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Iran Cuts Off Gas to Turkey, Russia Increases Exports

Media is reporting that Turkey has been cut off without much warning from natural gas supplies from Iran, the country’s second largest supplier after Russia. According to BOTAS, Turkey’s state-run pipeline operator, the country imports 20-22 million cubic meters of natural gas from Iran per day. botas_map.jpg Turkey is a critical transit country for European energy security Iranian Oil Minister Kazem Vaziri Hamaneh cited increased domestic shortages as the reason for the cut off, and said that once the new Parsian Refinery was online (which will receive 30.5 million cubic meters of gas per day from Homa and Shanol fields), gas exports to Turkey could resume in as soon as 10 days. In the meantime, Russia has already stepped up its exports to temporarily seize this market share. Sergei Kupriyanov of Gazprom has told Interfax that “For several days Gazprom has been delivering gas on a greater scale to Turkey – 20 million cubic meters a day in addition to the regular 63 million cubic meters.” Turkey is a critical transit country to supply natural gas to high demand markets in Europe and beyond, and there are urgent calls for both the US and the EU to develop stronger Black Sea energy strategies. Key projects involving Turkey such as the Nabucco gas pipeline are seen as the primary alternatives to avoid dependence on Russian exports and raise competition. However as Turkey receives continued insults from the EU during the enlargement negotiations and cultivates an ever-worsening image of the United States, the likelihood of a closer relationship with Moscow increases, argues Richard Weitz of the Hudson Institute:

In contrast to Turkey’s worsening relations with Europe and America, ties between Ankara and Moscow have noticeably strengthened in recent years. Bilateral commerce and investment have soared due to Russia’s role as Turkey’s major energy supplier, the millions of Russian tourists who visit Turkey, and the extensive involvement of Turkish contractors in several sectors of the Russian economy, especially construction. With an annual volume of $15 billion, Russia has become Turkey’s second-largest trading partner, ranking behind only the EU. Russia currently supplies well over half of Turkey’s natural gas and one fifth of its oil. Since February 2003, the two countries have been using a direct $3 billion “Blue Stream” dual pipeline, which runs under the Black Sea, to deliver oil. In November 2005, Russian President Vladimir Putin announced that Russia and Turkey would explore extending Blue Stream to Greece, Italy, Israel, and possibly other countries. The Russian energy company Gazprom has begun exploring with Turkish officials and firms the possibility of constructing large underground gas storage sites in Turkey and a liquefied natural gas export terminal at the port of Ceyhan, which already receives oil deliveries by pipeline from Iraq. While frictions have arisen between Turkey and Russia over which country should assume the lead role in supplying Central Asian gas to European importers, both countries have overlapping interests in expanding this market. For instance, the creation of a “South European Gas Ring” would enable Russia to deliver gas to Europe without having to traverse Ukrainian territory, reducing the chances of a repeat of last January’s EU-Russia energy crisis. It would also benefit Turkey by providing millions of dollars in transit fees, reducing tanker traffic through the congested Bosphorus Straits, and helping to transform the country from a conduit to an energy hub for the entire eastern Mediterranean.