ISTANBUL -- Russian President Vladimir Putin has proposed offering Turkey new natural gas supplies to transform the country into a regional "gas hub" that controls gas flows to Europe.
During an exchange in Kazakhstan's capital Astana on the sidelines of the Conference on Interaction and Confidence Building Measures in Asia Summit, Putin told Turkish counterpart Recep Tayyip Erdogan that Turkey could become a hub "that determines gas prices."
"If Turkey and potential buyers in other countries are interested, we can consider building another gas pipeline and establishing a gas hub in Turkey for trade with third countries, first of all European countries," Putin said during the televised meeting on Thursday.
Calling Turkey "the most reliable transit country for gas supplies to Europe," the Russian leader said the hub would not only be a platform for supplies but also determine the price of gas. "Today, these prices are sky-high. We could easily regulate [prices] at a normal market level, without any political overtones."
Putin's overture to his Black Sea neighbor comes as he seeks an energy partner with whom he can leverage Russia's energy resources, as the war in Ukraine continues.
Turkey already hosts multiple natural gas pipelines from Russia, Azerbaijan and Iran as well as oil pipelines from Iraq and Azerbaijan. It has long sought to be more than just a transit state between the energy suppliers and their key buyer Europe. Setting commodities prices in the Turkish market, as Putin proposed, has been seen as ideal.
Country leaders -- including Russian President Vladimir Putin, Turkish President Tayyip Erdogan, Bulgarian Prime Minister Boyko Borissov and Serbian President Aleksandar Vucic -- mark the launch of the TurkStream natural gas pipeline in Turkey in January 2020. © Reuters On the presidential plane back from Kazakhstan later Thursday, Erdogan welcomed the Russian proposal, saying that the leaders immediately instructed their officials to study the idea.
"We will establish this distribution center at the most appropriate place," Erdogan said, in comments released Friday. He suggested that Turkey's Thrace region -- neighboring Greece and Bulgaria in the country's northwest -- would be the best place.
On Friday, Turkey's Foreign Minister Mevlut Cavusoglu said that Russia no longer considered the Nord Stream pipelines as a safe route following the recent sabotage. "(Russia) says that via pipelines passing Turkey they can supply gas to countries in Europe that want it," Cavusoglu said.
Additional pipelines and facilities need to be constructed to realize the project, he added. "This is an issue of supply and demand. How many southeastern and western European countries are ready to take gas from such a project? All such dimensions should be studied," he said.
Putin's proposals come as Europe scrambles to shed its dependency on Russian hydrocarbon resources.
The French presidency immediately rebuffed the Russian proposal, saying it makes "no sense in creating new infrastructure that allows more Russian gas to be imported," according to AFP. An Elysee Palace spokesperson said that the market share of Russian gas in Europe has already fallen to 7.5% from close to 40% a few months earlier, adding "it is likely to fall further."
"Russia and Turkey may decide together to export more gas but it cannot be to the European Union, which has commitments to sovereignty, to reducing its dependency and also to the climate transition," the Elysee said.
Russia is seeking ways to reroute gas supplies from Nord Stream Baltic pipelines, which were damaged by explosions last month. Russia and the U.S. have blamed each other of sabotage.
During the televised portion of the meeting, Erdogan expressed hope that Turkey's first nuclear power plant, being built by Russia's state-owned Rosatom, will open in the first half of next year. It will be the first of four nuclear reactors planned in the southern Turkish town of Akkuyu.
The timeline is expected to align with Turkey's presidential and parliamentary elections, which must be held by mid June.
Russia has already wired billions of dollars to Turkey this year to cover some of the construction costs of the nuclear plant, in effect boosting Turkey's diminishing central bank reserves.
Erdogan also asked Putin to construct Turkey's second power plant in the Northern city of Sinop, saying that if both plants come online, they will together produce 20% of Turkey's total annual electricity needs.
The Turkish and Japanese governments had signed an agreement to build a four-reactor nuclear power plant in Sinop in 2013, planned to be constructed by a Japanese-French consortium. But the plan was scrapped when feasibility studies showed that costs would be double that of initial projections.
Then-Japanese Prime Minister Shinzo Abe, left, shakes hands with Turkish Prime Minister Tayyip Erdogan during a 2013 signing ceremony in Ankara for a subsequently scrapped Japanese-French nuclear power plant project.
© Reuters Erdogan told Nikkei in a 2019 interview: "We saw a picture which was not compatible with our initial agreement in terms of both cost and calendar."
Turkey has engaged in a delicate diplomatic balancing act as regards the Ukraine war. The NATO member has been providing armed drones to Ukraine, openly condemned Russia's invasion, and has closed the Turkish Straits of Dardanelles and Bosporus to warships, blocking Russia's ability to reinforce its navy.
Still, it has refrained from joining Western sanctions against Russia, saying Turkey is only bound by sanctions imposed by the United Nations Security Council. Russia is vital to Turkey's trade and tourism revenues.
Erdogan has leveraged his good personal relationship with Putin, securing a deal to pave the way for Ukraine to export grain through the Black Sea.
But both the U.S. and EU are increasingly uneasy about Turkey deepening ties with Russia.
The EU Commission issued its annual report on EU accession candidate Turkey on Wednesday, saying: "Turkey's non-alignment with EU restrictive measures against Russia is of particular concern due to the free circulation of products, including dual-use goods, within the EU-Turkey Customs Union. This creates a risk of undermining EU restrictive measures."
The report said that for the customs union to continue functioning, "The parties must fully respect existing rules and avoid undermining mutual trust."
In addition, the report took note of some Turkish banks that had accepted the Russian MIR payment system for credit cards -- moves that were suspended after the U.S. Treasury warned they could trigger secondary sanctions.