So Long South Stream? New Russian-Turkish Pipeline Announced

Gas dynamics in Europe have taken a surprise twist with announcement Monday that Russia and Turkey have agreed to build an offshore gas pipeline.

Gazprom’s head Alexey Miller said that a memorandum of understanding had been signed for the construction of an offshore gas pipeline to Turkey with the annual capacity of 63 billion cubic meters, the same volume as the proposed South Stream pipeline.

Speaking about South Stream, Miller said, "That’s all, the project is closed.

Earlier, Russian President Vladimir Putin had told a news conference that Russia would not continue the South Stream project “in the current conditions.”

"If Europe does not want to carry out (South Stream), then it will not be carried out," Putin said.

The new project, a major boost to Turkeys aspiration as an energy hub, would see Turkey receive 14 billion cubic meters of project capacity with the balance towards the Turkish-Greek border.  

The announcement follows a visit to Ankara by Putin to meet with his counterpart, Turkish President Tayyip Erdogan.

Turkey will also be receiving a six percent discount on gas purchases commencing in 2015 and will be taking an additional 3 BCM in supplies. Russia recently supplies Turkey via the Blue Stream pipeline which delivered 13.7 bcm of gas in 2013.