The Gazprom logo is seen on a platform at the gas compressor plant in Volokolamsk, Russia (file). Turkey relies on Russia for about half its natural gas supplies, paying state-controlled Gazprom as much as $10bn last year. That makes their energy ties an unattractive target for retaliation.

Bloomberg
London/Moscow

Turkey relies on Russia for about half its natural gas supplies, paying state-controlled Gazprom as much as $10bn last year. That makes their energy ties an unattractive target for retaliation.
With so much at stake for both sides, Russia may look elsewhere in its response to the downing of its warplane by Turkey last Tuesday. Russian Deputy Energy Minister Anatoly Yanovsky said that supplies to Turkey would continue in line with the contract. Longer term, Turkey could reduce its dependence on Russian gas through alternative supplies.
“Turkey will probably not want to halt any existing energy arrangements, but it almost certainly means Turkey will start a renewed look at what alternative energy relations it can have,” said John Roberts, an energy security specialist at Methinks Ltd in Jedburgh, Scotland. “Two obvious choices are becoming a customer for US LNG; the other is Iran.”
The relationship between Turkey and Russia was already strained before Russia’s warplane was shot down, and talks over a new gas pipeline had stalled, according to Alexander Kornilov, an Alfa Bank analyst in Moscow.
It was only last year that President Vladimir Putin said Turkey could become an energy hub for southern Europe and proposed to build Turkish Stream, a gas pipe under the Black Sea. As the nations fell out over the conflict in Syria, Moscow-based Gazprom, the world’s largest gas producer, said last month it would cut the capacity of the planned link to Turkey and on to Europe by 50%. The proposed pipe would help Russia reduce its dependence on gas transit via Ukraine, the current route for more than 10% of Europe’s gas.
Turkish Stream is redundant because there is already existing transfer capacity to Turkey and the rest of Europe, Sberbank’s investment bank unit said Wednesday in a report to clients.
The project has already been cut down to two pipelines from the original four. In the end, only one of the links may be commissioned, Sberbank CIB said.
While Turkey can’t turn away from Russian supplies right away, it still has leverage to fight retaliatory moves, including if Russia takes a hard line on prices or threatens cuts, according to Sijbren de Jong, an analyst at the Centre for Strategic Studies in The Hague.
The sales volume from Turkey is equivalent of 17% of Gazprom’s total exports outside the former Soviet Union, according to company data. Sergei Kupriyanov, a Gazprom spokesman, declined to comment. Iran is already shipping gas to Turkey and plans to expand its export capacity as it nears the lifting of sanctions related to its nuclear programme. Cheniere Energy plans to ship the first tanker of liquefied natural gas from the US in January.
US President Barack Obama last Tuesday called for a de-escalation of tensions between Turkey and Russia, as their war of words threatened to undermine efforts for a united front against Islamic State.