Calling time on the South Stream pipeline project, Putin announced a new Black Sea pipeline to Turkey instead. The new project could be a competitor to Azerbaijan gas ambitions, but, at the same time, it may require more collaboration in the future.
In reduced economic circumstances the big test for Russia is whether it will be forced to retrench, or whether Vladimir Putin will take his chances on expansionist foreign policy at a moment when there’s less money to go around to combat legitimate threats.
Vladimir Putin’s trip to Turkey could help him recover from the cold-shouldering at the G20 summit in Brisbane, but it will not make Ankara abandon its great strategic goal to become an indispensable supplier of natural gas to Europe and a major competitor for Gazprom.
Turkey sees the acute energy market competition as an opportunity to establish itself both as an influential energy state and as a central Eurasian power. In this regard, choosing Turkmenistan as the site of one of the first state visits by the new Turkish president was not accidental.
Moscow’s most recent, failed attempt to cooperate with China on the Altai gas pipeline shows that its political ambitions are not compatible with elementary arithmetic.
The only possible source of money for the Power of Siberia pipeline is no one else but China, and the terms of this assistance will be dictated from Beijing. The Kremlin’s inability to come to terms with the Western world does not come cheap.
The effect of the new sanctions on the Russian oil and gas industry might be very sensitive while at the same time saving large sums of money on projects with impossibly long payback prospects. Either way, Western governments are now doing basically what the Russian leader always wanted, staying away from Russia’s oil and gas.
Ukraine’s position as an important transport corridor for Russian gas has resulted in various periods of conflict between Ukraine and Russian-state owned gas companies. But, even though both recognize they will not reach a long-term agreement quickly, one can easily see that the number of disagreements between them is not great. Both realize the need to compromise.
Tensions in Ukraine threaten to alter the security environment in the Arctic. Russia must, therefore, proceed with caution if it wants to maintain previous levels of cooperation. Only time will tell if the hawks in the Kremlin will be willing to engage in cooperation rather than see the region as a zero-sum game.
