Russian-Turkish gas hub project faces stumbling blocks amid control disputes

Russia's ambitious initiative to establish a "gas hub" in Turkey, a strategy to offset dwindling gas sales to Europe, is stumbling amid disagreements over who should spearhead the project, Reuters reported on Thursday, citing two sources familiar with the matter.

The project was proposed by Russian President Vladimir Putin in October 2022 after the mysterious explosions that disrupted the Nord Stream gas pipelines, a critical conduit connecting Russia to Germany across the Baltic Sea. The responsibility for the blasts remains enshrouded in mystery.

The plan has been experiencing setbacks, predominantly attributed to the tug of war between Moscow and Ankara over its control. A well-placed source, requesting anonymity due to restrictions on speaking with the media, stated, "There are managerial issues, they are fighting for who should manage the hub."

An individual close to Gazprom, the Kremlin-controlled gas behemoth, acknowledged that managerial disputes are indeed the core "problem" plaguing the project. Notwithstanding these revelations, Gazprom and the Turkish energy ministry remained silent, failing to respond to requests for comments.

The envisioned hub symbolizes a fresh route for Russia to channel its gas exports, especially at a juncture where European nations have dramatically scaled back their purchases. The strategic move aims to facilitate gas sales through Turkey to nations reluctant to engage in direct transactions with Russia.

As it stands, the Blue Stream and TurkStream pipelines, traversing the Black Sea, facilitate the delivery of gas from Moscow to Turkey. Additionally, the TurkStream extends its reach, enabling further exports to southern and eastern European countries, including Hungary, Greece, and Bosnia and Herzegovina, amongst others.

However, the project has stoked apprehensions in several Western capitals, fearing that the integration of Russian gas into any Turkish hub could potentially enable Moscow to obscure sanctioned exports. This could be achieved by blending the sanctioned consignments with fuel from alternate sources, circumventing the restrictions imposed by the West due to Russia's controversial stance in Ukraine.

Turkey, a NATO affiliate fostering a cordial relationship with Russia, has witnessed strains in diplomatic ties. A notable instance was Russia's July decision to retract from a Turkish-mediated agreement that previously facilitated Ukraine's grain exports via the Black Sea.

Ankara, a city largely dependent on gas imports, sees a golden opportunity to elevate its status to a gas nexus, leveraging both existing and emerging trade alliances. This sentiment was echoed by Putin in July, highlighting the ongoing discussions to inaugurate an electronic platform in Turkey to streamline gas sales.

During a September 4 meeting with Turkish President Tayyip Erdogan, Putin disclosed Gazprom's submission of a project roadmap to Turkish energy powerhouse BOTAS. The discussion encompassed the establishment of a collaborative working group, the formulation of a legal scaffold, and the development of strategies for efficient gas trading and transfer.

The Kremlin emphasized the project's complexity, necessitating a considerable time investment to materialize. Earlier in February, spokesperson Dmitry Peskov had forewarned potential delays, attributing it partially to a catastrophic earthquake that rocked southeast Turkey and Syria.

Turkey, aspiring to cement its position as a gas exporter, initiated a significant move in August, securing a pact with Hungary's MVM to trade approximately 300 million cubic metres (mcm) of gas, marking its foray into exporting gas to non-neighbouring nations.

Furthermore, Turkey expressed the feasibility of integrating the Trans Anatolian Natural Gas Pipeline (TANAP) — a channel ferrying Azeri natural gas to the Turkish frontier — into the proposed hub's infrastructure.