The Influence of Turkey’s Accession to the European Union on the EU-Russian Energy Relations

1. The Influence of Turkey’s Accession to the European Union on the EU-Russian Energy Relations Dr. Tatiana Romanova Associate Professor School of International Relations St. Petersburg State University romanova@mail.sir.edu Nicosia, 11 June 2009

2. How shall I proceed • The essence of EU-Russian energy relations • Turkey’s energy sector and energy aspirations • How would Turkey’s accession to the EU affect EU-Russian energy relations

3. Why EU-Russian energy relations? EU’s External Dependence Oil Natural Gas EU imports >50% =20% EU consumption Rus oil export > 20 % EU import EU imports > 60% = 20% EU consumption Rus NG export >40% EU import EU’s import of oil and gas is projected to grow in the coming decades

4. Why EU-Russian energy relations? Russia’s Interest Russia’s Energy SectorInvestment Needs up to 2020 (bln.$)

5. What Legal Framework? Energy Charter Treaty and April 2009 Proposals • Energy Charter, the Hague 1991 • Political document • Energy Charter Treaty (ECT), Lisbon 1994 • Trade, investments, transit, energy efficiency • Russia signed but never ratified the ECT • Document defends consumers’ interests • Nuclear energy is excluded • Transit controversies between the EU and Russia (regional integration clause, available pipelines etc) • Russian proposal of 21 April 2009 • Can be either an alternative document or a revised ECT • Interdependence in energy security  rights of suppliers (security of demand) and consumers (security of supply) • Energy sovereignty • Market access rights, including the security of transit

6. What Policy Process? Energy Dialogue • 2000: EU and Russia launched the Energy Dialogue to “enable progress to be made in the definition of an EU-Russia energy partnership and arrangements for it” • Results: • Modification of long-term contracts for gas supply • Contribution to the Russian ratification of the Kyoto protocol • Maritime safety for heavy oil transport by tanker (within the IMO) • Cooperation on gas flaring reduction, renewables, energy efficiency • Feasibility study on the synchronization of their electricity grids • Construction of the Nord Stream is underway • Assurance that there is no 30% restriction on the import of natural gas or oil from Russia to the EU BUT! No strategic partnership!!! • From the beginning the EU and Russia had different views on the long-term goal of the dialogue • Their views on the energy dialogue have evolved in different directions

7. Initial Vision A common market on the basis of the EU’s acquis EU legislation – a reference for the energy sector reform in Russia Evolution Reasons: Initial vision did not work Growth of oil and gas prices Growing assertiveness of Russia EU’s enlargement 2006, 2009 – Russo-Ukrainian crises Growing politicization and eventual securitization as of 2004 Measures: alternative pipelines + diversification of suppliers and resources + energy-saving Securitization theory (Buzan,Waever) Initial Vision: short-term problem-solving Gradually: development of strategic thinking Reasons: Assertiveness of the new leadership High oil and gas prices In line with the Russian pattern: the state as a key modernizer Essence of new thinking Profit maximization (Personal interest + resources to reform the country) Support of specific companies  investment possibilities, prices, pipeline control, stability of demand Enhancing political standing in the international arena (multi-polarity + realpolitik + reassessment of the 1990s) Demand for equality in designing a new regulatory regime, cooperation with producers, pipelines’ control Why are the results so limited? EU RU EU

8. Turkey Energy Sector and Aspirations • External dependence BUT • Fortunate geographical position • In-between producers (72,7% of world oil and 71,8 of world gas reserves) and consumers • 15% of the EU’s oil and gas needs will soon transit Turkey • Flows: East-West, North-South • Good relations with different countries of the region  • Aspirations of a transit country • Turkey is NOT a substitute of Russia as the EU’s main energy partner! • Turkey’s energy strategy is different from those of Russia or the EU • Ensure diversified, reliable and cost-effective supplies for domestic consumption • Liberalize the energy market • Become a key transit country and energy hub • Wish to capitalize the geographic trump card to • Improve its economic situation • Upgrade its status in Europe • Achieve the goal of membership in the EU • Ambition to move from the role of a policy-taker to that of a policy-maker

9. Oil and Gas Pipelines Flows East to West (mainly) and South to North (have been secondary so far)

10. Gas pipelines Flows East to West (mainly) and South to North (have been secondary so far)

11. How would Turkey’s accession affect EU-Russian energy relations?1. The border between the EU and producing countries would extend East-West: • Russia will lose its monopoly on transportation of Central Asian gas • It will affect its commercial interests • It will be a blow to its political aspirations • Strengthening of the competition for Central Asian resources • EU would improve its chances to diversify away from Russia • Central Asian countries can become more responsive to the EU’s proposals • New ways of transportation of Central Asian gas are more certain to be put to life (Nabucco – South Corridor being the most widely discussed) • Substantial additional costs to taxpayers • Construction of new pipelines • The pipeline as an instrument to demonstrate Russia the limits of its power (J. Roberts) • Russia, being deprived of it, will have to develop its own resources  increase the price for gas in Europe South-North • Iran more certain to enter the EU’s energy picture  growing competitiveness in the gas market

12. How would Turkey’s accession affect EU-Russian energy relations? 2. A new actor in designing energy legislation • In case of the ECT reform (in line with Russia’s April 2009 proposals), Turkey will certainly contribute • Particularly transit issues • It’s views would differ from both those of Russia and the EU’s • Negotiations will be more complicated

13. Hub is a central market place where, in addition to pipelines, storage facilities, refineries, terminals, petrochemical units and other energy-related business may be located, which offer jobs and boost the local economy Benefits of a hub: Political and security Economic and financial Preconditions Unbundling and liberalisation (EU) A good balance between suppliers and consumers… (including Russia) 2 variants of hubs Turkey inside the EU (with its regulation) Turkey outside the EU (good relations with all neighbours) Can the two be combined? Problems: Fall in prices and economic crises Instability in the region Instability in Turkey proper Competition with other energy hubs in the EU (i.e. Germany, Austria but also Italy, Bulgaria) Turkey may also be oversupplied with contracted gas (take or pay contracts) How would Turkey’s accession affect EU-Russian energy relations? 3. Turkey as an energy hub

14. How would Turkey’s accession affect EU-Russian energy relations? 4 Nuclear issues • Construction of the nuclear power plant in Turkey (Mersin Akkuyu) • Consortium includes Atomstroyexport, Inter RAO, and Turkish “Park Teknik” – 13 February 2009 • Question of limits on the export of Russian nuclear materials in the EU will become more urgent (unresolved since 1992)

15. How would Turkey’s accession affect EU-Russian energy relations? 5 Perpetuated heterogeneity of the EU’s external energy policy • Already now the EU is struggling to design a common external energy policy • Divergent interests, particularly in respect to Russia  unwilliness of EU MSs to cede their competences • Turkey will contribute to further heterogeneity

16. What facilitates enhanced role of Turkey in EU-Russian energy dialogue? • The EU’s politicization and securitization of the energy relations with Russia benefit Turkey • By securitising EU-Russian energy relations, EU desecuritise certain aspects of relations with Turkey and Central Asian countries (including the issue of human rights) • It provides Ankara with a chance to secure special status in the EU and eventually membership in the EU (provided cultural distinctions are ignored) • In which case energy security becomes a tactical issue • It allows Turkey to solve its own energy problems (energy security) and eventually make the EU pay for its energy security • R.T. Erdogan: Turkey is the answer to [the EU’s] energy issues • Turkey depends on Russia (60% of gas, 30% of oil • Issue of dependence is over-emphasized  to what extent is it real / constructed to please the EU? • Concern that Russia does not invest enough in the oil and gas exploration

17. What complicates Turkey gaining a larger role in EU-Russian Energy Dialogue? • EU’s insistence on legal approximation • O. Rehn “the EU can assist in turning Turkey into an energy cross roads… But .. Turkey would also need to introduce … clear and enforceable rules on gas transmission, the liberalisation of Turkey’s domestic market at least for gas and the increase of investment on infrastructure, most importantly in gas storage.” • EU’s energy behaviour is a litmus test • Growing assertiveness of Turkey coupled with the difficulties of accession • A. Davutoglu: Turkey should be seen as located in the very heart of Eurasia • In energy: • R.T. Erdogan: if Turkey is confronted with the deadlock on the energy chapter it can revise its position on Nabucco; • Partial privatization and liberalization; • Energy Community Treaty (observer); • No negotiations on the energy chapter of the acquis • Effort to be central to both pipelines and bypasses (reminds Russian tactics) • Lack of investor’s confidence • Instability in the region • Legal status of the Caspian sea • No gas committed for new transit routes (8 May – Nabucco summit in Prague) • Russian-Georgian war demonstrated Russia can control all the by-passes