Turkish Stream is another Russian blow to Ukraine

Author : Christian Steiner

Source : Neuen Zürcher Zeitung

Russian Gazprom wants to make supplies to Europe not through Ukraine anymore, but in other ways
23:27, 27 November 2018

Everything will remain as it is now: Russia will continue to supply gas to Europe. But the state-owned giant Gazprom wants to make supplies not through Ukraine anymore, but in other ways. Currently, approximately 40% of natural gas exported by Gazprom, that is, about 80 billion cubic meters, goes through Ukraine. By commissioning new gas pipelines, Russia wants to counteract the hostile government in Kyiv and continue to receive billions for gas transit.

Currently, Gazprom is working on two projects designed to replace most of the transit gas supplies through Ukraine. One of them is the Nord Stream-2 Baltic gas pipeline under construction, through which in a few years, an additional 55 billion cubic meters of natural gas will be delivered directly to Germany.

The second pipeline is called the "Turkish stream". It should bypass Ukraine through the Black Sea. Earlier this week, Russian President Vladimir Putin met with Turkish President Recep Tayyip Erdogan to watch the completion of the Turkish Stream underwater part construction. A few years ago nobody believed that this pipeline would be commissioned at the end of 2019. After the conflict with Brussels, the Kremlin chief in 2014 had to bury the South Stream project, the predecessor of the Turkish Stream. But in December 2014, Putin unexpectedly — like a rabbit out of a hat — pulled out the Turkish Stream project. True, the Russians will suffer significant losses regarding the transmission capacity of the pipeline: through both its lines, it is possible to pump only 31.5 billion cubic meters of gas per year - half as much as planned in South Stream.

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The Russian Kommersant newspaper reported on Thursday that Gazprom had decided to continue the Turkish Stream by land to Bulgaria, Serbia, Hungary and Slovakia. As the newspaper further writes, the concern is already working on creating a network of domestic gas pipelines in these countries. According to Gazprom’s plans, deliveries to Bulgaria and Serbia will begin in 2020. Hungary should join the network a year later. Thus, the need to transport gas to these countries through Ukraine by 2022 will disappear. Surprisingly, the proposed lines for the pipelines are almost identical to the South Stream routes.

According to the newspaper, all the legal aspects of the new route are fully settled. However, in this case there are several pitfalls, according to analyst Mikhail Krutikhin. Thus, the European Commission does not allow Bulgaria to allow Gazprom to build there gas pipelines necessary for the further transportation of gas. Bulgaria is supposed to allocate 1.5 billion euros for this purpose, which, according to Krutikhin, is a very significant amount for this country. But even if Bulgaria collects the necessary amount, it will not mean that everything is fully settled. The EU and Bulgaria are now engaged in intense debates about other details.

Not all EU countries are delighted with the new Russian gas pipelines. For example, Poland and the Baltic states are stubbornly resisting. If Russia succeeds in connecting to the European network in two places, it will be a great success for Putin. But Gazprom will get it at a high price. At least eight billion dollars two lines of the "Turkish stream" will cost - and this is without taking into account the cost of domestic gas pipelines in Europe. In addition, Gazprom will have to write off billions in spending on the previous project. And the nearly five billion euros that Gazprom receives for the construction of the Nord Stream - 2 is only a fraction of the actual costs. Russia undertakes most of the expenses. For the Baltic gas pipeline, it will be necessary to lay new pipes from the Yamal field to the coast. And it will be several times more expensive than the gas pipeline itself.

Many observers are confident that even in the presence of new gas pipelines Gazprom will not be able to completely work without Ukraine. With sufficient capacity for underground gas storage, only it can provide Gazprom with sufficient flexibility under extreme loads. In addition, gas consumption in Europe is growing, and Gazprom wants to increase supply in the coming years. Analysts believe that Gazprom will export more than 200 billion cubic meters of gas this year. With further growth in consumption, the company will be glad to have any gas pipeline, even if it passes through Ukraine.

Read original article at Neuen Zürcher Zeitung

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