Will Turkey become the next big energy exporter?

Amidst the ongoing Ukraine crisis and unrest in the Middle East, Turkey is attempting to pursue its long desired goal of becoming a more prevalent energy distributor in the international market. Turkey is advantageously located between the countries of the energy-rich Caspian Sea region and the Middle East, and Europe, a huge buyer of resources from those areas. For years both the European Union and Turkey have been dependent on oil and gas exported from Russia, but the crisis in Ukraine and Western sanctions against Russia may provide Turkey an opening to assert itself in the energy market. In June of this year, a 50-year energy partnership was announced between Turkey and Iraqi Kurdistan. This agreement was prompted by the acquisition of the oil-rich city of Kirkuk by Kurdish forces in the same month, as well as the large gas and oil fields already possessed by the Kurdish Regional Government (KRG). This agreement is accompanied by the new oil pipeline built by the KRG running from the Khurmala oilfield to the Turkish border. The KRG hopes that the average output will start at 400,000 barrels a day and go as high as 2 million barrels a day by 2019. Iraq currently ranks fifth in the world in oil reserves, with Kurdistan (which encompasses less than a 10th of Iraq) holding 45 billion barrels. It is possible that internal Iraqi conflicts will hinder Turkey’s plans. Baghdad has warned Ankara and the KRG that there will be legal ramifications if they try to sell oil without the permission of the Iraqi central government. This threat is backed with the support of both the United States and Europe, however as Baghdad struggles to combat Sunni extremists, the potency of its warning is coming into question. Turkish leaders themselves were afraid that aligning their country with the independence-seeking Kurds in Iraq might incite the Kurdish minority in Turkey. Nonetheless, the Turkish government has assented to sell the Kurdish oil without the consent of Baghdad. It seems that the energy deal is strategically more important to Ankara, and it may turn out to be one of the biggest success of Turkish foreign policy. How does Russia feel about these developments? Unsurprisingly, it is unenthusiastic. Surprisingly, its policy coincides with that of the United States. Neither power wants to see Iraq broken up, and the KRG’s growing ties with Turkey may eventually lead to Kurdistan’s independence from Iraq. The United States’ position may change, as it has need of Turkey to approve shipments of liquid natural gas to Ukraine. Russia, on the other hand, is unlikely to waver, as it is suffering losses on all sides due to the Ukraine crisis and the resulting sanctions from the United States and Europe. These events have hindered Russia’s attempts to reassert itself in Central Asia, whose countries have been trying to lessen their dependence on Russia since the breakup of the Soviet Union in 1991. Three Russian energy giants – Gazprom, Rosneft, and InterRAO – have been pursuing investments in the region for political reasons, but due to the growing conflict in Ukraine, the projects have become very uncertain. One such project was Rosneft’s attempted acquisition of the Manas International Airport network in Kyrgyzstan. The state-owned oil firm signed a memorandum in February under which it would pay $350 million to acquire 51 percent ownership of the airport and then $650 million more to turn the airport into a regional logistics hub. The deal started to come apart in April, and by May, Chinese company Beijing Urban Construction Group came into the picture and gave the $1 billion originally promised by Rosneft. This is not the only instance of China’s spending on projects in Central Asia. The superpower has been putting billions of dollars into regional gas pipelines and reshaping the geopolitical status of Central Asia, taking control away from Russia. The Ukraine crisis has been a huge blow to Russia’s energy sector, and countries like China and Turkey are using this opening to make their move. The Turkish government does not wish to suffer Russia’s wrath, however, and still desires energy cooperation where possible. Earlier this month, the Turkish Ministry of the Environment gave its approval for the construction of Russia’s South Stream gas pipeline. This pipeline will run through the Turkish waters in the Black Sea to Europe. In light of this, as well as Russia’s growing list of other problems, it seems unlikely that Russia will act against Turkey in any way. Whether or not Turkey will achieve its dream of becoming a regional energy hub remains to be seen, but it is clear that the energy market is rapidly changing in the face of Russia’s struggles.