The revived Turkish Stream: What, when, and where?

Katja Yafimava's picture
Katja Yafimava, Senior Research Fellow, Natural Gas Research Programme, Oxford Institute for Energy Studies
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Turkish Stream (an offshore Black Sea pipeline to western Turkey) – just as its failed precursor, South Stream (an offshore Black Sea pipeline to Bulgaria) –reflects the Russian Gazprom’s desire to develop a new route for delivering its gas to (principally) southern Europe and western Turkey, thus reducing the Ukraine’s transit monopoly in respect of Russian gas exports to these regions. The project has been absent from headlines since November 2015, when Russia put it on hold as part of its overall suspension of cooperation with Turkey after the latter had shot down its military plane, while on combat duty in Syria. The Turkish president’s apology proved a necessary condition for a rapprochement, followed by a meeting between the two countries’ presidents in August 2016, where Turkish Stream was re-activated.

The project has good prospects for implementation by 2020 as Gazprom is interested in direct supplies of gas to Turkey, which is one of its biggest (and potentially growing) markets (though it is likely to be more cautious about Turkey assuming an overly significant transit role in respect of its exports to Europe) whereas Turkey is likely to need Russian gas due to shortage of realistic alternatives (though it is likely to be reluctant to increase its dependence on Russia significantly). It is reasonable to expect that the disagreements over, and the ways of formalising, the gas price discount (which accounted for a limited progress on the project during 2015) will be overcome during 2016-2017, thus paving a way to the signature of the intergovernmental agreement, issuance of the remaining permits, and actual construction.

However, the newly revived project will certainly be more modest than the original proposal (four strings, 15.75 bcm each), with two strings being a realistic expectation. One string is most likely to be built by 2020 thus allowing Gazprom to deliver the totality of its supplies to the Turkish market without having to transit its gas across Ukraine, before the existing transit contract expires at the end of 2019. An outlook is more uncertain for the second string as the Gazprom’s ability to transport gas delivered through it further on the EU territory, (via TAP or ITGI/Poseidon or any new onshore pipelines that might be built) would require a resolution of complex regulatory issues with the European Commission (EC). It also has a potential `competitor’ in form of Gazprom’s South Stream ‘lite’ (also requiring resolution of regulatory issues with the EC), which would run across the Black Sea in parallel to the first string of Turkish Stream but land in Bulgaria, and further connect to TAP or ITGI/Poseidon or any future onshore pipelines.

The (changing) context of EU-Turkey and EU-Russia political relations will be important in determining whether and when either the second string of Turkish Stream or South Stream ‘lite’ would be built. On one hand, the EU wants to preserve Ukraine’s transit role, and is therefore opposed to any pipelines that would enable Gazprom to reduce that role. On the other hand, the EU might not want to increase a transit role of Turkey beyond that which it will play in respect of Azeri gas to be delivered to Europe via TANAP, given that its regulatory power vis-à-vis Turkey is non-existent (as Turkey does not subscribe to the EU acquis), and its political power vis-a-vis Turkey appears to be deceasing in the aftermath of the failed coup. This thinking would improve the chances of South Stream ‘lite’ to be considered as part of the EU-led CESEC initiative, aimed at improving gas security in central and south-east Europe. The EC willingness to consider this option might depend on its assessment of security of transit across Ukraine post-2019.

Given that it is only one string of Turkish Stream that is likely to be built by 2020, southern European countries will continue to depend fully on Ukrainian transit for their supplies of Russian gas post-2019 whereas Turkey will be able to escape such dependence completely.

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Image not related to Turkish Stream. Source: Flickr