TurkStream’s $16bn impact: Geopolitical shifts for Ukraine, Turkiye and Hungary in Europe’s energy landscape

In the shifting landscape of global energy geopolitics, the TurkStream natural gas pipeline stands out as a critical artery for energy flows between Russia and Europe, with far-reaching consequences for Turkiye, Ukraine and Hungary. Launched in January 2020, TurkStream was designed to deliver Russian natural gas to Turkiye and onward to south-east Europe, bypassing Ukraine—a development that not only altered energy dynamics but also reshaped the geopolitical landscape of the region. This article explores the implications of TurkStream for Ukraine, Turkiye and Hungary, and the broader energy and political context in Europe.

TurkStream overview and its strategic importance

TurkStream consists of two parallel pipelines running from Russia to Turkiye across the Black Sea, with each line having a capacity of 15.75 billion cubic meters (bcm) of gas per year. The first line supplies gas to the Turkish domestic market, while the second is intended to provide gas to Southern and Central Europe, via Bulgaria, Serbia and Hungary.

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This pipeline is part of Russia’s broader strategy to diversify its gas export routes to Europe, reducing its dependence on Ukraine as a transit country. Traditionally, much of Russian gas bound for Europe travelled through Ukraine’s aging gas infrastructure. TurkStream, along with the Nord Stream 1 and 2 pipelines, seeks to bypass Ukraine entirely, ensuring more secure and direct gas routes to Europe, while limiting Ukraine’s role as a transit country.

For Turkiye, TurkStream is a geopolitical asset that enhances its standing as an energy hub. It underscores Turkiye’s strategic positioning as a critical link between the world’s largest natural gas producer, Russia, and energy-dependent European nations. Beyond economics, TurkStream also bolsters Turkiye’s geopolitical leverage in its relations with both the European Union and Russia.

Implications for Ukraine: Energy security and geopolitical concerns

For Ukraine, the commissioning of TurkStream has raised significant concerns about energy security and geopolitical marginalisation. Ukraine has long benefited from transit fees for Russian gas flowing to Europe through its territory. At its peak, around 90 bcm of Russian gas transited Ukraine annually. However, with pipelines like TurkStream and Nord Stream 2, Ukraine’s relevance as a key transit route has diminished. In 2021, the transit volume through Ukraine was already down to around 40 bcm annually.

The financial impact is significant—Ukraine earns about $2 billion annually in transit fees from Russian gas exports. With TurkStream operational and Nord Stream 2 on the horizon, these revenues are expected to shrink further, putting additional pressure on Ukraine’s already strained economy.

Politically, Ukraine’s exclusion from the gas transit system also increases its vulnerability. The loss of transit status reduces Kyiv’s leverage over Russia and Europe in energy discussions, potentially isolating Ukraine as European nations look for more secure and cost-effective alternatives to Russian gas transiting through Ukrainian infrastructure. This isolation is particularly concerning given the ongoing conflict with Russia and the broader security implications for Ukraine’s territorial integrity.

Turkiye: A strategic energy hub

For Turkiye, the TurkStream pipeline has reinforced its aspirations to become a regional energy hub, where gas from Russia, Azerbaijan, Iran and other potential suppliers could flow into Europe. The country’s geographical position at the crossroads of Europe and Asia makes it an ideal candidate for energy transit infrastructure.

As of 2021, Turkiye consumed approximately 60 bcm of natural gas per year, of which around 45 per cent is supplied by Russia, making TurkStream a vital source of energy for the Turkish economy. However, Turkiye’s role extends beyond being a mere consumer. By facilitating the flow of Russian gas to Europe, Turkiye strengthens its geopolitical leverage vis-à-vis the EU, allowing it to position itself as an indispensable partner in Europe’s energy security framework.

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The pipeline also strengthens Turkiye’s relationship with Russia. Despite tensions over regional conflicts, notably in Syria, Libya and Nagorno-Karabakh, energy cooperation remains a cornerstone of Turkish-Russian relations. TurkStream exemplifies the pragmatic aspects of this relationship, where economic interests, particularly in energy, take precedence over geopolitical rivalries.

Additionally, Turkiye’s participation in multiple gas transit projects, including TANAP (Trans-Anatolian Pipeline) and TurkStream, allows it to play multiple sides in the region’s complex energy dynamics, balancing relations with Russia, the EU, and its neighbours in the Caucasus and Middle East.

Hungary’s reliance on TurkStream: A delicate balance

Hungary has emerged as a key European beneficiary of TurkStream, relying heavily on the pipeline for its gas supply. Hungarian Prime Minister, Viktor Orbán, has pursued a foreign policy that maintains strong ties with Russia, particularly in the energy sector. In 2021, Hungary signed a 15-year gas supply deal with Gazprom, ensuring long-term access to Russian gas through TurkStream. The deal allows Hungary to receive 4.5 bcm of gas annually, further entrenching its reliance on Russian energy.

Hungary’s relationship with Russia via TurkStream complicates EU efforts to reduce the bloc’s dependency on Russian gas, particularly in the wake of the Ukraine crisis. The EU’s attempts to diversify its energy sources and reduce its reliance on Russian gas face significant hurdles when individual member states, like Hungary, continue to sign long-term contracts with Gazprom.

This reliance on Russian gas also puts Hungary at odds with other EU countries that are more committed to diversifying energy sources and aligning their foreign policy with EU sanctions on Russia. It underscores the difficulties in achieving a unified EU energy policy when national interests diverge, particularly when energy security is at stake.

A shifting geopolitical landscape

The TurkStream pipeline has undeniably shifted the geopolitical and energy landscape in Europe and the broader Eurasian region. For Ukraine, the bypass of its traditional transit routes represents both an economic and geopolitical loss, heightening concerns about isolation and vulnerability in its confrontation with Russia. For Turkiye, the pipeline bolsters its position as a regional energy hub, enhancing its influence in both Europe and the Middle East. Meanwhile, Hungary’s reliance on TurkStream strengthens its ties with both Russia and Turkiye, but complicates EU unity on energy security.

As Europe continues to grapple with energy dependence on Russia, the geopolitical ripples of TurkStream will be felt for years to come, shaping the region’s energy politics and foreign policy alignments.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.