The Istanbul Energy Forum, organized by the Ministry of Energy of Türkiye in collaboration with Anadolu Agency, brought together global leaders, policymakers, and industry experts to address the critical challenges and opportunities in the energy sector. Among the notable participants was the 1st Deputy Minister of Energy of the Russian Federation, a key figure in shaping Russia’s energy policy and international collaborations.
In this exclusive interview, the Deputy Minister shared insights into Russia’s perspective on regional energy cooperation, its approach to energy security, and the evolving dynamics of global energy markets to Dr. Esra Karahindiba from Harici. The conversation also delves into Russia’s participation in Türkiye’s energy initiatives and the broader implications for energy transition and geopolitical stability.
Let’s start with Russian President Vladimir Putin’s much-spoken statement on Turkey as being an energy hub. What are the steps taken for this initiative? What are the works which you can tell us until now? Was it just a statement, or was it really an initiative that you were working on?
Yes, thank you very much for the question. Indeed, Turkey enjoys a position of privilege in the sense that it is a bridge between two worlds, between Europe and Asia. Through centuries, Turkey has been playing that role, that very important role, and rather successfully. So previously, that was the Bosporus, you know, and the trade routes. Now, it is, to the same extent, an energy pathway. Gas pipelines and the same energy flows of oil through the Bosporus again help Turkey retain this role. Thanks to their very pragmatic and economically oriented approach, Turkey has been able to navigate this path very successfully despite all the political turbulence we’re seeing in the world.
So, that is definitely a feat by itself and an accomplishment. The initiative by our president to discuss and to work on making Turkey a gas hub as well is a continuation of this path and continuation of this work.
So now, already, Turkey receives gas from a number of sources, with the biggest being Russia, but also we’re seeing gas flows from Azerbaijan, some from Iran. Turkey imports LNG from various different sources. So, already, in many ways, it is a gas hub. Of course, predominantly, this comes for domestic consumption, which is growing, but also a significant portion of it is re-exported to Europe, adjusted for, of course, infrastructure bottlenecks, which always exist, but they take time to be lifted. There’s work being done on that.
There’s also potential to work on becoming a trading hub, also, with so many sources. Trading and the financial aspects of this trade are also quite a big potential, which is currently being discussed and worked on. So this definitely is a very prospective area and a very prospective pathway for our countries to continue working on.
There is still work in progress, of course, but this is a very major step forward, and it needs time to prepare and a lot of work to be done to make it actually beneficial for all sides, for the consumers and for the producers as well.
Do you have any numbers? What is the expected capacity or volume?
It’s a much broader concept than just volumes or just pipelines because, as I said, it’s a complex issue. So, at this point, I think it’s best to actually get all the pieces in place, get all the pieces of the puzzle in place because it requires a lot of discussion, and it requires a lot of work to coordinate this.
Especially, as I said, with all the obstacles and pitfalls that exist in today’s world, a lot of questions and topics need to be worked around to make it work for all the potential users of the system.
So, it’s not just about pipelines and numbers of volume supply, but it’s more about creating the whole ecosystem and making it accessible for everyone who wants to have access to it.
You just mentioned some steps. Which steps need to be taken? What is the outline of the
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In all those areas that I mentioned, we need the legal foundation for that. We need, basically, the contract foundation. We need to make sure that all the suppliers who take part in it, there is also sufficient additional supply.
So, as I said, it’s not one concrete step that, at this moment, we could talk about, but it’s rather a complex of things and a whole big list of things that need to be done, which are all being worked on at the moment.
That’s a big package. So, another topic was energy trade with local currencies. Is it possible for Turkey and Russia to take new steps towards conducting energy transitions in national currencies, and what conditions would need to be met for this to succeed?
Well, there already is quite a lot of trade in national currencies. And once again, as our president has been saying for quite a number of years now, that all countries, the global South, and our partners should consider increasing the share of trade in local currencies because that would give us significantly more financial freedom and room to maneuver.
As the recent three years have shown, this is a very solid foundation for future growth. Of course, there is volatility in exchange rates for local currencies. But the more we actually trade in them, the more we utilize them, the more predictable exchange rates would become, and the stronger these currencies would be as a global means of payment and global means of exchange.
So, we do already have quite a lot of trade in local currencies, not just in energy but in industry and agriculture, and the share would be growing. But, you know, because of some inherent disbalances in trade, in bilateral trade between countries—and this does not just concern Russia and Turkey; it’s true for almost any bilateral trade—either exports are higher, or imports are higher.
So this disbalance, of course, leads to an impact and effect on exchange rates, which would be used in such bilateral trade. So we need to work on actually getting more countries into this national currency trade circle so that we do get a balance, if not between two countries on a bilateral basis, but rather on a multilateral basis in trade.
And if that can be done—when I won’t say if, when, because we’re definitely moving towards that—then we can have a much more balanced scene for local currency trading. And that’s what we need to work on: to bring more countries with which both Russia and Turkey trade, to bring more of them into this game, because then that would help us eliminate arbitrage and that will help us eliminate many of the negative factors currently affecting this process.
I.e., exchange rates imperfections because, I mean, of course, when you trade against a global currency such as the dollar, there is much more liquidity, and this task of balance is already solved because a lot of countries trade in dollars, you know, and so you have a universal means of payment. But with local currencies, we need to work on that system.
That’s the area for development, but our central banks are heavily engaged in this, just as our foreign ministries and, of course, all the industrial ministries—the Ministry of Energy, the Ministry of Industry—to actually make this work. So, I see huge potential there.
Which countries are you negotiating with for making energy trade with national currencies? What are the potential countries?
With all our partners. We’re talking about probably with the countries which constitute up to 80% of the global population, which are not part of the non-friendly countries, or so as we call it. Because everybody is interested in this.
Everybody is interested in making their currency a universal means of payment, at least for their goods. So we are engaged in this process with everyone, and our president has openly and vocally stated this—that he’s inviting all our partners to do more work on this.
But I can say that this is a positive process and one which is developing.
I guess you were referring to China or India.
Everybody, including them, including those countries, yes.
Let’s talk about European energy security. With sanctions, Europe actually, in a way, has fallen into an energy trap. The lack of access to Russian energy has created challenges, especially for Germany and its industrial sector. If European countries request to resume gas supplies, how would Russia evaluate such a demand?
You know, in Russia, we have a proverb which you can directly translate as “don’t dig a hole for somebody else, because you’ll most likely be the person who falls into that hole.” And unfortunately, we’ve seen that with, as you said, the sanction policy.
The toll, the toll which the global economy paid, was huge. And we’re talking, as I said, about hundreds of billions of dollars just in 2022 and 2023. But a big chunk of that toll was paid by the Western countries themselves, which imposed those sanctions.
As a country, we have always been on the pragmatic path. We have, and we are continuing to do that—putting economy first and pragmatism first. But unfortunately, that’s not the approach of everyone, and today’s world does see quite a lot of hypocrisy and quite a lot of politicizing around various issues.
In the end, unfortunately, it’s the consumer who suffers. The consumer, both in the retail space—meaning people—and also in the corporate space. And as you’ve said, we have seen quite a lot of impact on the European economy from losing competitive energy sources.
What we have to keep in mind is that most of the traditional economies are very quickly losing their competitive appeal. Population is aging, welfare is high, and interest rates are not zero anymore. Yes, they’ve been declining over the past two quarters, but they’re not zero anymore.
So, this financial aspect and the monopoly on access to cheap funding have been deteriorating. Plus, technological competitiveness is also something that is deteriorating because we see many countries in Asia-Pacific especially making these technological leaps forward and becoming real competitors in the technology space.
With a lot of competitive factors being lost, energy was one of the major competitive factors that Europe had, and they deprived themselves of this factor, which has led to the consequences you spoke about.
Our president has said on numerous occasions that we were not the ones to impose sanctions; we were not the ones who started this process. So, we, as we have been, remain open to proposals, and we remain open to a pragmatic approach. Unfortunately, we don’t yet see that from some of the countries on the global scene.
But as I said, we remain pragmatic, and the president has made this very vocal and very open—that we are above politics.
Honestly speaking, this energy trade lack with Europe also impacts Russia’s economy. How did the sanctions impact Russia’s energy sector? Is Russia able to compensate for the loss of the European market, because you also lost a big market?
Of course. When I said there’s a toll on the global economy, everybody pays it. It’s not just the countries which impose sanctions that pay the toll. It’s not just the global South that pays for it. And that is one of the most disappointing things because countries that are struggling to find financing for social projects, for projects needed for development, are instead forced to pay this extra toll because of somebody else’s politics. That’s very disappointing and definitely does not help build a just and sustainable economy.
But Russia, of course, also pays a price for this. We’re realistic about it, but we have managed over the past few years to more or less mitigate most of the risks and negative effects we’ve seen.
We are very well on the path to achieving technological sovereignty in the sense that we’re covering most of the critical technologies that are needed. I’m talking mostly about the energy sector but also about other segments of the economy as well.
In the energy sector, we are pretty much covered in most of the critical technologies we need to generate electricity, produce oil, gas, and coal, and transport it. Of course, it comes at a bit of a higher price, but that’s the cost that we have to pay to achieve technological sovereignty, which is very important for our country—and I believe, for any other country as well.
Talking about the price—once again, as I said, we cannot do anything about the longer transportation routes because that’s just physics and geography. So, of course, we’ll be paying more. But most of that has led to the market being distorted and consumers paying a higher price.
In the end, all these costs get transitioned and transferred to the global economy. So, it’s very unfortunate. But once again, we were not the ones who started politicizing energy.
We remain committed to continuing working within whatever the market gives us. So, we currently are well in the market. We can sustain this and will continue working on lowering our costs to the maximum so that we can give energy to the markets at the most competitive price. We’ve solved most of those problems, and we’ll continue working on them.
Let’s also talk about the Istanbul Energy Forum. What are the expected outcomes of the forum for Russia and Turkey? I guess you had some bilateral talks with the Turkish Energy Minister, and there are also ministers from other countries like Hungary and Libya. What is this forum going to bring to your energy policies?
Well, the forum, as it turns out, we’re actually glad to see very good attendance, which shows significant interest, not just in Turkey but in Turkey’s role as one of the key players in the region in terms of energy.
The countries you’ve mentioned are all partners or neighbors that are interconnected in a good way, in terms of energy trade. So, we, as the Russian Federation, have relations with all those countries as well. We have projects in those countries and long-term, longstanding partner relationships.
We methodically continue working on developing those. And once again, especially in a world with significant political volatility, we need to stick together in building alternatives for everyone.
Diversification, not just in terms of energy supply but also in terms of technological cooperation and financial cooperation, is key to the well-being of any country today. This forum provides just such a platform because we are able to discuss our regional or bilateral issues and topics together.
With His Excellency Mr. Alparslan Bayraktar, we have a very big agenda. The Ministry of Energy of Russia and the Ministry of Energy and Natural Resources of Turkey have been longstanding partners. A lot of the projects we talked about today—the Turkish Stream, the Blue Stream, the transit routes, the energy hub—they are all being developed under the patronage of the respective ministries.
That’s why there’s always a very big agenda to discuss. What I can say, and for which we are very grateful, is that once again, pragmatism, economic pragmatism, common sense, and good neighborly relationships have always been the key pillars and the foundation of our relationship.
No matter what the volatility and no matter how things look from the outside, we have always been able to find solutions that benefit both sides. Mutually beneficial resolution of any dispute or any topic was always the cornerstone of our relationship, and it continues to be so.
This forum once again underscores this—that in any global situation, we are able to come together and discuss what our countries need.
Thank you very much. My questions are finished. Is there anything you’d like to tell us that I didn’t ask you?
I think we’ve covered the most important topics related to this industry.
Thank you very much. This interview was exclusive, and you spared your time for us.
Thank you very much.
