Turkish Stream: rival or partner?

Oil&Gas Materials 22 June 2015 22:00 (UTC +04:00)
The project for construction of the gas pipeline to supply Russian gas to Europe through Turkey, known as the Turkish Stream,
Turkish Stream: rival or partner?

Baku, Azerbaijan, June 22

By Elena Kosolapova - Trend:

The project for construction of the gas pipeline to supply Russian gas to Europe through Turkey, known as the Turkish Stream, has in the recent days been one of the most discussed topics.

Last week, the talks on this project intensified and even led to noticeable results.

In particular, Russia and Greece inked an intergovernmental memorandum to cooperate in the construction of the Turkish Stream's continuation in Greece.

Meanwhile, Bulgaria proposed to build a gas pipeline from the Turkish Stream in its own territory.

Although so far there are no final agreements on the project with Turkey, given Ankara's desire to use its strategic location and to become an energy hub, as well as Russia's great interest in this project and its willingness to not to be stingy for its implementation, it can be expected that the parties will agree and the project will take place.

However, this project's realization doesn't mean at all that Europe will refuse the gas supplies from other sources, in particular from Azerbaijan. For more than a year, the EU has been talking about the need to diversify sources and routes of energy supplies.

Such statements were sounded at all levels - starting from the leadership of the European Commission and the relevant ministers of the European countries, up to the experts, research agencies and think tanks.

In the light of the current crisis in relations between Russia and the West, this question has become more pressing than ever before.

European countries have understood clearly that Russia's monopoly position in the EU gas market creates conditions for its political and economic pressure on Europe.

The only way to protect from this pressure is the availability of alternative sources of gas.

That is why reaching an agreement on realization of the project for the Southern Gas Corridor, which will deliver Azerbaijan's gas to Europe, was so desirable and important for European countries.

Europe has tried to make this project happen. This project has the support at the level of the European Commission.

The Trans Adriatic Pipeline (TAP), which is a part of the Southern Gas Corridor, passing through the EU, was even granted exemption from the rules of the EU's Third Energy Package that is compulsory for all the other energy projects.

Russia has been seeking a similar indulgence for its South Stream project for a long time, but after failing it was forced to cease it.

So it is foolish to expect that Europe will refuse Azerbaijani gas, since it has been waiting for it for such a long time. This is out of the question.

Today Azerbaijani gas is the only alternative gas, which is expected in Europe in the foreseeable future. People talk a lot about the possibility of supplying Turkmen, Iranian, Iraqi and other gas to the EU. But there are no real conditions or infrastructure for this and so is not expected in the foreseeable future.

But even if something unreal happened and Europe decided to change Azerbaijani gas for additional volumes of Russian gas, its contractual obligations will not allow it. Europe has already signed contracts to purchase Azerbaijani gas for 25 years and will be obliged to receive this gas in specified volumes, Elshad Nasirov, vice president on marketing and investments of SOCAR (State Oil Company of Azerbaijan) said.

At the same time, it is clear that Russia will continue supplying gas to Europe. Refusing its gas has been never discussed. Azerbaijan will be able to initially supply only 10 billion cubic meters of gas to Europe. Russia supplies much more- (it supplied about 155 billion cubic meters of gas to Europe in 2014). At present, Europe has nothing to replace such volumes of gas. So in any case, Russia will continue supplying gas to Europe, through Ukraine or Turkey.

At the same time, if the Turkish Stream is implemented, Azerbaijan and Europe will be able to benefit from this project. Nasirov said that after the gas production in Azerbaijan and Azerbaijani gas supplies to Europe are increased in the future, it will be possible to use the ready infrastructure funded by Russia and built in Europe as a continuation of the Turkish Stream, rather than invest in the expansion of the gas pipelines of the "Southern Gas Corridor".

Edited by CN


Elena Kosolapova is Trend Agency's staff journalist, follow her on Twitter: @E_Kosolapova