In December 2014 the Russian President, Vladimir Putin, announced the cancellation of the South Stream pipeline, and its replacement by the Turk Stream pipeline. Before examining the geopolitical consequences of the cancellation of the South Stream and its replacement by the Turk Stream one needs to examine the geopolitical framework of the Russian-Turkish relations. This basically means to examine Russia's and Turkey's main geopolitical objectives, and to examine how the objectives of one country affect the objectives of the other.
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Russia’s most important geopolitical objective is to maintain her dominant role in the European oil and natural gas markets. Russia is the largest exporter of natural gas in the world, and one of the largest exporters of oil. Approximately one third of Europe's oil and natural gas imports come from Russia.
Turkey’s most important geopolitical objective is to ensure the country's energy security, because Turkey is very poor in oil and natural gas reserves. In addition Turkey wants to become the absolute energy hub between the Middle East and Europe, in order to generate huge revenues in transit fees, and to be able to bargain for better prices with the rich in oil and natural gas countries, which will depend on Turkey for their sales. By doing that Turkey will also increase her geopolitical might, because Europe will increase her dependence on Turkey.
Which are the main threats for Russia and Turkey? Which are the main obstacles to their geopolitical objectives? For Russia the main danger is the construction of a pipeline network that will connect Europe with the Caspian Sea and the Middle East through Turkey. This pipeline network would send to Europe the natural gas and oil of Iran, Iraq, Turkmenistan, Qatar, Saudi Arabia and Azerbaijan, which are all very rich countries in oil and natural gas. This would mean lower prices and lower market share for Russia's oil and natural gas industry, which account for approximately 70% of the Russian government's revenues.
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For Turkey the main danger is the connection of Europe with the Middle East and the Caspian Sea with a pipeline network that will bypass Turkey as an energy hub. This would reduce Turkey's ability to bargain vis a vis the rich in oil and natural gas countries, and it would also reduce Turkey's geopolitical significance, because it would reduce Europe's dependence on Turkey.
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In the past there have been two main efforts to bypass Turkey as the absolute energy connection between Europe and the Middle East. The first one was the Iran-Iraq-Syria pipeline, see the red line on the above map, and the other was the East Med pipeline (Israel-Cyprus-Greece), see the yellow line on the above map. Turkey attacked both Israel and Syria. Turkey attacked Syria with the help of Saudi Arabia, Qatar and UAE, and Turkey attacked Israel with the help of Qatar and Iran. Turkey and Qatar support Hamas, the Muslim Brotherhood affiliate that runs Gaza, and Iran supports Hezbollah, the shite military organization that operates at the borders of Israel and Lebanon. For more information see 'USA Russia & China in the Middle East: Alliances & Conflicts'.
The above represent the main geopolitical objectives of Russia and Turkey, and the main threats to their geopolitical objectives. What is very important is that Turkey is the main threat for Russia's geopolitical objectives, and Russia is the main threat for Turkey's main geopolitical objectives. It is mainly through Turkey that a competing to Russia pipeline network can be constructed, in order to send Iranian, Iraqi, Qatari, Azerbaijani and Turkmen natural gas to Europe. At least that's the best option, because the other options require the construction of long underwater pipeline networks, which are much harder to construct and they also cost a lot more.
Russia is behind the Iran-Iraq-Syria and the East Med pipelines. Gazprom agreed to construct and manage the Iran-Iraq-Syria pipeline, which would bypass Turkey (red line at the following map). An LNG plant would be built in Syria or Lebanon, which would liquefy the natural gas and send it to Europe or Africa with LNG carriers (ships). The pipeline would carry Iranian and Iraqi natural gas. In addition Russia agreed with Syria to exploit Syria's offshore natural gas fields in the Mediterranean Sea (purple circle at the following map).
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Moreover Russia formed an alliance with Cyprus and Israel in the East Mediterranean Sea. Both Israel and Cyprus have found natural gas reserves in the Mediterranean Sea (see black and yellow circles on the above map). Cyprus and Israel would be very happy to sell their natural gas to Europe through the East Med Pipeline (Israel-Cyprus-Greece), or by liquefying their natural gas at an LNG plant, which would be built in Cyprus, and then ship it to Europe.
With the plans for the Iran-Iraq-Syria pipelines, and the alliance with Cyprus and Israel, Russia managed to become for Turkey what Turkey was for Russia i.e. a geopolitical headache. Russia managed to become a geopolitical headache at the south of Turkey, in the same way that Turkey was a geopolitical headache at the south of Russia. In the same way that Turkey bypasses Russia from the south, with the TANAP and TAP pipelines (purple lines), Russia can bypass Turkey from the south with the Iran-Iraq-Syria and the East Med pipelines (red and yellow lines).
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It must be mentioned that the East Med pipeline is not completely controlled by Russia, as it would have been the case with the Iran-Iraq-Syria pipeline, but Russia's alliance with Cyprus and Israel makes life for Turkey much harder.
The last factor that must be taken into account when examining the Russian-Turkish relations is the large trade in the energy sector between the two countries. Turkey is the second largest importer of Russian natural gas, with Germany being the largest, as you can see at the following table from the site of Gazprom.
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Russian natural gas accounts for 56% of the Turkish imports, as you can see at the following pie chart of the Energy Information Administration.
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http://www.eia.gov/countries/cab.cfm?fips=tu
The above 5 points are the main elements of the geopolitical framework that should be used in order to analyse the Russian-Turkish relations. The first one is the energy corridor Turkey-Europe i.e. (TANAP-TAP). The second one is the energy corridor Middle East-East Mediterranean Sea— Europe (Iran-Iraq-Syria and East Med Pipelines). The third one is Turkey's energy dependence on Russia. The fourth one is that Turkey is Gazprom's second largest customer. The fifth one is that most of Russia's income comes from her oil and natural gas sales in the European markets.