Turkey is emerging as the key player in the scramble over Caspian Basin energy reserves. Russia views energy cooperation Turkey as a major component of its geopolitical strategy to expand Moscow's diplomatic reach. The European Union, meanwhile, finds Turkey increasingly attractive as an alternative source of energy.

Maneuvering in connection with Caspian Basin energy has increased dramatically since early January, when a pricing dispute between Russia and Ukraine caused disruptions in energy supplies to EU nations. [For background see the Eurasia Insight archive]. With all sides seeking to diversify their export/import options, the timing couldn't be better for Turkey.

Russia is eager to reduce its reliance on Ukraine as a transit nation for exports to Western Europe. In early February, Alexei Miller, CEO of Gazprom, Russia's state-controlled gas monopoly, held talks in Ankara with Turkish officials and energy executives, including Energy Minister Hilmi Guler, on boosting energy cooperation. The discussions produced pledges to explore an expansion of natural gas exports to EU states, especially Italy and Greece, via the Blue Stream pipeline stretching under the Black Sea. [For background see the Eurasia Insight archive]. Russian and Turkish officials also said they would pursue a pipeline extension project to boost exports to Israel and Lebanon. A formal agreement of that extension could come as soon as April, Turkish and Russian officials indicated. In addition, officials mulled the construction of a natural gas storage facility in Turkey's Anatolia region.

"We consider Turkey as a reliable partner to transit gas to third countries," Miller said at a news conference following his talks with Guler. "Recent developments in Ukraine indicate that a new pipeline has to be laid down across the Black Sea to run parallel with Blue Stream."

At present, the Blue Stream natural gas pipeline operates at less than one-third of its planned annual capacity of 16 billion cubic meters. In 2005, just 5 billion cubic meters were pumped via the underwater conduit from Russia to Turkey. Even so, Russian political and business leaders have pressed for an expansion of the pipeline's capacity. For example, during Blue Stream's official opening ceremony last November, Russian President Vladimir Putin energetically advanced the idea of building the second thread of the pipeline.

Gazprom's push to expand energy links with Turkey fits nicely into the Kremlin's strategy to restore Russia's geopolitical influence, which was greatly diminished by the 1991 collapse of the Soviet Union. According to Russia's strategic economic plan, endorsed in 2003, the Russian government should use the country's "energy complex" to advance its domestic and foreign policy agenda. "The role of the country in world energy markets determines its geopolitical influence," the strategic plan states.Kremlin strategists in recent years have expanded their focus beyond the utilization of Russia's own abundant energy reserves, and have sought to increase Russia's control over pipelines. To encourage Turkish cooperation with Russian export plans, Moscow is seeking to increase Ankara's already heavy dependence Russian energy.

By proposing gas deliveries to Greece and Italy via Turkey, Russia hopes to bolster its image as a reliable energy supplier in the eyes of the EU. Some analysts also suggest that Moscow efforts to expand its influence in southeastern Europe is motivated by a geopolitical desire to "asymmetrically" offset the United States' growing military-strategic influence in the Black Sea area, especially in Georgia. [For additional information see the Eurasia Insight archive].

Although Russia's Caspian Basin energy position is strong, it remains to be seen whether the Kremlin can achieve the level of control over export routes that it desires. Energy competition in the region, already fierce, stands to become cut-throat in the coming years. Indeed, at the same time Gazprom's Miller was visiting Ankara, Turkish Prime Minister announced that the construction of the Baku-Tbilisi-Erzurum gas pipeline, with a projected annual capacity of 20 billion cubic meters, would be finished by the end of 2006.

European policymakers and energy analysts, many of them wary of becoming too dependent on Russian-controlled energy, welcomed Erdogan's announcement. Indeed, there are indications that the EU is working hard to frustrate Russia's export designs. Calls for a reexamination of the EUs energy-security policy have grown louder in recent months, with analysts urging rapid action to diversify energy import sources.

Increased European interest in diversification could invigorate two pipeline projects. One is the Nabucco route that would transport gas from the Caspian Basin and Middle East via Turkey to southeastern Europe. The other is a proposed Trans-Caspian pipeline, which would enable Turkmenistan to link its considerable natural gas reserves with Azerbaijan's export network. The Nabucco project has long been clouded by an uncertain construction timeline, while the Trans-Caspian initiative remains stalled by a variety of factors, including disagreements over the price of Turkmen gas.

If one or both of projects is ever realized, Russia's energy position in the region would be seriously threatened. If Turkey emerges as an energy transit hub, as some analysts predict, Ankara could eliminate its dependence of costly Russian gas. As economic expert Vladimir Milov noted in a recent analysis published in the Russian newspaper Novaya Gazeta, Gazprom would be taking a considerable risk if it gets its wish and is able to build another natural gas pipeline to Turkey. Russia's Caspian Basin energy dreams could easily turn into an economic nightmare for the Kremlin.