Turkstream: the gas deal between Moscow and Istanbul

Turkstream: the gas deal between Moscow and Istanbul

Evgeny Utkin | Journalist and expert on the Russian economy and on energy issues
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New infrastructure to bring Russian gas to Turkey and Europe. Attended by the leaders of Russia, Turkey, Bulgaria and Serbia. Putin comes to Europe, bypassing Ukraine. Erdoğan reaffirms Turkey's role as an energy hub in the Mediterranean

January 8th: the date was set more than a month ago, yet no one could predict that the new year would be so full of events in this region of the world. With the killing of Iranian general Qasem Soleimani in Iraq, the Iranian response sending missiles to US bases, and the Ukrainian plane crash near Tehran, the media was left no space for coverage of this event. Some were even of the belief that the opening of the pipeline, to be inaugurated in Istanbul, would have to be delayed given the divergence between Russia and Turkey on Libyan issues. Yet everything went ahead as planned. Together with Russian President Vladimir Putin and Turkish President Recep Tayyip Erdoğan, the inauguration was also attended by Bulgarian Prime Minister Boyko Borisov and Serbian President Alexander Vučić, who together turned the valve to release the very first gas supplies.

 

The TurkStream pipeline linking Russia and Turkey via the Black Sea has two lines, each of which with a load capacity of 15.75 billion cubic meters of natural gas per year. One line transports gas to Turkey, and the other to European countries – Bulgaria and Serbia first and foremost. The ceremony was also attended by various energy ministers, heads of energy companies, deputies and politicians, making up over a thousand people in total. The project was completed in record time, taking just over a year. The submarine line stretches for 930 km, at certain points reaching depths of 2.2 kilometers.  It took more than 75 thousand pipes (81.3 cm in diameter) for each line, and the project cost 7 billion euro. “The commissioning of the TurkStream pipeline service will contribute significantly to the energy security not only of Turkey, but also of the southern European countries, and will be a major boost for global energy sustainability”, said Russian Energy Minister Alexander Novak during the pipeline’s launch ceremony. According to Novak, this is one of the largest infrastructure projects in history. Novak also noted that the successful achievement of this project has only been possible thanks to the personal commitments made by the presidents of Turkey and Russia. “The project was carried out in record time and even ahead of schedule” he stressed, adding that Russia has once again proven to be a reliable gas supplier.

“Interaction between Russia and Turkey is developing steadily in almost all areas. Despite the challenging world situation and the attempts of many international actors to prevent the expansion of mutually-beneficial cooperation between our countries, cooperation still goes on”, said Vladimir Putin. The Russian president recalled that Russia has already been exporting gas to Turkey for 30 years, first through the Trans-Balkan Pipeline, and then through the Blue Stream pipeline directly connecting Russia and Turkey. “Last year alone, 24 billion cubic meters of gas were delivered to Turkish partners”, Putin added. More than 50% of Turkey’s gas needs are fulfilled by Russia, and with the new pipeline, this percentage is of course set to rise further.

 

Erdoğan also seemed to welcome the project, as he is gradually realizing his dream of making Turkey Europe's energy hub (Southern Europe, but not only). “No project in the eastern Mediterranean that excludes Turkey has any chance of being achieved from an economic, legal and diplomatic standpoint”, warned the Turkish president. Erdoğan remarked that Ankara “has the longest coastline of the Mediterranean and can has a say in all kinds of projects in this region”, since it “intends to become a global energy hub as shown by the TANAP pipeline from the Caspian”.

 

As for the line heading to Europe, the Bulgarian section remains to be complete, even though Prime Minister Borisov has assured Putin that Bulgaria will do everything to meet its deadline. On the other hand, the Serbian stretch of the pipeline is almost ready. The EU Commission “will apply all EU energy standards applicable to all pipelines on EU territory with no bias”, said an EU spokesman on the opening day. What this statement means, however, is not yet clear. For TurkStream, EU rules do not apply (as these are non-EU countries), yet for the gas lines that leave from this area and run through to Europe – Bulgaria, Serbia, and then Hungary and Austria – it is rather another matter.

 

However, while Erdoğan and Putin are sure to see benefits from this project, Ukraine in particular is set to lose out. The gas transported through Ukraine towards Turkey and Bulgaria has in fact been suspended, precisely because of the launch of TurkStream. This was stated on January 9th by the head of GTS Operator of Ukraine Serhiy Makogon during a press conference:  “I can confirm that gas is no longer being supplied to Bulgaria and Turkey via Ukraine. All requests we receive are from Romania and Moldova. We no longer carry gas to consumers in Turkey through the Trans-Balkan Pipeline”. Kiev will receive 450 million dollars less per year because of the new TurkStream. “We cannot call this a loss. We will simply not earn this money”, Makogon explained.

 

The gas that will now be transported directly to Turkey via TurkStream obviously has less to travel, meaning lower costs; so aside from politics, the economy is a key factor.

Not to neglect some key figures, at the end of last year, Alexander Novak announced to the television broadcaster Russia 24 that the share of the Russian gas market in Europe has risen to around 45%. Novak also said that in 2019, Russia’s oil production rose by 0.7%, peaking at 560 million tons. Gas production increased by 1.7%, reaching 738 billion cubic meters. Therefore, in addition to the 200 billion cubic meters of gas that Europe already receives from Russia, TurkStream will cause these record figures to rise even further.