Russia resumes construction of TurkStream Line 2 for Europe

Gazprom will reduce volumes through Ukraine even further but Russian will not stop gas transit through the former Soviet republic, expert tells NE.


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THESSALONIKI, Greece – Russia has resumed the pipelaying operations for the second string of the Turkish Stream or TurkStream offshore gas pipeline, which aims to deliver gas to southern and southeastern Europe.

“I think when the initiative came up with TurkStream it was planned as two lines, one was planned to supply Turkish demand and the second line for European demand and so it seems everything is moving according to the plan,” Yurdakul Yigitguden, former under-secretary of the Turkish Ministry of Energy and Natural Resources, told New Europe on the sidelines of the 11 SE Europe Energy Dialogue on June 27 organised by IENE in Greece’s northern city of Thessaloniki.

The Pioneering Spirit vessel on June 26 resumed the pipelaying operations for the second string of the TurkStream offshore gas pipeline, moving towards the Kiyikoy settlement in Turkey, Russian gas monopoly Gazprom said in a press release.

After entering the Black Sea on June 20, the vessel conducted a set of preparatory works, including stinger deployment and pipelay equipment check-ups, Gazprom said. The pipeline head of the second string was recovered from the bottom of the Black Sea on the border of Russian and Turkish exclusive economic zones (EEZs) at a depth of 2,170 metres. The 224-kilometre section of the pipeline leading to the EEZ border was built in 2017.

Gokhan Yardim, the former CEO of BOTAŞ, the state-owned oil and natural gas pipelines and trading company in Turkey, told New Europe on the sidelines of the IENE conference the pipeline would come to Kiyikoy. “After Kiyikoy it could be connected to the Turkish line, this for the first part, and the second one, a joint venture was established together with BOTAŞ. But how it’s going to be connected and where it’s going to be connected is not defined yet,” Yardim said.

He reminded that the existing pipeline interconnecting Turkey and Greece is operating at a low 6 billion-cubic metre capacity. “But the initial capacity should 10 bcm. So there is a capacity at the existing pipeline. This capacity can be used. Also the Russians are investigating the possibility to make alive ITGI,” Yardim said, referring to the Interconnector Turkey-Greece-Italy, also known as Poseidon pipeline that was frozen after it lost the race for Azeri gas to the Trans Adriatic Pipeline (TAP).

“They lost the first game but they will play the second game now. Because you know in football the match is 90 minutes not 45. That’s why my feeling is that some of the gas will go to Greece and some will go to Bulgaria. But what’s important is the interconnecting lines,” Yardim said.

For his part, Yigitguden noted that the existing Trans-Balkan route could also be used for swaps or for swap-type operations.

Yigitguden reminded that pipelaying in offshore, is a continuous process. “I think Gazprom decided to finalise all this offshore pipelaying and on the onshore from the Turkish coast up to the border still a lot of things need to be done in the future. But the companies want building this infrastructure the onshore pipeline and so on. The rest is up to the countries in the region whether they want to purchase this gas or not because certainly it’s not arriving in a EU-member country. It’s arriving in Turkey and there are many options if they really want to purchase this gas,” Yigitguden said.

According to Gazprom, in April 2018, pipelaying for the first string of TurkStream’s offshore section was completed, with a total of 1,161 kilometres – 62% of the overall gas pipeline length – of pipes laid along the two strings.

“The first string to Turkey is not operating yet. The offshore has been finalised in end of April, now the onshore part has started already the construction works so it needs to be connected to the Turkish network in the coming years,” Yigitguden said.

Each string will have the throughput capacity of 15.75 billion cubic metres of gas per year. South Stream Transport BV, a wholly owned subsidiary of Gazprom, is responsible for the construction of the gas pipeline’s offshore section, according to Gazprom.

Yigitguden also expressed his confidence that unlike South Stream, which faced obstacles from the European Commission, Brussels cannot block the second string of TurkStream. “There is no way to stop the construction because it arrives in Turkey and all the additional construction work onshore will also be on Turkish soil,” he said.

Ukrainian transit

TurkStream will bypass Ukraine, which is a key transit country for Russian gas to Europe. Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe in Thessaloniki that Gazprom would reduce volumes through Ukraine even further but he opined that Russian would not stop gas transit through Ukraine.

If Russian gas supplies to Europe carry on increasing beyond 200 billion cubic metres, then some additional pipeline capacity may be needed beyond Nord Stream 2 and the second string of TurkStream, Ellinas said. Nord Stream 2 also plans to bypass Ukraine building a second pipeline from Russia to Germany.

Ellinas also noted that Russia would keep Ukraine as a transit country in order to have security of supplies to Central Europe. “Nord Stream 2 goes to Germany and Turk Stream 2 to Turkey. It is not clear how gas will reach central Europe, unless the Ukraine route remains operational. Security of supplies includes transit risk. Should one of the pipelines become unavailable for whatever reasons, then there would be other pipelines and spare capacity that can be used to maintain supply commitments,” Ellinas said.

Another reason Russia would not stop gas transit through Ukraine is because in the new rapport between Gazprom and the European Commission, the former may wish to appease the latter and satisfy EU demands, accompanied by strong political effort, and maintain partial use of the Ukraine route, he said.

“All of the above presupposes that with EU help Ukraine and Gazprom will patch up their differences and agree to new contracts to replace those about to expire. And also that Russian gas supplies to Europe carry on increasing. If they decline then the new pipelines could carry all the gas and the Ukraine route may not be used. And lastly, it should be noted that the Ukraine transit network requires serious rehabilitation,” Ellinas said.

East Med gas reserves

Asked if reserves from the East Med could be transported via TurkStream especially if Russia uses IGI Poseidon to transport Russian gas via the second pipe of Turkish Stream to Italy, Ellinas said, “Theoretically yes, but not through TurkStream, but through the EastMed gas pipeline connected to the IGI Poseidon pipeline.”

Ellinas noted, however, that the problem is commercial. “Getting East Med gas to Europe through this route is expensive. Average gas prices in Europe must increase substantially above last year’s average and stay high in the longer term, at least for the next 15 years, to justify the required investment. I do not see that happening,” he said.

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