Turkey Is Strengthening Its Energy Ties With Russia

Turkey has deepened its energy ties with Russia as European countries opposed to the invasion of Ukraine seek to reduce their dependence on Russian oil and gas, weathering rising price increases and possible shortages.

Since the start of the war, Turkey’s imports of Russian crude oil and coal have increased sharply. The presidents of both countries talked about how to turn Turkey into a regional trade hub for Russian gas. And Turkey has hinted at building a second nuclear power plant, designed and financed by Russia, in addition to the one already scheduled to come online next year.

Cheap energy is helping to keep Turkey’s sinking economy afloat during difficult times. But the maneuvers are also part of President Recep Tayyip Erdogan’s attempt to defuse the energy crisis. It has been a long-standing dream of the Turks to become a major powerhouse. Its location between Europe, Central Asia and the Middle East places Turkey at a key location.

Ambitious efforts have met with some success. Turkey’s growing role in global energy trade was on notable display this week as European Union sanctions on seaborne Russian crude took effect, along with the imposition of a US-led price cap on Russian oil.

More than 20 oil tankers, with no ties to Russia, sit in Turkish waters, awaiting permission to pass through the Bosporus and Dardanelles straits into the Mediterranean. Turkey has demanded additional proof of insurance, saying it increased the risk of uninsured tankers on its coast and raised the price cap. A Russian delegation reportedly visited Ankara on Friday to discuss Turkey’s request for a 25 percent discount on natural gas. At the same time, maritime tracking logs showed large cargo ships loaded with Russian coal or oil headed for Turkish ports.

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Turkey has made clear its opposition to war in Ukraine, condemning the attack and providing military support to Ukraine. However, it was careful not to antagonize Russia, which is economically viable in difficult times. By promoting his birthday phone call to Russian President Vladimir V. Putin in October, Mr. Erdogan is not imposing sanctions on Russia and continues to oppose the membership of Finland and Sweden in NATO.

The high-wire balancing act by Russian and European interests has given Turkey new prominence and leverage, but is also creating new tensions.

Mr Erdogan took the lead in brokering key deals to allow Ukrainian grain to be secured by Russia’s blockade of Turkey’s Black Sea ports to help reduce the risk of high food prices and a global hunger crisis. It also facilitated the exchange of prisoners between the two warring nations. But opposition to NATO’s expansion has irked politicians in Europe and Washington, with a tanker blockade outside the Turkish strait.

It is not clear whether overcaution, dysfunction or political posturing is behind the logjam, but it is unsettling oil markets and frustrating Turkey’s Western allies, who have urged Ankara to let the ships pass.

For Turkey, its tortured economy is a priority. Mr Erdogan’s policy, said Henry Barki, a fellow at the Council on Foreign Relations: “I have to do everything I can to improve the economic situation, and if that means working with the Russians, I will work with the Russians.”

Certainly, the economy needs to grow. Inflation has soared to more than 80 percent, severely denting the president’s popularity and jeopardizing his bid for re-election next year. According to the International Energy Agency, Turkey is also highly dependent on foreign energy, importing 93 percent of its oil and 99 percent of its gas, a situation that has widened its trade deficit and increased its debt burden.

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As bad as the economy is, it would be worse without Turkey’s energy trade with Russia and the money it brings.

Turkey does not participate in any sanctions of Russian power and as a result is able to buy Russia’s deeply subsidized oil. The benefits are twofold. Turkey, which has huge refining capacity, has been buying record amounts of cut-rate Russian crude, refining it on its own shores, and then selling the finished product at world market rates, legally labeled as Turkish in origin. At the same time, it is buying discount Russian diesel fuel for domestic consumption.

Over the past six months, Turkey has bought an average of 292,000 barrels a day of Russian crude, compared with an average of 113,000 barrels a day in the same period a year ago, according to Kpler, a firm that tracks petroleum shipping.

According to an analysis by the Center for Energy and Clean Air, Russian oil is increasingly being routed through Turkey, “where Russian crude oil is being refined, while the country increases its exports of refined oil products to the EU and the US” in Finland.

(The European Union’s ban on refined products using Russian oil is set to go into effect in February.)

Coal imports from Russia, sold at a discount, also increased. Between August and November, when the EU ban on Russian coal took effect, Turkey’s monthly imports from Russia averaged 2.1 million metric tons. That number is more than three times the monthly average of 630,000 tons purchased during the same period last year, according to Kpler.

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“Turkey has become the largest buyer of Russian coal,” said Viktor Katona, an analyst at Kpler who recently returned from a trip to Turkey. “Thanks to Turkey and China, Russia’s coal exports have returned to pre-sanctioned levels.”

Energy is one aspect of the complex economic and political interests that drive Turkey’s desire for closer ties with Russia. Russians make up the largest number of tourists, a source of foreign exchange to support the sinking value of the Turkish lira. More importantly, Mr Erdogan is expected to back Russia’s efforts to crush Kurdish separatism in Syria.

But power strategies have broader resonances.

Turkey’s position between energy-rich and energy-hungry countries gives it strategic importance as a transportation hub.

Simone Tagliapietra, a senior fellow at the Bruegel Institute in Brussels, said Mr. He said that Putin is using it. He doubted whether that strategy would work. As Europe is determined to end its dependence on Russian energy in the coming years, the idea of ​​an energy hub in Turkey does not make economic sense at the moment, he said.

“Turkey will try to take advantage as much as possible to get Russian power on the cheap,” he said, “but I don’t think doing so will damage the NATO alliance or the united opposition to Russian aggression.

Elif Ins Contributed to reporting.


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