Russia Declares Warplane Downing A "Hostile Act" But Will It Cut Turkish Gas Supplies?

Tyler Durden's picture

Some have suggested Vladmir Putin's first retaliation for the Turkish shooting down of a Russian fighter jet would be to cut off gas supplies (which represent 57% of Turkey's supply). With Russia Defense Minister stating that the "downing of the Russian warplane is a 'hostile act'," adding that the defense ministry is "devising a set of measures to respond to the incident," it seems taking the 'nuclear option' of cutting off 20% of Erdogan's entire energy supply would be a strong first non-lethal non-World-War-3-starting step.


And then...


So, despite earlier saying that "there will be no disruption," given the statements above, (and all of Erdogan's bluster on finding alternate sources) Russia may well decide to take the 'nuclear option' and cut off Turkey's gas supplies as a first non-military reaction.

Turkey gets 57% of its gas from Russia (and Turkey is Russia second biggest non-domestic market for gas). Turkey's alternative supply routes include Iran, which of course just signed a $5 bn trade deal with Russia and is unlikely to come to Turkey's aid. As we ominously predicted recently,  although Moscow and Ankara have thus far kept it civil in order to preserve and expand trade, it now looks as though each country may be willing to Plaxico themselves all because they disagree over what the fate of Bashar al-Assad should be... It appears we have moved on from 'civil'.

As we detailed previously, Turkey-Russia energy relations are tense at best

In June, we noted that Russia had signed an MOU with Shell, E.On and OMV to double the capacity of the Nord Stream pipeline, the shortest route from Russian gas fields to Europe.  

Here is a helpful visual:

What you’ll note from the above is that the Nord Stream allows Gazprom to dodge Ukraine, which is desirable for obvious reasons. 

Of course that’s not good for the Eastern European countries (like Ukraine) who derive revenue from the flow of gas. Late last month, Slovak PM Robert Fico had the following to say about the Nord Stream project: 

“They are making idiots of us. You can’t talk for months about how to stabilize the situation and then take a decision that puts Ukraine and Slovakia into an unenviable situation.”

To which we said the following:

When it comes to making grand public declarations about “stabilizing” unstable geopolitical situations and then turning around and doing something completely destabilizing, the West (and especially the US) are without equal, as evidenced by all manner of historical precedent including Washington’s efforts to help sack Viktor Yanukovych whose ouster precipitated the conflict in Ukraine in the first place. And make no mistake, to the extent there’s energy and money involved, that’s all the more true which is why it isn’t at all surprising that Western Europe would facilitate a deal that lets Gazprom bypass a war zone if it means getting natural gas to countries that “matter” in a more efficient way.

In an interesting, if predictable twist, Western Europe may need to step up its cooperation with Gazprom even further going forward because now, the conflict in Syria has strained the energy relationship between Moscow and Ankara. Specifically, several purported Russian violations of Turkey’s airspace have made President Erdogan "irate" and more generally, The Kremlin’s support for the Assad regime has angered Turkey, which has long supported and worked to facilitate his ouster. Here’s a bit of color from FT:

Last year, Recep Tayyip Erdogan, then Turkey’s prime minister, was one of the only western statesmen to attend the opening ceremony of the 2014 Winter Olympics in Sochi. On the sidelines he met President Vladimir Putin and hailed the strong ties that bound Russia and Turkey.


Such warmth seems a distant memory today.


The two men are at loggerheads over Syria, and their spat threatens an important energy relationship: Turkey is the second-largest consumer of Russian natural gas. A new pipeline across the Black Sea was supposed to cement the partnership. Its future is now murky.


Last week, an irate Mr Erdogan, now Turkey’s president and still the country’s unquestioned leader, warned that, because of its military intervention in Syria, Russia risked forfeiting a $20bn contract to build a nuclear power plant on Turkey’s Mediterranean coast. Ankara could also source its gas from elsewhere, he warned.

But that's where things get tricky because as Bloomberg noted on Monday, "Russian gas keeps the lights on in Turkey":

Nearly 75 percent of Turkey's energy use is derived from outside sources, with Russia alone accounting for one-fifth of Turkey's energy consumption, more than any other. Russia's Rosatom is scheduled to start building Turkey's first nuclear plant next year and the two countries are also partners on a major new natural gas pipeline, known as TurkStream, which will eventually allow Russia to send its natural gas into the heart of Europe via the Turkish-Greek border rather than through embattled Ukraine. Gazprom, the world's largest natural gas producer and a TurkStream signatory, recently announced that the project would be delayed and capacity cut. Turkey represents Gazprom's second largest market after Germany. 

Read the last bolded passage there and then, referring back to the map shown above, follow the Nord Stream right into ... Germany. Once again, here's Bloomberg:


Putin feels able to change tack on Turkey, the second-largest customer for Russian gas, because in September he agreed to expand the Nord Stream pipeline that links Russia directly with Germany.


“Putin is betting on Nord Stream, but that bet is risky," Sijbren de Jong, energy security analyst at the Hague Centre for Strategic Studies, said by e-mail. "Can Gazprom really afford to annoy Turkey and forgo gas revenues? Hardly."


Europe receives about a third of its gas from Russia with a third of that volume flowing through Ukrainian pipelines. Gazprom aims to end or at least cut its gas transit through the former Soviet republic after the current transit contract expires in 2019.


Putin said last year that the new Turkey route would help Russia to meet this goal. After talks on the link stalled over the summer, Gazprom said that the Baltic Sea link directly to Germany known as Nord Stream-2 was a priority.


Putin’s bet on Nord Stream-2 is risky as the project may face opposition in the EU, De Jong said. EU Energy Commissioner Miguel Arias Canete said last week the link risked concentrating 80 percent of the bloc’s Russian gas imports on one route while eastern European nations have also warned of the risk of circumventing Ukraine.


Gazprom said Tuesday that key markets for Nord Stream-2 are boosting gas purchases from Russia, with total European exports in early October gaining almost 36 percent from last year’s level.

There are two takeaways here. First, all of this underscores the degree to which geopolitics and energy are inextricably bound up and that serves to strengthen the thesis that part of what triggered the conflict in Syria were energy disputes between the two regional axes of power. Although Moscow and Ankara have thus far kept it civil in order to preserve and expand trade, it now looks as though each country may be willing to Plaxico themselves all because they disagree over what the fate of Bashar al-Assad should be.

Second, Turkey needs to be careful here. If Erdogan effectively kills the Turkish Stream because Russia is bombing anti-regime forces in Syria, then Ankara had better hope Moscow and Tehran don't succeed in restoring Assad, because then, there'd be no hope for the Qatar line either. 

And as for Erdogan's contention that because Turkey can get gas from sources other than Russia, Moscow should "think well," the following pie chart suggests that in the current geopolitcal environment, it is actually Ankara that should think twice before adopting too brazen a position...


*  *  *

But, of course, this is not a 'simple' decision since Turkey has become a notably important market for Russia... and with The Saudis pressing for market share in Europe's crude market, losinmg another such major source of national revenue will not be such a slam dunk.


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buzzsaw99's picture

ww3 will not disrupt trade. the usa could be in a full blown shooting war with china and still be buying their shit at the same time.

JohninMK's picture

Russia has to be careful with any economic response, with its supply line to Syria running through the Bosporus.

It cannot afford that to be shut (it would be against International Law to do that but I can see the Turks ignoring such niceties).

AlaricBalth's picture

Did the U.S. military just tell Putin "Happy Hunting"?


My interpretation of this statement is that Turkey, due to its own stupidity and duel complicity, is on its own and any retaliation by Russia will not be covered under NATO Article 5. Article 5 states that " an attack on one Ally shall be considered an attack on all Allies." 

Vlad just received the implicit go-ahead (as if he needed permission) to implement a rebuttal in the form of a "Turkey shoot" on those responsible. 

tmosley's picture

Just do what they did with Ukraine--Demand payment up front.  If they fuck up again, cut the gas and keep the money.

Soul Glow's picture

Fuck that.  Just cut their supplies.

rapetrain's picture

This isn't a passive-aggressive spat with your neighbor.

This is a dispute between to major world powers. Turkey has over half a million soldiers. The way these things are solved is by a conpensatory payment. Anything else causes further losses for both sides. Russia cannot do anything unilaterally to increase its profit.

Publicus's picture

The genetic weapons will soon be unleashed. Race specific ebola flu.

Money Counterfeiter's picture
Money Counterfeiter (not verified) Publicus Nov 24, 2015 11:47 AM

Putin needs to secure the border with Turkey and wait for the USA meltdown.  China needs to go full bankrupt and liquidate all bankrupt assets.  Russia to do the same.  Now. 

If the US continues the bubble economy till the affirmative action president is out of office this will give their economies a much needed head start on preparing for WWIII.  One full year of US economic bull shit ahead.  Use the time wisely.

The first country to liquidate and get its financial house in order will be the one most likely to emerge victorious.

This is a golden opportunity for Russia and China if they understand how to get an advantage in the next two years.  Liquidate the shit and start rebuilding.

TahoeBilly2012's picture

The genetic weapons will soon be unleashed. Race specific ebola flu.

Probably gender specific too, like white AND male

HenryHall's picture

Russia will not cut off direct gas supply to Asian Turkey via Blue Stream.


Instead Russia will terminate gas exports via Ukraine. This has the effect of cutting off Russian gas supplies to European Turkey (via Bulgaria).

For reason of Force Majeure - secure access to maintain pipelines within Ukraine is no longer possible due to recent events with electricity in Kherson. Ukraine remember says it no longer needs to buy Russian gas, it can get gas from europe. And pigs fly.

BarkingCat's picture

Turkey might have 500,000 million soldiers but they are in Turkey and would be wiped out before getting anywhere close to Russia.

mtndds's picture

Nothing will happen.  Stock market will rise.  The Federal Reserve will have an excuse not to raise rates nexr month.  This is all transitory.  Relax people.  

Invinciblehandaxe's picture

Soul Glow

my words too, though little guys in turkey might be just as pissed as russians for what their edogan psychos in the goverment have done

BarkingCat's picture

Turks aren't exactly that bright. They are probably having visions of another Ottoman Empire.

It's time to push them out of Europe and take back Constantinople.

Ralph Spoilsport's picture

The Pentagram will probably keep supplying Turkey with arms, sit back and watch both sides bleed out.

researchfix's picture

Not ´up front´ but second front. Supply the Kurds.

SilvertonguedAngel's picture

Saddam Hussein thought Bush gave him the implicit go-ahead to invade Kuwait...of course Putin should take any statement from D.C. with a train of salt.

BarkingCat's picture

Saddam was not a leader of a nuclear nation armed with intercontinental ballistic missiles.

YHC-FTSE's picture

@AlaricBalth  Re: "Did the U.S. military just tell Putin "Happy Hunting"?"

I'd say it could be a trap in the making. Incirlik is one of the largest US airforce bases in the world. Even giving explicit "permission" to attack usually ended up in tears for the attacker when the MSM finished demonizing them - remember the story about Saddam asking the US ambassador permission to invade Kuwait. Putin is so widely demonized already, it wouldn't take much.

"In a now famous interview with the Iraqi leader, U.S. Ambassador April Glaspie told Saddam, ‘[W]e have no opinion on the Arab-Arab conflicts, like your border disagreement with Kuwait.’ The U.S. State Department had earlier told Saddam that Washington had ‘no special defense or security commitments to Kuwait.’ The United States may not have intended to give Iraq a green light, but that is effectively what it did."

Add this to the Kagan/Nuland zionazis urging their lot to send 50,000 troops to Syria and it looks suspiciously like a nice prelude to WWIII.

PrometeyBezkrilov's picture

No, to me it looks like a trap. There won’t be any military responses. There will be financial responses. Cutting gas supply, raising price. Urging tourists not to go to a “hostile country”. Cutting down trade. Of course it is going to lead to tensions in Turkey as businesses will begin to feel pinch. We shall see. I know one thing for sure, Putin will never give them a present like this.

Oldballplayer's picture

I did not get that....can you say it again?

Elliott Eldrich's picture

"the usa could be in a full blown shooting war with china and still be buying their shit at the same time."

Nailed it! Patriotism is only for the chumps who go and get their balls blown off for their corporatist masters. The corporatists laugh at patriotism, they laugh at nations, and they laugh at humanity. Their only God is money, their only interest is Mammon, their only passion is plunder. Anyone who wears the uniform of the corporatists pirates should be deeply ashamed of themselves, at the very least they should completely understand that they are nothing more than very poorly paid mercenaries.

TahoeBilly2012's picture

But don't forget they sponsor touchy feely liberalism all the while....sickos

KindaToldYouSo's picture

Stop referring to it as WW3. It's not going to happen. It's always been a pissing contest and it will stay that way.

JRobby's picture

Definitely Buzz. It is the only way to sanely prolong a war.

reinhardt's picture

easily the wisest and brightest comment in this thread so far

folks really don't get the way the world works (has always worked)


Noplebian's picture
Noplebian (not verified) buzzsaw99 Nov 24, 2015 2:27 PM
WW3 – Russian Jet and Chopper Destroyed by Turkey/US Proxies......

Truther's picture

Get them Vlad. Erdogan needs a quick lesson on war crimes.

LoneStarHog's picture

Vlad's response will FREEZE their ASSets this Winter.

chunga's picture

Ergodan better round up whoever shot the plane down and hand them over fast before he finds a horse head in his bed.

Oldballplayer's picture

It wasn't Aunty.

It was Master Blaster.

JustObserving's picture

Better to ask a few billion in compensation and a trial of the Turkish pilots who shot down the Russian plane inside Syrian territory at the Hague

Fish Gone Bad's picture

It is going to be a cold Turkish winter I'm afraid.

1223pm's picture

So this thanksgiving turkey will be roasted and will be left in the cold.

The Carbonator's picture

Obama and Democrat minions can just fly over there and blow gass out of their asses.


How is all that Hope & Change working out for you fools.

xrxs's picture

How would the SA/Qatar to Europe pipeline look then?  Interesting.

silverer's picture

If I was Putin, I'd pipe the assholes nitrogen, and bill them for it anyway.

J Jason Djfmam's picture

How much could you "cut" NG with an inert gas and still have it light?


Tasty Sandwich's picture

I'm sure Janet would like a big war or terror attack as a NIRP and more outright QE justification.