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Europe unlikely to buy Russian gas from Turkish stream

Oil&Gas Materials 12 October 2016 15:39 (UTC +04:00)
Likelihood of Russian gas supplies to Europe by Turkish stream pipeline is remote given the current state of play in EU- Russia relations, Constantine Levoyannis, head of the Greek Energy Forum's Brussels branch told Trend by email on Oct. 12.
Europe unlikely to buy Russian gas from Turkish stream

Baku, Azerbaijan, Oct. 12
By Elena Kosolapova - Trend:
Likelihood of Russian gas supplies to Europe by Turkish stream pipeline is remote given the current state of play in EU- Russia relations, Constantine Levoyannis, head of the Greek Energy Forum's Brussels branch told Trend by email on Oct. 12.

Turkish Stream project, which involves the construction of a gas pipeline from Russia to Turkey through the Black Sea, was frozen after the relations between Moscow and Ankara deteriorated in November 2015. In Aug. 2016 the Presidents of two countries Vladimir Putin and Recep Tayyip Erdogan agreed to resume the implementation of the Turkish Stream project.

This week an intergovernmental agreement on the Turkish Stream pipeline has been signed in Istanbul in the presence of both presidents. The agreement envisages the construction of two pipeline strings, each with a capacity of 15.75 billion cubic meters. The first string will supply gas directly to Turkey, while the second is to be used to deliver gas to European countries through Turkey.

Levoyannis noted that the first stream supplying Turkish gas demand should come as no surprise.

“It is likely to happen. It makes commercial sense and the demand is there,” he said.

On the other hand, the expert noted that the likelihood of the second string to Europe materializing is remote, given the current state of play in EU Russia relations, adding that a top priority for the EU is the Southern Gas Corridor.

“To me the second announcement bears more of a political message towards the EU,” Levoyannis said.

The intergovernmental agreement signed this week defines that the two maritime strings of the pipeline are to be built by December 2019. Russia will construct and own the maritime stretch of both Turkish stream strings. The land part of the string, supplying gas to Turkey, will belong to a Turkish company, with a joint venture to be created which will assume ownership of the transit pipeline.

Within the negotiation on the Turkish Stream this week, the parties also agreed on a mechanism by which to provide a discount on Russian gas for Turkey.
The agreement on gas price discount is interesting news, Levoyannis said.
“This could have a significant macroeconomic impact - particularly on gas on gas competition,” he noted.

Follow the author on Twitter: @E_Kosolapova

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