Gazprom says Turkish Stream is frozen over disagreements

Russian state-controlled energy titan Gazprom says Turkish Stream project will not be completed by end of 2016 as it has initially been planned due to disagreements between Turkey and Russia

Photo by: AA
Photo by: AA

An engineer inspects pipes at a natural gas station in this archived photo.

Russian state-controlled natural gas company Gazprom Deputy Chairman, Alexander Medvedev has announced that Turkish Stream pipeline project will not be implemented by the end of 2016 as it has previously been planned, because of continuing disagreements between Turkey and Russia. 

Medvedev said, “Due to the fact that the installation did not begin as planned, we are no longer speaking of December 2016,” speaking to the press on Monday. 

Reuters citing Medvedev, reported that the "current Turkish political uncertainty" has led to the postponement of the project.

However, Turkish Energy Ministry Deputy Undersecretary, Sefa Sadik Aytekin said last week that Turkish negotiations with Russia could not move further because “Russians have preconditioned the price negotiations between Turkish state-owned pipeline firm BOTAS and Gazprom. We have thought that as a starting point.”

Russian Energy Minister, Alexander Novak announced in late July that Gazprom and BOTAS agreed on a 10.25 percent discount concerning natural gas prices, but Novak also indicated that the deal was not signed yet.

“The negotiations have been frozen at this point.There was also no progress in terms of establishment of a government in Turkey following June elections. I do not say the parties of the project have walked away from the [negotiation] table, but the negotiations have been frozen,” Aytekin  stated.

Ali Riza Alaboyun, interim Energy Minister of Turkey, recently declared that it is apparently not possible for the two countries to reach an agreement before formation of a new government.

Turkey will hold early elections on November 1, after the parties could not agree to establish a coalition government following the inconclusive results of June elections.

Former Turkish Energy Minister, Taner Yildiz indicated in mid July that the Turkish Stream pipeline project needs more time because there have been “certain disagreements” between Russia and Turkey in terms of priorities of the project.

Novak had previously disclosed that Turkey and Russia will sign a formal agreement concerning the Turkish Stream at the end of June, after Turkish President, Recep Tayyip Erdogan announced the project on June 13 with Russian President, Vladimir Putin in Azerbaijan’s capital Baku during Baku’s 2015 European Games.

Both countries were meticulously planning for the project since Russia relinquished its plans for the $40 billion South Stream pipeline project in December 2014, due to objections from the European Union (EU) on competition grounds.

The new Turkish Stream project is an alternative pipeline which is planned to bring gas to Europe through Turkey, bypassing Ukraine, with the aim of pumping 63 billion cubic metres (bcm) of gas per year - 47 bcm of which will be delivered to Europe - by 2020. The rest of 16 bcm will be allocated for domestic use in Turkey.

The pipeline will have four lines and each one will have an annual capacity of 15.75 bcm and the project is planned to lay out a total of 660 kilometres of pipeline through the old South Stream route beneath the Black Sea.

Yildiz previously emphasised that Turkish discussion with Russia is focused on the first line of the pipeline, which is expected to be valued at 3.3 billion euros ($3.73 billion).

Reuters reported that Gazprom hopes to create a gas hub at the Turkish-Greek border for transit to Europe, but this depends on “Turkey agreeing to build on its territory and needs of EU countries  - many of which want energy independence from Russia - to develop the required infrastructure.”

Aytekin described current attitudes of the countries towards each other regarding the agreement as “mutual distrust.” He said, “Turkey has taken a serious risk, by going through with Turkish Stream and partnering with Russia against political realities."

However, “Russia has adequately not understood the risk Turkey has taken and lost a considerable time,” he added.   

He also pointed out the fact that the name of the project had been suggested by Russia. It does not matter whether the name of the project is ‘Turkish Stream’ or not, but what matters is “the results should be the Turkish Stream,” he emphasised. 

Turkey is Gazprom’s second biggest export market after Germany and BOTAS is globally the biggest trade partner of the company in terms of firms.

TRTWorld and agencies