 |
| Turkish President Erdogan, left, and Ukrainian President Poroshenko at the summit in Ankara last week. (PA) |
Turkish President Erdogan, left, and Ukrainian President Poroshenko at the summit in Ankara last week. (PA) Turkish President Erdogan, left, and Ukrainian President Poroshenko at the summit in Ankara last week. (PA)
Turkey and Ukraine signalled a closer alliance on energy last week, but analysts say market realities are likely to restrict short-term cooperation when it comes to gas.
The leaders of the two countries took part in a bilateral summit in the Turkish capital late last week. One key suggestion from Ukraine’s President Petro Poroshenko was for Turkey to use his country’s gas storage facilities as a means of boosting national supply security.
"Poroshenko and [Turkish Prime Minister Ahmet] Davutoglu agreed to establish closer cooperation on issues relating to joint participation in developing energy infrastructure and international energy corridors," Ukraine’s presidential media service said following the talks.
"The Ukrainian head of state also expressed his readiness to allow Turkey to use Ukrainian underground gas storage facilities for gas storage," the service added.
Speaking in Ankara on Thursday, Turkish President Recep Tayyip Erdogan spoke of the "illegal annexation of Crimea" and promised to stand with Kiev in a further sign of a new nexus emerging around the Black Sea.
A parallel meeting between Ukraine’s energy minister, Volodymyr Demchyshyn, and Turkey’s minister of energy and natural resources, Berat Albayrak, touched on prospects for the delivery of Iranian and Caspian gas to Ukraine and the construction of new gas storage facilities in Turkey.
Competitors, not comrades
But rather than being natural partners in the energy sector, Andrew Neff, principal oil and gas analyst at consultancy IHS, told Interfax that Turkey and Ukraine are instead natural competitors for transit volumes of Russian gas.
"Turkey and Ukraine are more like gas transit competitors. Note that South Stream/Turkish Stream was mainly geared to redirecting Russian gas flows from transiting Ukraine, with Turkey garnering more of the transit business as a result," Neff said.
"But they both have similar problems as major net importers and also complications in relations with Gazprom so there is an ‘enemy of my enemy is my friend’ quality to the Turkey-Ukraine relationship," Neff said.
Turkey and Ukraine are united in dispute with Russia. Kiev is vexed over the annexation of Crimea and Moscow’s murky role in its eastern breakaway provinces, while Ankara has been angered over incursions into its airspace that led to the downing of a Russian fighter jet late last year.
However, both countries have historically relied on Russia for gas supplies – although over the past year Ukraine has all but stopped receiving stocks directly from Gazprom, instead favouring deliveries of Russian gas from EU member states via reverse flows.
"Gas is a key fuel for both countries," Georg Zachmann, from Brussels-based thinktank Bruegel, told Interfax on Monday. "But both countries import gas from Russia and are not connected. Thus, in the short term the room for collaboration seems limited."
With Turkish demand rising steeply, Ankara will need to ensure future supplies meet consumption. Although Iran and Caspian producers will play a role, Turkish Stream was designed to open up a high-level corridor with Russia.
New partners needed
With diplomatic relations at a low, Turkish Stream appears on ice and Turkey under Erdogan is looking elsewhere for partners. Gazprom’s deliveries to Turkey have already dipped, with data for late February showing year-on-year falls of up to 40% on some days in Russian supplies heading south via Bulgaria.
"Turkey is belatedly coming to grips with its over-reliance on Russian gas in the wake of the downturn in relations following the shooting down of the warplane, but turning to Ukraine is not going to help address this problem," Neff said.
The immediate prospects for a new Black Sea energy partnership remain vague despite the summit. The key intervening state is Bulgaria, which is seeking to rekindle prospects for a version of South Stream that would bypass both Ukraine and Turkey, giving Russia a new route into EU markets.
At home, Turkey needs its own new storage facilities, as Neff noted, and not necessarily capacity in sites hundreds of kilometres away from its consumption centres. A lack of pipeline infrastructure also makes pumping non-Russian gas between the two difficult.
"In the longer term, some joint project to exploit Caspian or Black Sea gas by building a pipeline or using the existing line through the Balkans could be envisaged. But in gas terms Ukraine and Turkey seem to be more competitors than complements," Zachmann argued.
That said, there could be one interesting point of cooperation between the two countries, Zachmann noted. Ukraine has long considered building an LNG terminal somewhere around the port of Odessa. Progress has been slow and dogged with scandal over recent years, but any future development would depend on Turkish consent for tankers to cross the Bosphorus, a deal that Ankara may soon be willing to make.
SOURCE
