It’s still about oil and gas in the Middle East

Merve Sebnem Oruc

On 2 August, 1990, Iraqi forces blew into Kuwait. The main reason for the Iraqi invasion of Kuwait was economic; Iraq couldn’t pay its huge debts after eight years of war with Iran. Saddam Hussein accused Kuwait of overproduction of oil from the two countries’ shared oilfields and keeping oil prices low.

When Kuwait refused to wipe off Iraq’s war debts, Saddam came to the end of his tether and declared Kuwait as the 19^th province of Iraq. Following the United Nation Security Council’s economic sanctions and a series of resolutions against Iraq’s aggression, an international coalition was formed. Hundreds of thousands of troops were sent to the region.

In 1991, Iraqi soldiers set fire to more than 600 Kuwaiti oil wells one by one. It was Saddam’s last bold move. He was saying, “If I can’t have it, then no one can.”

Energy has always had a big part to play in the Middle East, as it does today. When the Kremlin started to carry out air strikes in Syria claiming that Russia was fighting ISIS, many started to ask what exactly Russia’s ultimate goal was in the Middle East. Neither Russia’s real intention nor the energy-related grounds of the Syrian conflict had been questioned until then.

Since the start of the bloody civil war, Russia has propped up Bashar al-Assad’s regime on many occasions by sending weapons to the Syrian army or vetoing drafts of the UN resolutions that would force Assad to leave power. As the bonds between two countries go back more than 40 years and Russia has been the biggest arms supplier of Syria, with a naval base in the coastal city of Tartus, no one has asked more.

Russia’s ultimate goal in Syria

Qatar, the largest exporter of liquefied natural gas (LNG), proposed a trans-Syria pipeline plan to Assad to send its natural gas to Europe in 2009. Assad refused the proposal to protect the interests of his long-time ally, Russia, which is Europe’s biggest natural gas supplier. Since Europe is dependent on Russian gas and Russia’s President Vladimir Putin likes to threaten Europe with turning off gas supply whenever he loses his temper, a Middle Eastern gas pipeline through Syria was an attractive proposition for Europe as well.

Assad refused the proposal but he realised that it was a big deal and there was another opportunity. He started negotiations for another trans-Syrian pipeline plan with Iran, which would carry Iranian and Iraqi gas to Europe across Syria. Iran, the largest Shia nation in the world, the Iraqi government, which is dominated by Shias after Saddam, and the Alawite-dominated Syrian government soon started to work on the Iran-Iraq-Syria pipeline. A Shia line for energy transfer was formed, and the first sectarian seed was planted.

Russia, of course, endorsed that project, as it would have more control over Iran’s gas imports than Qatar’s. Russia has already had long-term energy agreements in place with Iran. The Tartus base would also strategically help Putin to control the pipeline in question. Gazprom agreed to construct and manage that pipeline. An LNG plant where the gas would be liquefied and sent to Europe with LNG ships was going to be built in Syria. Moreover, Syria and Russia agreed to explore Syria’s offshore natural gas fields in the Mediterranean Sea. If oil or gas were found, Russian state-controlled Soyuzneftegas would have a controlling interest for 25 years.

Meanwhile, Gazprom agreed with Israel to finance an offshore LNG facility for Israeli gas discovered in the Mediterranean Sea and to ship LNG to Europe. The Russian energy giant has already made an attempt to establish control over distribution of Cyprus’s gas in the same area with the same goal in mind.

That’s why the Iranian pipeline is a priority for Russia. So when its forces entered Syria in October, Russia was not only backing the Assad regime, it was also backing its main goals.

The relevance of Turkey

Turkey is poor in oil and natural gas reserves but its geostrategic location makes the country feasible to become an energy hub between the Middle East and Europe. Many trans-Turkey pipeline projects, which would carry oil and natural gas from Central Asia and the Middle East to Europe through Turkey, have been on the table for a while. But this would mean lower oil and natural gas prices and lower European market share for Russia, which is a net importer of almost everything except oil and gas.

Since Putin does not want to lose Russia’s dominant role in the oil and gas market but also desires to make Iran, Iraq, Syria and the Mediterranean Sea its hinterland of oil and gas, Turkey has been a problem for Russia. The Nabucco pipeline project was a headache for the Kremlin, so are the Trans Anatolian Gas Pipeline (TANAP) and Trans Adriatic Pipeline (TAP). If Qatar’s trans-Syria pipeline proposal were accepted, it would also be a big problem for the Kremlin.

If the Iran-Iraq-Syria pipeline is established, Turkey will be bypassed. Also, if the East Med pipeline (Israel-Cyprus-Greece), another pipeline backed by Russia, were founded, it will bypass Turkey again.

Turkey and Russia started on the proposed Turkish Stream pipeline, which was supposed to replace the cancelled Russian South Stream project as of December 2015, but the talks were suspended last month. Turkish Stream was never considered as a promising project by energy experts. It was just a political move by both countries. European sanctions cornered Putin after Ukraine while Turkey was disappointed by the reluctance of its Western allies, which have dragged their feet to find a solution for Syria.

Lowering oil prices

The ultimate goal of Russia in Syria and the relevance of Turkey can explain Russia’s imbalanced reactions after Turkey shot down Russian warplane following an airspace violation. But Russia’s flare-up does not look like it will die down soon. The aggressive tone of the Kremlin raises the question of whether Russia is in a hurry for something.

Russia has been in recession for a while and, since oil is the country’s biggest single source of export income, the collapse in oil prices from over $115 a barrel in June 2014 to $45 at the end of November 2015 is not helping. Russia is among those hit by the recent decision of OPEC to increase its collective output despite crude oil prices dropping to a seven-year low. Russia is not willing to cut back its production to shore up prices while it loses about $2 billion in revenues for every dollar fall. If oil prices stay low, it is likely that Russia will suffer more.

It’s hard to think that Russians will begin to question Putin’s leadership as his popularity is still at record highs according to government-funded polls, but the Kremlin cannot afford its ongoing military spending. By ratcheting up tension with Turkey, Putin hopes to move oil prices up, but in the meantime, he is destabilising the region that is already in turmoil.

On the other hand, Turkey is trying to maintain calm to avoid a situation, which would end up badly. However, the past experiences in the Middle East cannot be neglected. Let’s hope Putin doesn’t copy Saddam and say: “If I can’t have it, then no one can.”