turkey’s procurement of US “F-16” aircraft. This positive development was officially acknowledged by US National Security Adviser Jake Sullivan on July 11, 2023, affirming his country’s endorsement of supplying “F-16” planes to Turkey in consultation with Congress. Concurrently, Sullivan emphasized the United States’ support for Turkey’s potential membership in the European Union.
  3. The preceding developments have led Russia to assert that Turkey is an unreliable partner and that Turkey’s primary interests may clash with its Russian counterpart. Consequently, Turkey’s aspiration to become a major conduit for the export of Russian gas to Europe will be hindered by its interests that are not aligned with Russia. This is particularly evident given the growing prospects for Turkey’s rapprochement with the EU prompting Russian decision-makers to retract their plans to establishing a gas center on Russian territory. Instead, they have opted to confine themselves to the role of an electronic platform for trading Russian gas. This shift undermines Turkey’s strategic objective of becoming a global hub for the trade and distribution of natural gas.

The Contradicting Turkish Position Towards Russia

Turkey’s endeavor to enhance its involvement in addressing global energy security challenges, while bolstering its strategic influence in the international arena, has diverged from Russia’s inclinations in this domain. The growing alignment between Turkey and the Western bloc has posed a predicament for Russia, leading Russia to decide against renewing the agreement. The proposal to establish a gas center on Turkish territory has been significantly diluted, suggesting that the current contradiction in Turkish and Russian policies could hinder their efforts to enhance their presence in the global gas market. In order to maintain a minimum level of relations with Russia, Turkey must react by ensuring the continuity of their partnership until normalcy is restored. This can be achieved by reaching a consensus on future energy projects, including plans for Turkey to become a pivotal hub in the distribution of Russian gas. By doing so, Turkey can secure a significant role in global energy security through the implementation of potential future mechanisms.