Russian Retaliation: How Will Turkish Gas Supplies Be Affected?

Moscow has no plan to cut off its supply of gas to Turkey in response to its downing of a Russian jet fighter, but that doesn’t mean Russian President Vladimir Putin isn’t furious with Ankara.

Hours after Tuesday’s incident, Russia's deputy energy minister, Anatoly Yanovsky, said the gas will be delivered according to the contract signed by the two countries. “It could not have been otherwise,” he said.

That would be fortunate for Turkey, which is heavily dependent on other countries for its energy, importing about 95 percent of it, including 55 percent or 27 billion cubic meters of the gas it consumes from Russia.

Related: Big Oil: Which Are The Top 10 Biggest Oil Companies?

Turkey says one of its F-16 fighters shot down the Russian Sukhoi Su-24 while it was in Turkish air space after the pilot repeatedly ignored warnings that it return to Syrian air space. Putin responded that the Russian jet never got within a kilometer of Turkey’s border; that, like Turkey, it was targeting Islamic State (IS) targets in the Syrian province of Latakia; and that it presented no threat to Turkey. “This incident stands out against the usual fight against terrorism,” Putin said. “Our troops are fighting heroically against terrorists, risking their lives. But the loss we suffered today came from a stab in the back delivered by accomplices of the terrorists.”

The key word here is “accomplices,” because the Russian leader suggested that the Turkish government has played a role in financing the operations of IS, also known as ISIS and Daesh. He said his government has long known about shipments of oil moving to Turkey from areas of Syria controlled by terrorists, and that the money to pay for the oil finances such groups.

Related: As Prices Tank, This Natural Gas Exporter Became A Net Importer

“IS has big money, hundreds of millions or even billions of dollars, from selling oil,” Putin said. “ In addition, they are protected by the military of an entire nation. One can understand why they are acting so boldly and blatantly, why they kill people in such atrocious ways, why they commit terrorist acts across the world, including in the heart of Europe.”

Putin said he is baffled by the incident. “We have always treated Turkey as not only a close neighbor, but also as a friendly nation,” he said. “I don’t know who has an interest in what happened today, but we certainly don’t.”

The incident came at a sensitive time for Western powers fighting the Islamic State in various parts of the Middle East. News of the shoot down came as French President Francois Hollande was in Washington to try to persuade President Obama to join with Russia in a stronger alliance against IS. The incident involving the jets, though, only intensified tensions between Moscow and NATO.
Still, at least one political analyst in Turkey says any action taken by Putin against Ankara is likely to be political, not economic.

Related: Oil Prices Down As Storage Keeps On Filling Up

“I don’t think the situation between the two countries will have an economic dimension,” political columnist Ugur Gurses told the Turkish newspaper Today’s Zaman. “In the past Russia did not immediately react economically to countries with which it was engaged in a dispute.” Gurses pointed to the continued flow of gas to European countries, even though they joined with the United States to impose harsh economic sanctions on Russia because of its unilateral annexation of Ukraine’s Crimean peninsula in March 2014.

The reason? Russia needs the money. According to Gurses, “Due to falling [oil] prices, the economy constricted,”and therefore, “On the topic of the downed plane, [Russia] won’t adopt a ‘let’s-close-the-valve’ attitude. The political reverberations will be more contentious.”

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:

• U.S Drillers’ Operating Loses Could Surge In 2016
• Can Next Week’s OPEC Meeting Comfort Oil Markets?
• Shale Gas Rig Count Could Implode Here If Prices Don’t Rebound