By the Blouin News Business staff

Will Syria tensions thwart Russia-Turkey gas pipeline?

by in Middle East.

Chairman of the Board of Gazprom Alexey Miller (R) is seen during examination with 4-hour helicopter tour with Turkey's Energy Minister Taner Yildiz (L) on possible course of Turkish Stream pipeline in Istanbul, Turkey on February 08, 2015. Getty Images

Turkey’s Energy Minister Taner Yildiz (L) and Gazprom CEO Aleksei Miller (R) examine a route for Turkish Stream. Getty Images

Turkey and Russia may be squabbling over Syria, but geopolitical tensions are not preventing them from getting down to business. On Wednesday Aleksei Miller, CEO of Russia’s state-owned gas company Gazprom, said that he is working on an intergovernmental agreement with Turkey for the completion of the Turkish Stream project. This mega-pipeline will supply Russian natural gas to Turkey and then continue to a hub on the Turkish-Greek border, where it could potentially extend to southern Europe (if Athens allows it). Miller added that he doesn’t expect Ankara’s anger at Russian jet incursions from Syria into Turkish airspace over the past week to derail this agreement.

Turkey has sought to defend its sovereign airspace while not jeopardizing its extensive economic ties to Russia. (In 2014 Turkey’s exports to Russia totaled $5.9 billion while its imports were $25 billion, making Russia the seventh biggest export partner and the largest import partner for Turkey.) So far Ankara has avoided overreacting, but its restraint may not last. “Russia is a friend but if the repeated incursions continue, we will perceive it as a threat and not as friendly behavior,” said Omer Celik, a spokesman for Turkey’s ruling AKP party. “If Russia loses a friend like Turkey with whom it has a lot of co-operation it is going to lose a lot of things. It needs to know this,” said President Recep Tayyip Erdogan. He has previously stated that any “attack on Turkey means an attack on NATO.”

In mid-September the Turkish Stream pipeline was delayed yet again, with long lapses in intergovernmental communication over the project to blame. “Due to the fact that the installation did not begin as planned, we are no longer speaking of December 2016” for the launch, said Gazprom deputy chairman Alexander Medvedev. And the pipeline still faces major uncertainty, particularly in light of Turkey’s upcoming elections on November 1. The agreement won’t be ready before this December, meaning it will need to be signed with the next Turkish government (which may or may not have the same officials as the current one, given Turkey’s parliamentary democratic system and the weakening of national support for the ruling AKP party.)

So even though Gazprom denies that Turkish politics have any influence on the decision, Russia is already distancing itself from overdependence on Turkish Stream. (This lesson was driven home after Russia canceled the proposed South Stream pipeline into Eastern Europe last year out of frustration from international negotiations.) Miller announced on Tuesday that the capacity of Turkish Stream will only be 32 billion cubic meters instead of 63 billion as originally planned. (This will allow Russia to send more gas directly to Western Europe via the proposed Nord Stream II pipeline, if an agreement can be reached despite the controversy surrounding it.) “We hope that negotiations on the intergovernmental agreement on the Turkish Stream’s construction across the Black Sea will advance to a substantive phase in the near future,” Miller summed up on Wednesday.

Ultimately, the pipeline would be strategic for both countries. Russia is still facing painful Western sanctions over Ukraine, and Turkey imports 95% of its energy from abroad, including 55% of its natural gas consumption and 30% of its oil needs from Russia. An acrimonious breakup of the Turkish Stream project would have a far worse impact than any Russian incursions into Turkish airspace.