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Progress stalled on Russia's pipeline through Turkey

The project to pump gas from Russia to Europe via the Black Sea and Turkey has not broken ground despite plans for completion by 2019.
A worker checks the valve gears of pipes linked to oil tanks at Turkey's Mediterranean port of Ceyhan, which is run by state-owned Petroleum Pipeline Corporation (BOTAS), some 70 km (43.5 miles) from Adana February 19, 2014. Crude oil flow through the Kirkuk-Ceyhan pipeline linking Iraq to Turkey restarted on Wednesday at a rate of at a rate of about 300,000-350,000 barrels per day (bpd), a Turkish energy official said. The pipeline, which carries Kirkuk crude to Turkey's Mediterranean port of Ceyhan, was d

During a visit to Turkey on Dec. 2, Russian President Vladimir Putin announced the cancellation of the South Stream project to carry Russian natural gas to Europe via Bulgaria. Instead, he said, a pipeline would be build under the Black Sea and via Turkey. The European Commission had delayed approval of the South Stream project as part of sanctions against Moscow for its actions in Ukraine. Without the commission's approval, Bulgaria declared South Stream could not cross its territory. Russia, upset with the Europeans' position, responded with the Turkey Stream project.

Putin's move surprised the Europeans. Federica Mogherini, EU foreign affairs and security policy chief, declared on Euronews TV that the Russian decision illustrated the urgent need for Europe to diversify its gas procurement channels. The scrapped project was to have been 3,600 kilometers (2,237 miles) long and would have transported gas to Croatia, Hungary, Serbia and Slovenia.

Andras Deak, of the World Economy Institute, told Euronews: “The European Commission, by explaining why reconciliation would be more beneficial to both sides, could induce Russia to take a step back and thus boost its own prestige as well.” Neither Europe nor Putin, however, chose to step back. In fact, Putin moved forward, on his new project, meeting in February with Hungarian Prime Minister Viktor Orban to discuss Turkey Stream. The two leaders agreed the pipeline should pass through Hungary. Having been a key proponent of South Stream, Hungary it appears decided it would not lose anything by joining Turkey Stream.

Gokhan Yardim, former general manager of Turkey’s Petroleum Pipeline Corporation (BOTAS), explained to Al-Monitor how Turkey Stream and South Stream could actually be combined, which Putin had suggested. He said, “The route is mostly the same. As in South Stream, the gas will reach Austria via Serbia and Hungary with the Turkey Stream. The only difference will be that it enters Europe via Turkey instead of Bulgarian territorial waters. But a possible alteration is possible. Today Russia is sending Turkey 14 billion cubic meters of gas per annum via Ukraine and Bulgaria. When Turkey Stream is completed, that pipeline will be basically useless. Russia can transfer gas from the Turkey Stream to that pipeline. Romania and Bulgaria can buy gas from that pipeline, and the pipeline will not be left idle.”

After keeping Hungary onboard, Putin turned to Greece. Meeting with Prime Minister Alexis Tsipras in Moscow April 7, Putin proposed that Turkey Stream provide natural gas via Greece to the central Europe countries of Austria, Hungary, Macedonia and Serbia. Putin noted that the project could earn Greece hundreds of millions of euros every year. Tsipras' only objection was to the name of the project — Turkey Stream. In a statement to the Ria Novosti news agency, the Russian Ministry of Energy dismissed most misgivings and said a preliminary agreement between Russia and Greece was in the works for the construction of a pipeline.

As with South Stream, the European Commission is not in favor of Turkey Stream. Maros Sefcovic, deputy chairman of the commission, said in a Feb. 4 statement in Brussels that none of the countries or companies involved in South Stream had been officially informed of the project's cancellation. Sefcovic also questioned the economic feasibility of Turkey Stream. He said, “I cannot see that this would be the final solution. I think that we will have to come back to a more rational debate on what should be the economically viable solutions for this project, and for overall gas cooperation between Gazprom and the European countries.”

With debate continuing over the project, Russia issued a warning to the European Union on April 14. Alexei Miller, CEO of Gazprom, said EU obstruction of Turkey Stream would be a grave mistake that might prompt Gazprom to suspend the project and redirect its natural resources to Asian markets. He said that for Turkey Stream to be ready by 2019, construction should have already begun. “There is still a chance. We warned Europe about this,” he said. One-third of Europe's natural gas demands are met by Russia, which is why Russia wants commitments from the Europeans for purchases via Turkey Stream.

Kenan Tanrikulu, a former minister of industry and commerce and currently a member of parliament from the opposition Nationalist Action Party, told Al-Monitor that the Nabucco (Turkey to Austria) pipeline project had gone bankrupt because of South Stream. He said, “When the South Stream was canceled, Russia introduced Turkey Stream as a bribe to Turkey.”

Tanrikulu has doubts about the future of the project, saying, “We were told that construction would start at the end of 2015 and gas will flow in 2019 in this pipeline. It has been five months since the announcement of the project. I don’t see any preparations on our side. According to my research, there is no demand for this gas from Europe at the moment. Gas will be brought to Trachea [on the European part of Turkey], and the project will be financed by finding buyers from the spot market. Greece, Serbia, Macedonia and Hungary want to participate in this project, but if Russia and Ukraine fully sort out their problems, this project could be forgotten. In its current form, it is not really economical. There is no buyer other than Turkey.”

On the other hand, Yardim believes the Russians will not go back on their word and that the Turkey Stream project will be realized. He said four pipelines will be laid to carry 63 billion cubic meters of gas annually to Turkey. He explained, “There is enough demand for one pipe. Turkey will get its Russian gas from that pipeline. Russia definitely wants to bypass Ukraine. That is why by 2019, it wants to stop the flow of gas via Ukraine. The gas Turkey is now getting via Ukraine will be transferred to the first pipeline of Turkey Stream. As for the other three pipelines, Russia is saying ‘We will bring the gas to the Greece-Turkey border, the rest is up to the EU. They will either buy it or not.’ I see this as a technically and financially feasible project. Europe needs gas. Forty percent of Russian gas exports go to Europe via Ukraine. When it cuts off the Ukraine route, Europe will have to buy this gas.”

Yardim said Russia, in delivering natural gas to Europe's border via Turkey Stream, does not anticipate encountering financial problems. “The Turkish side has held meetings. We were told Russia will provide preliminary financing. It appears that the pipelines will be financed without problems.”

Will Russia give up on Turkey Stream? According to Yardim, “I know that Russia has decided on this issue. I worked with Russians for 25 years. They don’t easily change their minds. I don’t think they will revert to South Stream.”

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