The Turkish back door for Russian gas into Europe
A simple loophole risks undermining progress in diversifying away from Russia
Since the start of Russia’s war against Ukraine, Europe has been cutting its imports of Russian natural gas. While not progressing nearly as fast as it should, there has been a substantial cut from around 40% of the EU’s total imports to around 15%.
Yet a back door into Europe has been created that risks undermining this progress by allowing Russian gas to come in unnoticed.
Over the last couple years, gas flows from East to West have been drying up. First, Nord Stream 2 was put on indefinite hold. Then flows through the Yamal Pipeline to Poland were cut off. Nord Stream 1 followed shortly after.
The Ukraine transit route is still operational, although the level of gas flows is lower than before the war. In addition, the agreement that governs that transit expires at the end of this year. Ukrainian officials have made it clear they have no intention of negotiating a new agreement or extension, meaning that further disruption to East-West gas flows is possible.
As the traditional avenues of Europe-Russia gas trade dry up, countries are reorienting from an East-West logic to a North-South structure. For countries like Poland or Germany, this means looking to Norwegian pipeline gas and to international LNG coming into ports in the North and Baltic Seas.
For many others in Central and Eastern Europe, it makes more sense to focus on ports in the Mediterranean, bringing in LNG from there. This is what is driving the creation of the Vertical Gas Corridor – a plan to fully link up Greece, Bulgaria, Romania, Hungary, Slovakia, Moldova and Ukraine, building on existing infrastructure connecting these countries. The improvements would add new links where needed and expand the capacity of some existing connections. This would allow for greater volumes of LNG and Azeri pipeline gas to flow from southern parts of Europe, northwards to more central areas.
Russia too has its stake in this emerging centre of European gas imports. While the East-West flows have been shrinking, gas flows through the ‘TurkStream’ pipeline have been going up. This route takes gas from Russia, down to Turkey and then back into southern Europe through Bulgaria. Bulgaria itself no longer takes this gas as it refused to pay in roubles but the fuel does continue onwards to Serbia and Hungary, who were less resistant to Gazprom’s demands.
However, TurkStream is not the back door to Europe that we should be worrying about. While we should be pressuring those countries that are supplied from this pipeline to cut their consumption, the situation here is at least transparent. Everyone can see that this is Russian gas, coming from Russia and appropriately labelled as such. Everyone is then free to act on this information as they feel appropriate.
No, the real issue is that gas that is supposedly coming from Turkey itself.
Turkey does not produce much gas of its own but it does have very good infrastructure for bringing in gas from elsewhere. Combined with its geographically strategic location, this allows the country to act as an international gas hub. It brings in significant amounts of gas from Iran, Azerbaijan, the US and Algeria. It also gets a lot from Russia.
If the gas were separately labelled and tracked, that might be okay. But that is what happens. Gas is brought in and mixed and distributed in ways that are opaque and difficult to follow. When gas comes from a Turkish pipeline into Bulgaria, knowing its true origin is impossible.
That doesn’t mean we can’t make an educated guess. The sad reality is that countries and companies in Europe are still often just looking for the cheapest gas. And who can supply the cheapest gas? Russia’s large reserves and the lower cost of transporting gas by pipeline (rather than shipping as LNG) are the reason Moscow came to dominate the European gas market in the first place. Europe has turned to other sources as a matter of necessity but there’s little doubt that Russian gas is more competitive than the alternatives.
So when we see particularly cheap gas arriving in Southeastern Europe, there’s every chance this is Russian gas.
This then is the back door: Russian gas being laundered through Turkey and then sold on into Europe as an unidentifiable but temptingly cheap gas mix.
In this context, the spate of deals Turkey has been signing with European countries looks anything but benign. Last January, Turkey finalised an agreement with Bulgaria on long-term gas supply. In August, it did the same with Hungary and in September with Romania. At the start of this month, Turkey made the first deliveries to Hungary, marking the first time it has exported gas to a country that isn’t an immediate neighbour.
The danger is obvious. On paper, Russian gas imports may end up falling and even reaching levels that should be inconsequential (there’s only so much gas Hungary can buy), while in reality that very same gas may be smuggled into Europe under a different name. We would pat ourselves on the back for an achievement that is little more than an illusion.
Europe’s energy trade with Russia has long represented an essential source of funding for Putin’s regime in Moscow. It keeps the oligarchs happy and rich, subsidises basic good for the poor and, right now, is paying for missiles and artillery to be fired at Ukrainian cities daily. Any strategy to support Ukraine and prevent a Russian victory must contend with that energy trade.
EU sanctions on Russian gas unfortunately remain highly unlikely but countries can still diversify their gas supplies and be held accountable if they choose to cosy up to Moscow. That process will be worthless if countries start importing large volumes of Russian gas via the back door. At a minimum, the EU needs to demand that Turkey separate out Russian gas from other supplies and makes sure it can be tracked if it comes into Europe. Otherwise, Europe’s leaders will be played for fools as Putin continues to get rich.