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Abu Dhabi, UAETuesday 22 May 2018

The Russia-Iran-Turkey energy triangle – old enemies locked in a power embrace

The three countries are locked in an embrace over energy, while Tehran and Moscow eye each other suspiciously over oil, gas and historical rivalries.

Tabnak, an Iranian news site, stated that “Russians are unreliable partners” in an article published in October. The website is close to the former Revolutionary Guards commander Mohsen Rezaei.

Iran and Russia may be confronting Turkish-backed groups in Syria’s civil war, with Turkey’s downing of a Russian jet last Tuesday the latest twist. But the three countries are locked in an embrace over energy, while Tehran and Moscow eye each other suspiciously over oil, gas and historical rivalries.

Turkish-Russian relations have deteriorated sharply over the aircraft incident. Vladimir Putin claimed: “We have long been recording the movement of a large amount of oil and petroleum products to Turkey from ISIL-occupied territories”, and said that the plane’s shooting down was to protect the smugglers.

An investigation by Al Araby Al Jadeed has recently detailed the shadowy ISIL oil trade through the south-eastern Turkish town of Silopi, brokered by the mysterious Uncle Farid, although this is nowhere near where the plane was shot down.

Turkey has to tread carefully. It gets 56 per cent of its gas from Russia, and its shaky economy can little afford an interruption, especially as winter sets in. Iran provides another 18 per cent, and is essential to supply parts of eastern Anatolia. Russia has various options for retaliation, such as supporting the Kurdish PKK group in attacks on pipelines with Turkey carrying oil and gas from Iran, Iraq and Azerbaijan. Mr Putin’s allegations about ISIL may be intended to bolster western doubts about whose side the Nato member Turkey is really on in the Syrian bloodbath.

But Russia and Iran also need Turkey. After the European Union forced the cancellation of its South Stream gas pipeline project, Moscow turned to Ankara, planning to reroute its exports that currently pass through Ukraine. Turkey was interested, as part of its plan to become an “energy hub”, an ambitious-sounding if vaguely defined concept, but it now seems doubtful that the president Recep Tayyan Erdogan will support the project.

Meanwhile, Turkey is Iran’s only significant gas export market, the essential route if it wants to sell gas to Europe after sanctions are lifted, and the only non-Asian country currently able to buy Iranian oil.

Iran and Russia have, of course, cooperated on numerous fronts in recent years, both backing the Assad regime in Syria. Russia’s Atomstroyexport built the long-delayed Bushehr nuclear power plant, the two countries have repeatedly announced a US$70 billion economic agreement, and Russian companies have discussed developing Iranian oilfields. Both countries are under western economic sanctions targeting their energy sectors, their perceived Achilles heel.

But their closeness should not be exaggerated, as the Tabnak article suggests. By the 1828 Treaty of Turkmenchay, Iran surrendered Armenia and Azerbaijan to the Russian empire, a territorial loss still not forgotten in Tehran.

The two countries are energy rivals. With oil prices plumbing new lows, the return of full Iranian exports next year will put further stress on the Russian economy. While Russia may sign some oilfield deals, Tehran will prefer the technology of western companies and the market access brought by Asian firms. The grand “oil barter” deal, intended to bypass the sanctions constricting both parties by swapping 500,000 barrels per day of Iranian oil for Russian goods, has not made evident progress, and logistically always looked implausible.

Most of all, in gas, Russia has attempted to block Iranian exports, or at least divert them towards south Asia and away from its plum European customers. A much more diverse and well-supplied global gas market gives both parties little room for geopolitical games.

All three countries have more to gain by cooperation than confrontation. But when the successors of the shahs, sultans and tsars find themselves in opposition, mutual suspicions and rivalries count for more than the smooth flow of oil and gas.

Robin Mills is head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis.

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