Turkish Stream important for Russia, but not vital

Economy Materials 22 September 2015 19:44 (UTC +04:00)

Baku, Azerbaijan, Sept. 22

By Aygun Badalova - Trend:

Turkish Stream gas pipeline project is important and interesting for Russia, but not vital anymore, as the country has an alternative supply of its gas to Europe, bypassing Ukraine, Stanislav Pritchin, research assistant of the Center for the Study of Central Asia and Caucasus of the Institute of Oriental Studies (Moscow), said in an exclusive interview with Trend Sept.22.

Russia needs the Turkish Stream, but its implementation is no longer a matter of vital necessity, as, for example, it was a year ago," he said.

"If earlier, the construction of the Turkish Stream was in fact the only possible way to the European market for Russia bypassing Ukraine, now there is an investment agreement on construction of the second stage of the Nord Stream with the participation of major European companies," Pritchin said.

In early September, during the Eastern Economic Forum, Gazprom inked an agreement of shareholder of the joint design company, the New European Pipeline AG, which is to deal with creation of the 'Nord Stream-2' pipeline.

This in particular involves the construction of two strings of the gas pipeline with a total capacity of 55 billion cubic meters of gas per year off the coast of Russia through the Baltic Sea to the coast of Germany.

Aside from Gazprom, the joint design company's shareholders will include E.On, Shell, OMV, BASF/Wintershall and Engie (former GdF Suez).

Gazprom earlier told Trend that the initiation of work on the Nord Stream-2 does not change the company's position on the Turkish Stream project. The latter is expected to be one of the topics of discussions during the upcoming visit of Turkish President Recep Tayyip Erdogan to Russia September 23. During the visit, Erdogan will meet with Russian President Vladimir Putin.

It isn't worth expecting any agreements, including those on the Turkish Stream project during the visit of Turkish president to Moscow, Pritchin said.

"It's hardly worth expecting some agreements now, because in fact the situation in Turkey is not very stable, there is no functioning government," he said. "Most likely, it will be a synchronization of watches, discussion of negotiating positions. But the talks will be fully continued as soon as the government is formed in the country."

According to the Turkish media, Turkish President Recep Tayyip Erdogan has prepared a special package of proposals to discuss the Turkish Stream in Moscow. Moreover, it was reported that the Turkish Stream construction and the discounts for Russian gas would be discussed as two separate issues during President Erdogan's visit to Moscow.

However, Pritchin believes that these two issues are linked and cannot be viewed separately.

"Initially, the issue of changing the price on Russian gas being supplied to Turkey was raised on the eve of launching the discussions on the Turkish Stream construction," he said. "These two negotiating issues are linked and they are linked by the Turkish side. Then Turkey understood that Russia had no alternative to the Turkish Stream and so it must agree to the price change."

He also recalled that later Russia offered a 10.25 percent discount but it did not suit Turkey.

"And the final settlement of the Turkish Stream construction issues has been put off because of the political crisis in Turkey," Pritchin said.

The project for the 'Turkish Stream' involves the construction of four gas pipeline strings at a capacity of 15.75 billion cubic meters of gas each. The gas, which is to go via the first string, is completely meant for Turkish market, while the remaining volumes will be brought to Turkey's border with Greece, where a gas hub is planned to be located.

In early August 2015, Gazprom was reported to have revised plans on construction of the 'Turkish Stream' and that it would give up the third and fourth strings of the pipeline.

The reason was said to be the "absence of a key agreement on granting Ankara a discount on Russian gas."

Alexander Medvedev, Gazprom deputy chairman of the board, told reporters that the commissioning of the Turkish Stream gas pipeline, originally scheduled for late 2016, is postponed to a later period.

Edited by CN


Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova