Page 6 - Euroil Week 46 2019

EurOil PIPELINES & TRANSPORT EurOil
TANAP to reach full completion on Nov 30
TURKEY
The Turkish gas market is bearish at present.
THE final phase of Turkey’s Trans-Anatolian gas pipeline (TANAP) project is slated for completion on November 30, Turkish Energy Minister Fatih Donmez told local media this week. According to the official, the event will be marked with a ceremony in Turkey’s west- ern city of Edirne, attended by Turkish Presi- dent Tayyip Erdogan and his Azeri counterpart Ilham Aliyev.
The 1,800-km TANAP forms the central section of the Southern Gas Corridor (SGC) network of pipelines running from Azerbaijan to Italy. TANAP’s first section between Eskisehir was completed in mid-2018, enabling the flow of extra Azeri gas to Turkish consumers. The pipe- line has handled more than 3bn cubic metres of gas since shipments began.
TANAP’s second section continues to Edirne, near the Greek border, where it will connect with SGC’s final stretch, the Trans-Adriatic Pipeline (TAP). TAP is running behind schedule, with the head of its operating consortium recently admitting that it would not be ready until at least October 2020.
At peak capacity, SGC will deliver 6 bcm of gas to Turkey and 10 bcm to Italy, Greece, Alba- nia and other European countries.
Russia’s Gazprom is meanwhile preparing to launch a rival project, TurkStream, whose twin 15.75 bcm per year strings should be completed by the end of this year. But it is still uncertain when the pipeline will begin pumping gas. Both projects could suffer from bearish market condi- tions in Turkey at present.
“The economic turmoil in Turkey [has] made consumers there particularly sensitive to the price of gas being supplied, with gas consump- tion pressured by alternative cheap sources such as coal,” Moscow-based VTB Capital wrote in a research note on November 19.
Turkish gas consumption fell 5.5% y/y in Jan- uary to August to 30.6 bcm, while Russian gas supplies slumped 35% in the first nine months of the year to 11.7 bcm, because of competition from TANAP and LNG imports.
VTB said it did not expect to see a significant rebound in Russian gas supplies to the country, as TurkStream’s first string will simply carry gas that would otherwise have been pumped through Ukraine.
“Gazprom’s gas is probably the most expen- sive on the Turkish market, so to keep its market share the company is inevitably going to have to sacrifice the margin,” the bank said.™
Russia proposes 1-year Ukrainian transit deal
UKRAINE
Ukraine is unlikely to accept the terms.
RUSSIA’S Gazprom has sent a formal letter to its Ukrainian counterpart Naftogaz, proposing that the pair either extend their existing long- term gas transit contract or sign a new deal for one year.
Russia and Ukraine’s current transit agree- ment runs out at the end of this year, and several rounds of EU-brokered talks between the pair over recent months have failed to make headway in agreeing transit terms for 2020 onwards. This has sparked fears of a disruption in Russian gas supplies to Europe in mid-winter, prompting countries across the continent to store record volumes of gas.
In the letter, signed by Gazprom CEO Alexei Miller, the Russian gas exporter set out several conditions for a new agreement to be reached. First, the company called on both sides to drop all claims against each other in international arbitration courts. Gazprom owes Naftogaz $2.56bn for past violations of their transit deal under a Stockholm Chamber of Commerce rul- ing last year, but has refused to pay.
Secondly, Gazprom said Ukraine’s anti- monopoly committee must reverse its 2016 decision, imposing a $6.7bn fine on the Russia firm for abusing its dominant position on the
Ukrainian transit market. Thirdly, Gazprom insisted that Naftogaz withdraw its petition with the European Commission for an investigation to be launched into Gazprom’s activities.
Transit volumes under the new deal would depend on forecasts for demand from European buyers, Gazprom said, adding it was still awaiting Ukraine’s position on the resumption on Russian purchases next year. Naftogaz has not bought any gas directly from Gazprom since 2015, instead supplementing domestic supply with imports from its EU neighbours.
Gazprom said copies of the proposal had been forwarded to Ukrainian Energy Minister Alexey Orzhel and European Commissioner Maros Sefcovic, who is overseeing trilateral talks between Brussels, Kyiv and Moscow on 2020 transit terms.
Russia has listed the same prerequisites for a new transit deal before, and they have all been flatly rejected by Ukraine. Kyiv has also said it is against entering a one-year deal on transit, instead demanding a longer-term contract that ensures stable transit revenues even after Gaz- prom launches its Nord Stream 2 pipeline to Germany next year. ™
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w w w . N E W S B A S E . c o m Week 46 21•November•2019