Russia and Turkey have agreed to build gas pipeline Turkish Stream along the Black Sea bottom, reported Gasprom today. It is planned that the first branch of the gas pipeline with the capacity of 15.75 billion cub.m. will be built in December 2016.
660 km of Turkish Stream gas pipeline will be similar to the South Stream and 250 km of the pipeline will be built towards the European part of Turkey. Capacity of four branches of the gas pipeline will be 63 billion cub.m. of gas a year. It was announced yesterday after the meeting between Aleksei Miller, chairman of Board of Gasprom, and Turkish Minister of Energy and Natural Resources Taner Yildiz.
It is planned that the company will submit an inquiry for the prospecting works on the new offshore Turkish section on January 28, 2015.
Russia will independently lay the gas pipeline along the sea, but construction in Turkey will be carried out jointly.
Russia and Turkey will find agreement on the shares in the project at the next talks.
Botas company is the authorized company on the Turkish side. Within a week Gasprom and Botas will work out a joint plan of main measures to implement the project.
“Our primary goals are to analyze the variants of the routes on the territory of Turkey, determine the point of out of the sea, the point of delivery of gas to the Turkish consumers and the point of crossing of the Turkish-Greek border,” reads Gasprom’s press release.
The first branch of the gas pipeline with the capacity of 15.75 billion cub.m. must be launched in December 2016.
This period of the project implementation is very real, said Andrei Polishuk, analyst of Raiffeisenbank. He said that share of Gasprom in construction of the onshore section of the gas pipeline will most likely constitute over 50%, though a lot depends on the company’s financial possibilities, analyst said. The rest will be divided between the partners and it could be not only Turkey, he believes.
The main issue of the Turkish Stream is the market, said Polishuk. “I can hardly imagine how to distribute 63 billion cub.m.
15.75 cub.m. will be used by Turkey and the company will have to contract about 50 billion cub.m. of gas more. One will need European infrastructure for that, which Gasprom, most likely will not build,” he explained.
Gasprom will not be able to contract 63 billion cub.m. of gas and it will also be unable to build four branches, said Mikhail Korchemkin, Director of East European Gas Analysis. “Only one or two branches are real, because they will not demand costs: the pipes have been purchased and the works have been already paid for. The pipe will also reduce transit of these 15.75 billion cub.m. Gasprom will be able to distribute this volume between Turkey, Bulgaria, Romania and Greece,” Korchemkin said. As far as the remaining branches are concerned, this is unreal for Gasprom, because it has no money for that, the expert is sure.
“Until the next year the company will be unable to survive in the current state, it has great losses ahead. Turkish Stream could become another expensive project for Gasprom, which will not justify itself. The new scheme of delivery of 15 billion cub.m. of gas to the Balkans and Turkey will significantly increase operation costs of Gasprom and bring nearer the company’s division into parts,” concluded Korchemkin.
Gasprom’s representative did not answer RBC’s question about markets and investments into the project.
Gasprom’s official representative Sergei Kupriyanov said in January that a little bit more time will be needed to implement Turkish Stream, than South Stream, which was planned to be completed in 2017.
Commenting on the plans to build the Turkish Stream, Russian Foreign Minister Sergei Lavrov said the gas pipeline will allow increasing Europe’s energy safety and secure it against the problematic transit countries.”
On December 1, 2014 Russian President Vladimir Putin announced Russia is not going to build South Stream gas pipeline, because of unconstructive position of the European Commission and difficulties with construction of the gas pipeline in Bulgaria.