Russian gas pipeline TurkStream faces many obstacles

Broad geopolitical and energetic context of building of the Russian gas pipeline TurkStream

Soon after South Stream project cancellation, Gazprom announced a new proposal to build a gas pipeline TurkStream that would deliver Russian gas to Europe through Turkey. Like his predecessor, TurkStream would help Russia to bypass Ukraine and deprive it of its status as an important transit country for Russian natural gas. Turkey would get the position of an important energy junction but it would increase its dependency on Russia. In Europe, the project raises some worry as it would be a threat to energetic security like the cancelled South Stream. Therefore it is uncertain if the Russian plan will be put in motion.

The European Union has been concerned about the problem of high dependency on Russian natural gas for a long time, especially in Central and Eastern Europe. After the cancellation of the South Stream project, Russia has a new opportunity to become the main provider of natural gas for these parts of Europe which is problematic from a security point of view. Moscow uses natural gas to reinforce its political influence and crises in 2006 and 2009 only confirmed that. The EU's animosity toward Gazprom intensified after the crisis broke out in Ukraine and the EU currently takes legal actions against Gazprom for abusing their dominant market positions.

In the last couple of years, Brussels has been trying to reduce the dominant position of Moscow and the question is whether they will allow the building of TurkStream under conditions acceptable for Gazprom. Especially the EU's "Third Energy Package" which asks for pipeline capacity allocation for the competition is hardly acceptable for Gazprom. Being granted the exception is unlikely due to the current relations between Moscow and Brussels. Some states of the EU, including Hungary, Austria and Greece, would likely support the exception. The project is another chance for Russia to test the cohesiveness of the EU.

It is possibly the last chance for Moscow to by-pass Ukraine in the south which puts Moscow into a difficult bargaining position. Building the gas pipeline is important for keeping the current Russian share in the European natural gas market and also for Russian economies dependent on fossil fuel export. Therefore Russia is in the weaker position in negotiations with Ankara because unlike its counterpart Russia has no other alternative. The inability of both sides to agree on the building details and discount on gas supplied to Turkey led to postponing of the TurkStream's planning.

Turkey could become an important natural gas transit junction which would reinforce the country's position as a regional power. Furthermore, Turkey is dependent on the import of this material and if the planned building of the pipeline will be realised, Istambul will probably get a discount on deliveries from Russia. However, the dependency of Turkey on Russian natural gas is more than 50 percent already and its increase will be problematic from the long-term point of view. Which does not change the fact that if the Recep Tayyip Erdoğan's government hopes to continue the economic growth, it will have to increase the current energy supply.

In the case of the project's realisation, Ukraine would be a clear loser. Losing its position as an important transit country would leave Ukraine at the Russia's mercy regarding the natural gas supply. On the other hand, Ukraine is actively trying to decrease its dependence on Russian gas since the beginning of the crisis. Furthermore, the EU promised to include Ukraine in a future unified market with energies which would result in Ukraine's protection from the influence of Moscow.

Although the new pipeline would be geopolitically advantageous for Russia, the question is whether it would be economically viable. According to Maroš Šefčovič, the Vice-President of the European Commission for the Energy Union, 63 billion cubic meters (bcm) of gas a year is more than the region needs. Šefčovič also disregarded the Gazprom's warning that in 2019 natural gas will be delivered through Greek-Turkish border instead of the Ukrainian one.

So far there is no binding agreement for building the TurkStream and it is highly uncertain if it will be made. Even though Gazprom is determined to bypass Ukraine and enforces the building of the new natural gas pipeline, the success of the project will depend on the EU’s stance. It does not seem very friendly considering the current conflicts with Moscow. If the opposition wins and Brussels refuses the TurkStream, Gazprom will be eventually forced to go back to its agreement with Ukraine which will expire in 2019. There is also still the matter of possible expansion of the capacity of the Nord Stream gas pipeline which will, however, face the same obstacles as TurkStream.

About author: Tereza Krásová

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