Page 8 - Euroil Week 01 2020

EurOil COMMENTARY EurOil
Russia, Turkey launch TurkStream
The launch changes regional gas supply dynamics, to Russia’s benefit
TURKEY
WHAT:
Putin and Erdogan have commissioned the TurkStream pipeline.
WHY:
The pipeline will send Russian gas to Turkey and later Europe.
WHAT NEXT:
Russia can either send gas through Ukraine or through Turkey, strengthening its bargaining position.
RUSSIAN President Vladimir Putin and Turkish counterpart Recep Tayyip Erdogan on January 8 inaugurated the TurkStream pipeline built to carry Russian natural gas to southern Europe through Turkey.
The Istanbul occasion will have been keenly observed by Ukraine—TurkStream, like Nord Stream 2 which runs from Russia to Germany, has been constructed to reduce Russian reliance on Ukraine when it comes to sending gas ship- ments to Europe.
TurkStream spans a 930-km (580-mile) route across the Black Sea. It helps to meet Turkey’s ambition of becoming a gas hub serving the Europeans. However, analysts have noted that Turkey will not be able to use its role as a transit state for Russian gas to Europe as leverage over Moscow because if it attempted playing politics in that way the Kremlin could simply switch gas volumes back to Ukraine.
The TurkStream inauguration was also attended by the leaders of Serbia and Bulgaria.
The pipeline was a sign of “interaction and cooperation for the benefit of our people and the people of all Europe, the whole world”, Putin said at the ceremony.
Russia has already commenced European gas deliveries through the pipeline, gas operator Bul- gartransgaz said on January 5.
The pipeline terminal is near the Turkish village of Kiyikoy, located just 20 km from the Bulgarian border.
Russian gas producer Gazprom plans to tran- sit around three billion cubic metres (bcm) of gas annually to Bulgaria via TurkStream, replac- ing shipments that pass through Ukraine and Romania.
Gazprom shipped around 3 bcm to Greece and about 500,000 mcm to North Macedonia via that route last year, according to Reuters.
TurkStream comprises of two pipelines, each with an annual capacity of 15.75 bcm. The first
will supply Turkey. The second will run from Bulgaria to Serbia and Hungary.
Bulgaria has said it hopes to be able to make TurkStream shipments to Serbia by May and build the whole section by year-end.
Putin in December accused Sofia of delaying the building of the pipeline on its territory. He cautioned that Russia could find ways to bypass Bulgaria if needed. Prime Minister Boyko Borissov denied any deliberate delays.
Russia and Ukraine at the end of last year signed a five-year agreement on gas transit to Europe—but volumes are set to fall from 65 bcm in 2020 to 40 bcm annually from 2021 to 2024.
Turkey already imports 16 bcm of Russian gas annually through Blue Stream. That pipeline, which also runs under the Black Sea, launched in 2003. Notably, Turkstream is launching ahead of the completion of the last part of the Southern Gas Corridor (SGC) that will allow Azerbaijan to export Caspian Sea gas to the European Union market via pipelines stretching across Azerbai- jan, Georgia, Turkey, Greece, Albania and the Adriatic Sea. The last part of the SGC, the US- and EU-backed Trans Adriatic Pipeline (TAP), will launch later this year. It is to have an initial capacity of 10 bcm that can be expanded to more than 20 bcm.
Greece, meanwhile, is completing an inter- connector pipeline to Bulgaria that would enable Sofia to receive some of the Azerbaijani gas and reduce its dependence on Russia.
Rising shipments of liquefied natural gas (LNG) are also increasingly competing for cus- tomers on the Turkish and Balkan gas markets. In northern Europe, Russia completed Nord Stream 1 under the Baltic Sea to Germany in 2011. It is expected to launch the $11bn Nord Stream 2 project before the end of the year. Com- bined, the two pipelines have a capacity of 110 bcm. ™
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