The Russian-Ukrainian conflict represents a geopolitical turning point in the reshaping of energy flows in the Black Sea region, especially in the context of the economic sanctions exchanged between the European Union (EU) and Russia. While the EU imposed economic and trade sanctions on Moscow to hinder its war efforts, Russia responded with counter-sanctions targeting the European gas sector. Nevertheless, many trade exchanges continue, as Russia exploits legal loopholes in the sanctions regime, allowing it to continue exporting raw materials to European countries and importing goods from the EU, particularly from Germany.
This brings to light the importance of the report released by the Observatory for the Security of Energy and Materials Flows (OSFME) in April 2024, which examines the economic impact of the Russian-Ukrainian conflict on the restructuring of energy and trade flows between the EU and Russia, particularly in the Black Sea region. The report discusses projects aimed at diversifying energy sources for European countries to compensate for the deficit in Russian oil and gas imports. It also explores Russia’s strategy to circumvent European sanctions by finding alternative solutions and routes for exporting raw materials, leveraging Turkey’s significant role as a regional energy hub. The report concludes by highlighting the risks that could affect gas extraction operations from newly discovered offshore fields off the coasts of Ukraine, Bulgaria, Romania, and Turkey, particularly the “Neptune Deep” field.
Redirecting Energy Flows
1. The Black Sea’s Role in European-Russian Trade (Before 2022):
The Black Sea serves as a strategic crossroads in the Eurasian continent, linking Europe, the Balkans, Russia, the Caucasus, Central Asia, the Middle East, and the Mediterranean. It is a focal point where major and medium powers with competing geopolitical ambitions, such as Russia and Turkey, coexist. Relations between Ankara and Moscow have strengthened in recent years, despite significant tensions arising from their differing positions on regional geopolitical crises.
The geopolitical tensions triggered by the Russian-Ukrainian crises in 2006, 2009, 2014, and the onset of the war in 2022 heightened the EU’s awareness of its heavy energy dependence on Russia, making energy security a central focus of European policy. During this period, the failure of the “Nabucco Project” to establish a gas corridor for Southern Europe, led by Azerbaijan and Turkey with EU support, provided Turkey with an opportunity to become a strategic transit area.
Between 2000 and 2020, there was a gradual shift in the gas transit center from Ukraine, which hosted about 70% of Russian gas transit to the EU at the start of the 21st century, toward Turkey. Several pipelines (BTC, BTE, Blue Stream, TANAP, TurkStream) were constructed on Turkish territory over two decades, positioning Turkey at the heart of the process of reshaping energy flows, particularly gas, toward Europe.
2. The New European Energy Strategy:
Before the outbreak of the Russian-Ukrainian conflict in February 2022, Moscow was the primary energy supplier to the EU, with the latter importing approximately 45% of its gas, 27% of its oil, and 46% of its coal from Russia in 2021. Russian energy exports were valued at around 300 billion euros, constituting a major source of income for Moscow. The total gas demand in the EU was around 400 billion cubic meters annually, with 150 billion cubic meters supplied by Russia, mostly via pipelines. However, to undermine Russia’s war effort in Ukraine, the EU announced a significant reduction in its energy imports from Moscow during 2022, aiming to phase them out entirely by 2027. It also imposed a series of sanctions on imports of Russian oil and coal via the sea.
Two years into the Russian-Ukrainian conflict, the EU’s energy import sources have diversified, and the share of Russian gas has significantly decreased. In 2022, Russian imports dropped to 80 billion cubic meters, declining further to 43 billion cubic meters in 2023. The EU’s dependence on Russian gas sharply decreased from 45% of the European market share in 2021 to 15% in 2023. By early 2024, only two of the five main routes for Russian gas supplies to Europe remained operational: the “TurkStream” pipeline, which crosses the Black Sea to reach Turkey, and the “Fraternity” pipeline, which runs through Ukraine. To compensate for the shortfall in Russian gas, the EU has strengthened its ties with traditional partners, particularly Norway, which accounted for 30% of the EU’s gas imports in 2023, and Azerbaijan, which has increased its gas exports to the EU by over 46% since 2021.
3. The Middle Corridor: A Multimodal Transport Project in Central Asia to Bypass Russian Networks:
The countries of the South Caucasus and Central Asia, rich in hydrocarbons and minerals like uranium in Kazakhstan’s case, are landlocked and located in the heart of the Eurasian continent. To export their resources to Europe, these producing countries rely on infrastructure networks built during the Soviet era that pass through Russia.
Amid successive sanctions packages that have impacted the Russian economy, the exporting countries of Central Asia seek to diversify their export routes by developing the Central Asia Corridor, supported by China and the EU. This is a multimodal land and sea transport corridor that allows the transport of raw materials and consumer goods from China to Europe. It stretches from the Chinese coast through Kazakhstan to the port of Aktau on Kazakhstan’s Caspian Sea coast. Goods are then transported across the Caspian Sea to Azerbaijan, and from there, they cross the South Caucasus and the Black Sea to Europe. The volume of trade between Central Asian countries and the EU has significantly increased since the start of the Russian-Ukrainian conflict. In 2022, the volume of goods transiting through this route increased by 2.5 times, reaching 1.5 million tons, and is expected to reach about 4 million tons in 2024 and 10 million tons in the medium term.
By politically and economically supporting this major geopolitical project, the EU aims not only to revive land links with China but also to develop a corridor that allows it to bypass Russian networks via ports. This requires the modernization of rail, road, and port infrastructure to increase their export capacity. In February 2024, Kazakhstan’s Ministry of Energy, which transports four-fifths of its crude oil through Russian territory via the Caspian Pipeline Consortium, in which Moscow owns 31%, announced that it is negotiating with Azerbaijan to increase its oil exports to 3 million tons annually through the “Baku-Supsa” pipeline.
Russia’s Circumvention Strategy
1. Turkey as a Hub for Reshaping Energy Flows:
Western sanctions on Russian crude oil and oil products, coupled with the sharp decline in Russian gas exports to the EU, have reinforced Turkey’s strategic geographic position in the energy sector. In 2022, Russian exports to Turkey saw an exceptional increase, driven by the energy sector, rising by 103.1% compared to 2021, making Russia Turkey’s main supplier, ahead of China.
This development confirms some key trends that have emerged since the early 2000s, most notably Turkey’s role as a regional “energy hub” due to its geostrategic location and its growing role on the regional and international stages. In its relationship with Russia, Turkey is a strategic energy partner, and the Russian-Ukrainian conflict allows Ankara to strengthen its economic and strategic partnership with Moscow by positioning itself as a privileged intermediary that enables Russia to bypass Western sanctions through Turkish territory.
In response to Western sanctions on Russian oil, Russia has implemented a circumvention strategy in which the Black Sea and Turkey play a key role. The Western oil embargo, which took effect in December 2022, affects two-thirds of Russian oil exports by setting the price of Russian barrels at $60 and prohibiting companies in the EU, G7 countries, and Australia from providing services necessary for transporting oil by sea from Russia.
In reality, Russia’s sanctions evasion system, with Turkey’s assistance, allows it to export almost all of its production without any oversight, leveraging Turkey’s geographical position and its control over the Bosporus and Dardanelles straits. Since the beginning of the war in Ukraine, Turkey has doubled the amount of crude oil imported from Russia, reaching a record level of 400,000 barrels per day in November 2023 (about 14% of Russian seaborne oil shipments). Turkey has become the third-largest destination for Russian crude oil exports after India and China, and the largest for oil products.
Moscow is also pursuing a gas strategy divided into three main lines: First, starting in 2021, Russia began reducing export volumes to the EU. Second, since the beginning of the invasion of Ukraine, Russia has intensified its strategy of limiting exports to Europe, demanding payment for imports in rubles and imposing counter-sanctions on the West, targeting the gas sector. Third, since the invasion, Russia has accelerated the diversification of its liquefied natural gas (LNG) resources and export destinations, particularly towards new partners like China.
2. The Balkans as a Gateway for Russian Gas to Central and Eastern European Markets:
The Vertical Gas Corridor project in the Balkans, initiated in 2016, aims to develop bi-directional regional gas flows along a north-south axis. This involves linking Greece with Eastern European countries to reduce Russia’s control over gas supply routes to Europe, creating new opportunities for cooperation and competition among gas-producing countries. This is beneficial for Turkey, as it enhances its revenues, strategic position, and gas accessibility, and for Russia, as it facilitates the evasion of origin identification, making it difficult to label the gas as Russian. This allows Moscow to sell its refined oil products to European countries while conce aling their origin.
Additionally, the project allows Turkey to consolidate its role as an energy “hub” by implementing its own circumvention strategy, enabling the import and re-export of Russian gas via the Trans-Balkan Pipeline (TBP), which transports it to Central and Eastern European markets. For example, Russian gas supplies to Bulgaria reached an all-time high in 2023, rising by 60% to over 2 billion cubic meters per year. Russian companies also provide cheap natural gas to Serbia, Bosnia-Herzegovina, and the Republic of North Macedonia, allowing the Kremlin to regain control over these markets.
3. Risks Facing Gas Extraction in the Black Sea:
The successive crises resulting from the Russian-Ukrainian war have spurred the EU to establish new partnerships to secure its energy supply, particularly in the Black Sea. However, this supply has become increasingly politicized. Amid geopolitical tensions, several countries have increased exploration activities in their offshore zones. In September 2022, Turkey discovered a gas field containing 58 billion cubic meters in the Sakarya zone. Bulgaria is also increasing exploration in the Khan Asparuh zone and in deep waters off the coast of Romania.
Russia’s invasion of Ukraine has accelerated gas extraction efforts from several Black Sea fields. However, this extractive activity has been met with caution, as it increases the risk of military conflict with Russia. In February 2023, the Ukrainian Armed Forces destroyed a Russian military base on Snake Island, strategically located 35 kilometers from the Neptune Deep field, which contains over 100 billion cubic meters of gas, 90% of Romania’s total reserves. Since February 2022, several major Western companies have joined the Black Sea extractive projects, including British oil company Shell, which announced in March 2024 that it would develop extraction operations in Ukraine’s offshore zone, despite the risks of Russian bombing, and French company TotalEnergies, which holds a stake in the gas exploration license in the Romanian zone.
Moscow is closely monitoring these new players’ participation in gas extraction, raising concerns about potential sabotage actions to disrupt production. However, Turkey is pursuing an ambitious gas development strategy and has discovered new reserves in the Black Sea since 2020, increasing its reserves by 30% and gradually reducing its dependence on Russian imports. These new gas fields are expected to be connected to the national gas network by 2028, strengthening Turkey’s energy independence. Turkey’s exploration policy in the Black Sea is linked to its maritime strategy in the Mediterranean, particularly its ambition to extract oil and gas in disputed waters in the eastern Mediterranean, the subject of tensions with Greece and Cyprus, both EU members.
In conclusion, the OSFME report highlights the transformation of energy flows in the Black Sea region and Turkey’s role as an intermediary in Russia’s circumvention strategy. It also emphasizes the risks and challenges posed by gas extraction activities in this region. Turkey’s ambitions as an energy “hub” are growing, and its geopolitical importance is likely to increase in the coming years, particularly as it seeks to reduce its dependence on Russian gas and assert itself as a key player in the global energy market. However, the risks of conflict and the uncertainties surrounding gas extraction in the Black Sea remain significant, making the region a key battleground in the broader geopolitical struggle between Russia and the West.
Noémie Rebière, Sami Ramdani, Luca Baccarini, “Guerre russo-ukrainienne: la région de la mer Noire au cœur de la reconfiguration des flux énergétiques”, OSFME, Avril 2024.
