U.S.-EU And Russia: Geopolitical Chess Fever Over Greece And Turkey’s Energy Plans

According to the latest news update from Russian and Turkish sources, these days there is a mobility in terms of launching a series of initiatives both at the diplomatic and technocratic level, in order to reach a final agreement between the Turkish energy company BOTAS & Russia’s Gazprom for the construction of  the Turkish Stream project.

Bear in mind that this pipeline, which will pass through the Black Sea will transport Russian gas to Europe, as it was announced when South Stream was cancelled on December 1, 2014 by President Vladimir Putin during his official visit to Ankara, where both parties signed a Memorandum of Understanding (MoU).

On December 1, 2014, during a visit to Turkey, Russian President Vladimir Putin abruptly announced that Gazprom was cancelling the South Stream pipeline, which would have taken natural gas from Russia through the Black Sea to Bulgaria, and through Serbia, Hungary, and Slovenia to Austria. That same day, BOTAŞ, Turkey’s state-owned pipeline company, and Gazprom signed a memorandum of understanding for the construction of a new offshore gas pipeline named Turkish Stream, which would boast a capacity of 63 billion cubic meters (bcm) per year and would run from Russia, under the Black Sea, and on to the Turkish–Greek border. In the first phase of the project, starting in December 2016, Russia agreed to supply some 16 bcm to Turkey. In the second phase, the remaining 47 bcm would be delivered to the planned hub on the Turkish side of the Turkish–Greek border.

Today, almost a year later, a little progress has been made in terms of project’s implementation since the basic parameters, of this project, still have not determined. What has been decided is that instead of the original plan of construction of four parallel conductors, of which everyone would transfer 15.75 billion cubic meters (BCM ‘s) gas per year,( of the total 63 BCM’ s), it will only be constructed a pipeline through which the Turkish market will be satisfied with its energy needs firstly. Now Turkey imports about 27-28 BCM ‘s , 14-15 BCM’ s via the Blue Stream, which crosses the Black Sea, and the rest through the Trans Balkan Pipeline, which starts from Russia and passing via Ukraine, Moldavia, Romania and Bulgaria, and then leads by its different branches in Turkey and Greece : thats a big route for gas-thirsty Turkey.

In Greece, at the same time, the rise of SYRIZA, a radical left-wing political party, to power in January 2015 added a new imponderable piece to the Eastern Mediterranean geopolitical architecture. The SYRIZA-led government’s perspective on Greece’s real potential in the international arena have turned also out to be naive and unrealistic.

The more the Europeans did not yield to leftist demands for a revision of the bail-out policy towards Greece and a writing-off of latter’s sovereign debt, the more intensely Athens attempted to show the Europeans that it could turn east, playing Russia off against the EU. Thus, it repeatedly denounced the international sanctions against Moscow in the wake of the war in Ukraine as harmful for Europe and counter-productive for EU strategy, security and foreign policy, formulating instead the opinion that Ukraine should be a bridge between the EU and Russia, and not an area of division.

In April 2015, Greek Prime Minister Alexis Tsipras traveled to Moscow. Since he was the first European leader to travel to Moscow following the assassination of Boris Nemtsov, his visit provoked strong criticism from Western analysts that his trip might make him an “useful idiot” for Moscow and Putin, who was isolated at that time (RIAC). The aim of the visit was to confirm a possible multibillion-dollar pipeline deal – the resurrection of the Russian-sponsored South Stream project under the new name, Turkish Stream. Greek officials had negotiated the deal a few weeks earlier with the head of the Russian energy giant Gazprom, ahead of the European Union’s announcement of antitrust charges against Gazprom and the company’s determination to stop gas transit through Ukraine after 2019.

However, last week’s visit of USA’s assistant secretary Victoria Nuland at the Greek Foreign Ministry, sparked scenarios for major American pressures to Greece for abandoning the construction of the pipeline «Turkish Stream», and its ramifications in Greece while promoting also the IGB pipeline project.

She said among other things that:

We also talked about energy security and the TAP pipeline; the spur that we’re talking about going from there up to Bulgaria. We are very bullish, very enthusiastic, about the role that Greece can play in European energy security. We think that there are enormous opportunities here to spur growth throughout Europe and in, Greece as well with these investment opportunities, so we talked about that in some detail.

Two weeks before, Amos Hochstein said there was significant progress regarding the Greek-Bulgarian pipeline and urged the Greek government and TAP to openly discuss pending issues and to find solutions the soonest possible. “The US wants to continue working with Greece for the country΄s energy security but mostly on the role to be played by Greece as a strategic partner in the region.”

Given the fact that Greece had already been chosen for the Trans-Adriatic pipeline (TAP) that is to deliver gas from Azerbaijan to the European market, the Turkish stream deal could have serious political implications. The so-called TransAdriatic pipeline, which beat out competition from Nabucco West project, being developed by Norwegian, Swiss and German companies and hence favoured by the EU, is expected to cross the territory of Greece and Albania and reach across the Adriatic Sea to Italy, carrying 10 billion cubic meters per year to European markets.

Though originally the project had the full backing of the European Commission, due to the resurrection of the Russian-sponsored South Stream project, it did not look as attractive. The possibility of 47 bcm of Russian gas arriving through Turkish Stream to the Greek border looked much more profitable than the 10 bcm of Azeri gas to be pumped through the TAP pipeline.

However, Greece’s European creditors are very negative disposed against the deal. Thus, as has been the case with South Stream pipeline, which was envisioned initially as running through another EU-country Bulgaria, such a deal cannot circumvent EU antitrust legislation. Furthermore, that pipeline, which is meant to carry Russian gas to Europe through Turkey and Greece, would face a variety of political and economic obstacles. Except for the deep routed Greek-Turkish confrontation over Aegean and Cyprus, European countries appear reluctant to join the project as consumers trying to reduce their reliance on Russia. In this event, Greece and Turkey would not be able to use on their own all the gas that Gazprom would eventually plan to send through the pipeline.

From a purely economic standpoint, the best scenario for Greece and maybe for Turkey would be an eventual compromise between the European Commission and Russia’s Gazprom, allowing a mixture of Azeri, maybe a bit of Iranian, and Russian gas into the transportation infrastructure. However, politically motivated objections by the EU and the US make this option unsustainable, whereas some of political implications connected to the deal have already become obvious.

In intepretting Russia’s course towards the countries of the Eastern Mediterranean,according to RIAC, despite some opposite appearances, it seems that all of the countries in the region have been in general of secondary importance for Moscow. Only occasionally have some of them, such as Cyprus in the post-Cold War, acquired a high priority in Russian’s political and economic international relations. These countries play from time to time a important complementary part in Russian aspirations in the region, such as a counterweight to the US or the European Union, but in itself do not possess such value to urge Russia to put at stake its fundamental interests in the West.

Accordingly, the view that a common Christian Orthodox Solidarity exists to motivate Russians, Greeks and Cypriots into common action, or discouraging Turkish elites from joining, appears also very naive. It seems rather that Moscow prefers not to give money to anybody unless it can get something tangible in return—like a large share in Cyprus energy reserves which but have not been exploited yet or in the case of Greece a removal of EU sanctions, something Athens is incapable of doing.

If this appraisal is not valid, then Kremlin’s foreign policy makers and strategists should seriously reconsider the validity of their analyses, because Russia, by refusing to shore up Cyprus and Greece during their recent financial and fiscal crises, has lost a unique opportunity to take on a leading role and seriously threaten for first time Western hegemony in the region.

There is also another interpretation for the Kremlin’s behaviour that accords with the history of Moscow’s intervention in the region. Russia acted in this manner only to gain political benefits from the Greek crisis by trying to exploit rifts and fissures in European unity. Moscow let the Europeans look weak and bad so as to create a Russia friendly country within the EU to be used as a lobbying and communication channel, as was the case during the Cold War.

Bulgaria plays an important role for interconnecting the South- North pipelines

IGB was planned to ensure an alternative supply to Russian natural gas for Bulgaria through a linkup with the Trans Adriatic Pipeline (TAP) that will carry Azeri gas, with the prospect of additional interconnecting pipelines up to Romania and Hungary, and possibly all the way north to the Baltic countries.

Washington has sent its special envoy and coordinator for international energy affairs, Amos Hochstein, to Athens, who met with Greek Energy Minister Panos Skourletis mid-October. After that there was a three-way meeting with the participation of Bulgarian Energy Minister Temenuzhka Petkova.

Hochstein’s visit is deemed preparatory ahead of a formal visit by US Secretary of State John Kerry to Athens in November as has been referred by the greek journal Kathimerini.

The IGB pipeline is high on the US energy diplomacy agenda due to the potential independence it offers to Southeastern European countries from Russian firm Gazprom’s gas. Through its connection with TAP, IGB will link the Greek town of Komotini with Bulgarian city Stara Zagora. First Bulgaria, then Romania and Hungary, and later on the Baltic states will be able to receive gas from Azerbaijan and from other sources in the Caspian Sea, not only from the gas coming via TAP through Greece, but also from the Greek network that could supply those countries with the liquefied natural gas (LNG) stored at Revythousa. This is why the IGB project has been included among the European Union priorities and resources of 45 million euros have been set aside for its funding.

The start of the project’s construction depends on the decision that managing company ICGB will make, though this was postponed in May without a new date being set. The Greek side cited technical details for the postponement, but this coincided with the visit of Skourletis’s predecessor, Panayiotis Lafazanis, to Moscow.

The installation of a liquefied natural gas (LNG) terminal at Alexandroupoli and the Greece-Bulgaria gas interconnecting pipeline (IGB) being promoted by the US, and the Greek-Turkish pipeline being pushed by Moscow require significant contracted quantities for the sale of natural gas to render their construction financially sustainable. This problem has not yet been solved, though these projects would indeed make Greece a European junction in the transmission of LNG.

IGB’s advantages

The great advantage of the IGB’s pipeline project is that through facilities in Greece it  will be able to accept LNG (liquefied natural gas) from major producers such as Qatar (a country already in advanced talks with Sofia), or in an emergency even from USA where gas is cheaper.

Moreover, it could accept natural gas from Israeli, Cypriot and Egyptian deposits, a development that will shape a new energy network, political, economic and strategic cooperation in the Eastern Mediterranean.   This will provide an opportunity for East Europe’s independency  not only from Gazprom’s monopoly, but also of the pipelines which pass only through Turkey.

The IGB, the Gas Interconnector Greece – Bulgaria has a budget of 100 million of euros and the EU has already approved a 45 million funding. It has a length of 180 km. It has a capacity to transport  3 bcm (billion cubic meters) of natural gas with a view to increase up to 5 bcm.   It starts from Komotini and will end in Stara Zagora, forming part of the infrastructure of the Southern Corridor (of the European project and not of the  Russian one) that will transport natural gas from the Caspian to Europe.

The Nord Stream Vs Turkish Stream : The European paradox 

The 21st of October, the Greek Foreign Minister Kotzias and Bulgarian Foreign Minister Daniel Mitov, following their meeting in Athens made joint statements. 

Mr. Kotzias noted that he has already told the USA officials that the Greek government will not prohibit the the Russian gas pipelines when these will Greece’s borders ,which, of course, presupposes a mutual understanding between Russia and Turkey  He made a point  against the West regarding the Nord Stream  which brings Russian gas to Germany:

“I never lose an opportunity to express my query” my: Is the Russian gas that causes problem? After all this will pass through the Europe’s north from now on. Or it was just the fact that this gas would be exploited by other countries? 

The world is changing. And energy sources are changing. The U.S. has the cheapest natural gas, the Eastern Mediterranean is bringing new gas, we see that a vast reserve was found in Egypt, Kurdistan and Iraq are entering the game. The end of the embargo on Iran will also bring natural gas from there. And this gas can pass through our countries, and that would be good.

It will bring prices down, it will increase our energy security and competitiveness, and this is why Greek-Bulgarian cooperation is fundamental and strategic.

Russia & Turkey bilateral relations key figures

• Russia and Turkey are at odds over Crimea, the Armenian genocide, and Syria.
• In fact, relations have recently deteriorated over the Russian intervention in Syria, with Turkish President Recep Tayyip Erdogan warning that Turkey could reevaluate its cooperation with the Kremlin on a number of key energy projects.
• Cooperation between Turkey and Russia in the energy field has been notable: Russia supplies two-thirds of Turkey’s natural gas. In 2010, Turkey brokered a deal with the state-controlled Russian company AtomStroyExport for the construction of Turkey’s first nuclear power plant, a project worth $20 billion. 
• Russia made Turkey a major transit corridor along its new gas supply route to Europe that circumvents Ukraine.
• Ankara is disproportionately (up to 65 percent and rising) dependent on Russian gas. And its consumption is growing, reaching 51.8 bcm  in 2014.
• Regarding the Turkish Stream, Putin talked about creating a trading point on the Turkish-Greek border, or, in other words, a Russian hub on Turkey’s soil that BOTAŞ would not own that causes maybe a problem.

Ronis Sofroniou is the author of Eyes on Europe & the Middle East and  was born in Limassol, Cyprus, and studied Human Resources Management and French Language at Montpellier 3 University (2007) and granted with a Master’s degree in Oil and Gas Management from Abertay Dundee University in 2014. He worked at the Cypriot Embassy in Paris in 2009 and just after as a B2B salesman person in the smartphones market for some years. Currently he curries out a research study about Forex Companies Scams and Frauds in Cyprus. He lives between France and Cyprus where he works as an interpreter  and French teacher.