Turkish Stream: at the starting blocks
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The normalization of relations between Moscow and Ankara has restored life to the gas pipeline project that is expected to transport Russian gas to Europe. Permits for construction works to be carried out by Turkey are ready and, according to the CEO of Gazprom, Alexey Miller, works are expected to begin in 2018 and end in December 2019

The agreement was signed by the two respective energy ministers, Russia’s Alexander Novak and Turkey’s Berat Albayrak, in the presence of Presidents Putin and Erdogan. However, it was not a big surprise. Negotiations had resumed a few months ago, after Recep Erdogan’s visit to St. Petersburg, in the light of clarifications given on the case of the Russian military aircraft shot down by the Turkish air force in Syria. The incident, dating back to November 2015, had been considered a "stab in the back", according to a statement made by Russian President Putin, and had broken all collaborations between the two countries, from Turkish exports of fruit and vegetables to Russia, to tourism, and major energy projects, including Turkish Stream. But after Ankara’s apologies, the possibility has re-emerged of restoring the historic partnership and the first concrete result was the decision to proceed with the infrastructure project for transporting gas. The current plan is to build two lines, with a capacity of 15.75 billion cubic meters each per year: the first would be dedicated to Turkish consumers, while the other, on the other hand, would be dedicated to European consumers. The underwater section would be owned by Gazprom for both lines, while, as regards the mainland section, one line would be owned by Turkey’s Botas, and the other international line would be owned by a Russian-Turkish Joint Venture. The permits for construction works to be carried out by Ankara are practically ready and, according to the CEO of Gazprom, Alexey Miller, works are expected to start in 2018 and end in December 2019.

Russia focuses on new gas transportation routes

While on the one hand, problems are not expected to arise in the construction of the line for the domestic market, there are still issues to be resolved as regards the section dedicated for transport to Europe. It is no coincidence that Russian Minister Novak, the day after signing the agreement, met European Commissioner Maros Sefcovic, to discuss precisely the "diversification of routes for Russia’s gas flow to Europe" and the gas pipelines: Nord Stream 2, Opal and Turkish Stream. After Turkey, the Russians would like to build their own gas pipeline, or activate one that already exists in the infrastructure, such as the TAP. Of course, however, they want to be certain that they are not hindered, as previously occurred with South Stream: everything had indeed been defined, Saipem ships had entered the Black Sea, ready to lay the pipes, but Bulgaria had not yet given the final go-ahead. This had resulted in a flash decision by Vladimir Putin who, on December 1, 2014, announced the cancellation of South Stream and, shortly afterwards, the founding of Turkish Stream.

Turkey uses approximately 27-28 billion cubic meters of gas per year originating from Russia, half via Blue Stream, the gas pipeline located under the Black Sea that travels from Russia to Turkey, and the other half via the gas pipeline that passes through Ukraine and Bulgaria

The tortuous development of Turkish Stream

This latter project is therefore born not out of the absolute need to travel that route exactly, but out of a misunderstanding between Russia and the European Union. For Turkish Stream, there was hope, but this almost immediately faded due to a misunderstanding, this time between Russia and Turkey, and it is revived again due to the strategic interests of these two countries. Turkey uses approximately 27-28 billion cubic meters of gas per year originating from Russia, half via Blue Stream, the gas pipeline located under the Black Sea that travels from Russia to Turkey, and the other half via the gas pipeline that passes through Ukraine and Bulgaria. It is clear, therefore, that with the new Turkish Stream line Erdogan will be able to receive gas directly, even at a discount (which was already promised by Putin, on October 10); this time, these 14-15 billion cubic meters will no longer pass through Ukraine: Kiev therefore loses a substantial sum in transit fees.

Gazprom to conquer European gas

Politically, major discussions are still underway between the two countries, especially on the issues related to Syria: interests in that field do not always coincide. For this reason, the newly-signed agreement still has some weaknesses, but economic interests often prevail. Russian gas is convenient to both Turkey and Europe, and Russia is seeking to exclude Ukraine from its gas routes to the old continent. This is currently the main route which, with the construction of Nord stream-2, is expected to become less important and, with Turkish Stream, it would become almost obsolete. The development of renewables in Europe also paves the way to reducing the consumption of gas. However, the decline in its production and the lack of stability in the external markets mean that Gazprom is able to regain the European market shares. There is much talk of reducing dependence on Russia but, in reality, in 2015 Gazprom occupied 31% of the European gas market: as stated by Miller, Gazprom transported 159.4 billion cubic meters of gas to Europe in 2015, 8% more than in 2014. Moreover, this year, Russia is once again hoping for a new record, given that in the first 8 months of 2016 it had already increased exports by 10% compared with the same period last year.