Gazprom reached an agreement on the details of the Turkish stream
The new pipeline from Russia to Turkey will be conducted mainly along a South Stream route. The project will be realized by the year 2020, when Gazprom plans to abort transit of gas through Ukraine. By the experts opinion, Russian company was forced to meet requirements for route selection of Turkish partners, and is even ready to offer a discount for gas.
Turkish pipeline stream with the capacity of 63 billion cubic meters of gas per year will be conducted from Russia to Turkey on the bottom of Black sea, mainly by the route that was planned for South Stream. According to Aleksej Miller, the chairman of the board, Gazprom will abort transit of gas through Ukraine by the year of 2020. By then the Turkish stream should have been built, and Europe must build pipelines so they could get 63 billion cubic meters of gas from Turkey. Around 660 km of the pipeline will be conducted under the old corridor of South Stream and 250 km under the new corridor in the direction of the European part of Turkey.
Details of the agreement
In experts opinion, Russian company was forced to meet requirements of Turkish partners. “Gazprom insisted on the second version, in which the underwater part of the pipeline went parallel with other pipeline ‘Blue Stream’, and this version would be cheaper for the gas company” said Ilya Balakirev, the top analyst of the investment company UFS. According to him, the chosen version is also not bad considering the fact that over 70% of the route will represent South stream, which is already projected. Construction of a pipeline from Russia to southern Europe was planned as part of the South Stream, but the Russian company withdrew from the project due to the attitude of Bulgaria, which has suspended construction of the pipeline at the request of the European Commission. On December 1st Russian president Vladimir Putin finally abandoned the South stream project.
Main problem of the Turkish stream project is the fact that there is still no agreement on the final price of gas. Specifically, Turkey demands a reduction in price by 15% which is a big discount. “A discount that big can be considered as a price to pay for the lack of transit countries”, says Ivan Kapitonov, assistant Professor of the Department of State regulation of the economy of the Russian Academy for National Economy and the state administration (RANHiGS). ” At the same time, in his words, Turkey itself becomes a transit country. In current version of project there is a risk that Turkey will impose theit terms, and it was clear from the beginning. In any case, Turkey will get some kind of discount”, says Balakirev.
According to Ilja Balakireva, opening of the first pipeline in 2017, will help to reduce transit over the Ukraine by quarter, which means that discount should pay off. Gazprom will build the sea section of the pipeline independently, and Turkish company Boats will join them on the land section. The main tasks of the company are to analyze routes in Turkish territory and to define the points of exit of the pipeline from the sea.
“It is very important that Russia and Turkey reached principled consensus on the project, and that there is mutual interest and willingness to realize it. It all increases the chance to realize the project on fast track”, says Dmitry Baranov, leading expert of management company Finamore Management. As pointed out by Alexander Dorofeev, CEO for consulting Arkaim, negotiations will be successful for Russia because of the introduction of additional channels for delivering gas to Europe, and this will enable the use of capacities of local findings and realization of additional profits from export. “European countries will buy the gas anyway, even through Turkey, because its price will certainly be lower than the price of imported liquefied natural gas”, says Dorofeev.
Source: Russia Beyond The Headlines
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