Forget the Third, Fourth String of Turkish Stream, Say Experts in Brussels

The first string of Turkish Stream will come true, experts agreed on Friday, explaining that the pipes to build the project can be easily transported from Varna (Bulgaria), and that the internal corridor within Russia bringing gas from Siberia to the Russkaya compressor station near Anapa is already in place. These two facts show that the resources are there and that the construction can start soon. 

Nonetheless, the second string of the pipeline is in doubt, as a natural trade-off between Turkish Stream and Nord Stream II is increasingly emerging in a context Moscow seems to prefer the project to Germany. While political uncertainties remain in Turkey, the Russian gas giant had indeed found strong European advocates of the project to Greifswald. 

In this sense, the third and the fourth string of the Turkish Stream are completely unrealistic. Unless a significant diplomatic effort from Brussels and Moscow that seems impossible at the moment, the Kremlin will promote the pipeline to Germany and a reduced version of the project to Turkey. 

NORD STREAM II: ALMOST CERTAIN 

“Nord Stream I is getting fully used” Danila Bochkarev, fellow at EastWest Institute, said during a conference organised by Platts on Friday, adding that the Nord Stream II project would be used to ship gas to Italy.

Italy gets most of its Russian gas through Ukraine. In this sense, from 2019, Nord Stream II could be used to avoid transits through Ukraine and Slovakia. This belief is coherent with exports data. 

As recently written by Simone Tagliapietra and Geoerg Zachman, Russia needs 35 billion cubic meters (bcm) of additional capacity in order to avoid Ukraine and keep its exports to Europe at current levels (119 bcm in 2014). 

“Gazprom and its European partners seem to be committed to the advancement of Nord Stream II, most likely on the ground of the belief that the OPAL dispute will be resolved. This leap forward represents serious burden to the Turkish Stream project, which due to these developments and Turkish domestic political uncertainties look increasingly unlikely to fully materialise” Tagliapietra, Senior Researcher at the Fondazione Eni Enrico Mattei, and Visiting Fellow at Bruegel, told Natural Gas Europe. 

Nord Stream II project, consists of stage 3 and 4 of Nord Stream, is expected to have a capacity of 55 bcm per year. Against this backdrop, it seems clear that, in case of construction of the pipeline between Russia and Germany, Turkish Stream is likely to be built mainly for Turkish costumers.

TURKISH STREAM: FIRST STRING, PROBABLY SECOND, BUT NOT THIRD AND FOURTH

“Turkish Stream will definitely have the first string because it just compensates the gas that goes through the Balkan pipeline to Greece and Turkey - it is exactly the same amount that has been sold last year to Turkey and Greece. The second also have chances, as there are infrastructures in place. For example you can use the reverse flow on the Trans-Balkan pipeline and you can call open sales on TAP, but this would be a bit more complicated. For the third and the fourth, unless of additional agreements between Gazprom and the EU, we will not see them in the near future” Bochkarev told Natural Gas Europe on the sideline of the conference in Brussels.  

According to the Gazprom’s website, the offshore section of Turkish Stream will consist of four strings, each with a capacity of 15.75 bcm, for a total capacity of 63 bcm from Russia towards Turkey across the Black Sea. 

Earlier this week, the company led by Alexander Medvedev and Alexey Miller said that the delays of the 63 bcm pipeline have to do with political uncertainties in Turkey. A few hours later, Turkish reports claimed that Ankara cannot be held responsible for the delays, blaming Moscow for not being a credible partner. 

SOUTHERN GAS CORRIDOR: THE REAL CERTAINTY

On the other hand, the Southern Gas Corridor is expected not to be stopped, as the project connecting Azerbaijan with Turkey gives Ankara a strong bargaining power vis-a-vis Russia, and is strongly backed by Baku. 

“Europe is the only feasible market in the long-run for Azerbaijan. I don’t see why they should stop the Southern Gas Corridor. Unless major changes occur, the Southern Gas Corridor is the only way Turkey has to become a gas crossroad” said Tagliapietra, adding that Baku already invested in the project through its Sovereign Fund.

In this sense, it is both in Turkish and Azeri interest to finish the US$45 billion project stretching over 3,500 km, crossing seven countries to bring Caspian gas to Europe.

As a consequence, the most likely scenario is a combination of the three projects - Nord Stream II used by Russia to avoid Ukraine and send gas to Italy, Turkish Stream to ship gas to Turkish customers, and Southern Gas Corridor to bring Caspian gas to European markets. Financing is the last hurdle.

Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci