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President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan earlier this month signed an intergovernmental agreement for the Turkish Stream pipeline in Istanbul. The agreement had been long in the making. The original plans for the pipeline, which is set to run from Russia and underneath the Black Sea to Turkey, date back to December 2014, when Putin pulled the plug on the South Stream project.
South Stream, which was supposed to run through the Black Sea to Bulgaria and through Serbia, Hungary and Slovenia further to Austria, has been replaced by Turkish Stream.
The pipeline has since been marred by numerous setbacks. For a long time, Turkey and Russia failed to agree on a discount on gas deliveries demanded by Ankara. And when, in November last year, Turkish fighter jets downed a Russian jet that strayed into Turkish airspace, the project was placed on hold for the foreseeable future. Recently however, Turkey and Russia experienced a thaw in their relations which has led to the revival of the project.
What are the strategic implications of the agreement, taking into account the desire on the part of the EU to wean itself off of its dependence on Russian gas? It appears that Putin and the Russian state-owned gas company Gazprom are trying to create a precedent in order to undermine future gas deliveries via the EU’s planned Southern Gas Corridor.
From Russia with (Half the Amount of) Gas
Originally, Turkish Stream was to have a total capacity of 63 billion cubic metres (bcm), consisting of four parallel pipelines each with a capacity of 15.75 bcm. In October 2015, however, Gazprom announced that it would halve the capacity of the Turkish Stream pipeline, attributing the change of mind to the planned expansion of the Nord Stream pipeline which runs between Russia and Germany under the Baltic Sea.
In reality, however, the third and fourth line of Turkish Stream were hopelessly unrealistic from the outset: there simply is not enough demand for gas in the region to support the construction of a 64 bcm-large pipeline. Moreover, doing so would have required additional agreements between Gazprom and the EU. Although Gazprom chairman Alexey Miller is right to point to the trade-off between Nord Stream and Turkish Stream, there was more to the decision to halve the pipeline’s capacity than met the eye.
Under the October agreement, Turkey and Russia committed to the construction of two strings of the pipeline. One would serve the Turkish domestic market, and the other would extend into southeastern Europe. Putin claimed after holding talks with Erdogan that a mechanism for providing discount on gas prices had been agreed upon. But details of any pricing agreement remained elusive; according to Russian Energy Minister Alexander Novak, Gazprom and Turkish state-owned oil and gas company BOTAS have been ordered to work out the precise numbers.
The pipeline agreement, however, does not immediately amount to something of a coup in European gas markets. After all, the first string of the Turkish Stream pipeline is set to divert the existing 14 bcm per year that is currently supplied to Turkey via the Trans-Balkan pipeline that traverses Ukraine, Moldova, Romania and Bulgaria.
As such, the creation of the first string of Turkish Stream does nothing to satisfy Turkey’s growing demand for natural gas and does not pump additional gas into Europe. Rather, it is the same strategy that underpins the Nord Stream extension: getting rid of the Ukrainian gas transit route by making European customers directly reliant on Russian supplies. Any additional flows will have to come from Turkish Stream’s second string.
Strategic Implications for Europe
Still, problems will start to emerge when the remaining surplus from the second 15.75 bcm capacity line has to be transported to southeastern Europe. Under EU law a sole company is not allowed to be the sole operator of a new pipeline that it has built to Greece and beyond. Third-party access to the pipeline is mandatory.
Given that the Trans-Adriatic Pipeline (TAP) – a pipeline that forms part of the EU’s Southern Gas Corridor – is not available for Gazprom, that leaves the Russians with using part of the Italy–Turkey–Greece (ITGI) Interconnector line that has a 25-year exemption on third-party access and could provide 8 bcm capacity if connected to the planned offshore section of ITGI that runs to Italy, known as ITGI-Poseidon.
This is the point where it becomes interesting for Europe. When comparing capacities, the TAP pipeline provides 10 bcm of initial capacity to gas coming from Azerbaijan. In the future it could be expanded to 20 bcm if additional sources, for example from Turkmenistan or Iran, become available.
With Gazprom eyeing to supply 8 bcm of natural gas to southeastern Europe via Turkish Stream’s second line, it becomes clear that Russia is trying to pre-empt these deliveries and, as a result, poke holes in the Southern Gas Corridor.
Whether this strategy will ultimately succeed remains to be seen, but it is clear that Gazprom is trying to raise the pressure on the EU’s diversification plans and pre-empt any future deliveries beyond the 10 bcm already contracted from Azerbaijan.
Dr Sijbren de Jong is a strategic analyst with The Hague Centre for Strategic Studies (HCSS) in The Netherlands and a lecturer in Geo-economics at Leiden University specialisingin Eurasian energy security and Europe’s relations with the countries belonging to the Former Soviet Union. He is the writer of the monthly Crude World column on power politics in Europe’s eastern neighborhood for EUobserver.
Banner image: Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan sign the agreement for the Turkish Stream pipeline, Istanbul, 10 October 2016. Courtesy of Gazprom.