Gazprom's Turkish Gambit pays off in energy relations with EU
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Tired of Brussels-based European Union bureaucrats’ endless geopolitically motivated red tape over its South Stream gas pipeline, the Kremlin at the end of last year finally abandoned the venture in favor of construction of a new alternative gas route to its European gas consumers via Turkey, the so-called Turkish Stream pipeline.
According to Konstantin Simonov, the director of the National Energy Security Fund, a Moscow-based energy-focused think tank, the construction of the Turkish Stream pipeline is expected to kick-off in about 8-10 months after the approval of the project documentation.
The new strategy of the Russian gas monopolist, Gazprom, envisages the construction of a new pipeline and delivering gas via it to the Turkish borders with Europe. From there, the EU and other interested countries will now have to ensure the delivery of gas to end consumers across the continent. This is radically different from the South Stream plan that had envisaged Gazprom's participation in financing the construction of the pipeline over its entire length up to Austria and even to Italy.
However, Brussels invented the so-called anti-Russia Third Energy Pact, whose main essence is to ensure that energy producers in the EU cannot simultaneously be owners of gas pipelines and their contents. Although this requirement at first sight is generally neutral, but it is in fact pointedly directed only against Russia’s Gazprom, as it is the only energy player that has this capability and more importantly that also intends to build a new gas pipeline across the EU.
But, according to experts, the EU bureacrats seemed to have overplayed their Russophobian hysterics card because the Turkish scheme is more beneficial for Russia and Gazprom, as it saves them from having to spend billions of euros in the construction of a gas pipeline to Europe.
With the proverbial one stone, the Kremlin has just killed two birds. According to the Kremlin’s strategy, the perennially problematic Ukrainian gas transit flow will now move to safer Turkey, while the EU must now hurry to build a pipeline to transport Gazprom’s gas from the new point of delivery at the Turkish-Greek borders. The Turkish Stream is expected to be commissioned by 2017, just two years gas before the transist contract between Gazprom and Ukrainian Naftogaz expires in 2019.
Gazprom’s new position on this issue is based on the European Commission single buyer policy, the Russian gas monopoly explained in an official statement.
Tactically smart Russian President Vladimir Putin, as has now become the norm in its relationships with the West, as for example, in the Crimean issue, has again outplayed Western anti-Russia strategists. Using the chess game terminology, the Russian leader has applied the so-called Turkish Gambit in its endless gas negotiations with the EU.
In a layman’s language, the Turkish Gambit refers to a specific combination of moves at the beginning of a chess game, in which a player purposely sacrifices a pawn or any other figure to get an early strategic advantage in the game over an opponent.
While the disappointed South Stream gas transit countries are counting billions of dollars of lost benefits, the mood of the Turkish authorities, which have accidentally become the new energy hub in southern Europe, is quite different. This optimism is seen in the statement of the Turkish Ambassador to the Russian Federation Umit Yardim who has proudly announced the start of work on the technical part of the project.
“Our energy partnership with Russia is very important for Turkey and, therefore, we see our cooperation as strategic cooperation,” the ambassador said. “Both the Russian and Turkish sides have already started the technical part of this project and our cooperation will continue in this field.”
Mapping the Turkish Stream pipeline
Gazprom has mapped the route of the Turkish Stream pipeline under the Black Sea. According to Gazprom’s plans, the first branch of the pipeline, with a projected annual capacity of 15.75bn cubic meters of gas, is expected to reach Turkey by December 2016, Gazprom CEO Alexei Miller said after a meeting with the Turkish Energy and Natural Resources Minister Taner Yildiz.
The four branches of the pipeline are expected to carry a combined volume of 63bn cubic meters of gas per year. The gas pipeline will run about 660km along the abandoned South Stream route and then another 250km in a new direction to the European part of Turkey, according to Gazprom.
Russia has already officially informed the EU leadership that the decision to build the Turkish Stream, just as its cancellation of the South Stream, and also the fact that the EU needs to begin the construction of its own transportation infrastructure to deliver its ordered gas to consumers in Europe.
The European Commission, together with the countries of south-eastern and central Europe, in the shortest possible time necessary will have to make a decision on the development of its own gas transportation infrastructure, Russian Energy Minister Alexander Novak told European Commission Deputy Chairman and EU Energy Commissioner Maros Sefcovich.
“This work should be carried out as soon as possible because such large capital-intensive infrastructure projects cannot be implemented within a year. And to ensure that consumers are able to receive gas on time, it is necessary to start this work even today,” the minister noted.
The same opinion is shared by Gazprom’s Miller: “The EU has only a few years to develop these infrastructure projects. This is a very tight schedule. In order to meet this deadline, the work on the construction of new gas pipelines in the EU should start today. Otherwise, these volumes of gas can be rerouted to other markets, the Gazprom executive noted.
However, Sefcovich considers the Turkish Stream project economically unviable and offers Russia to return to a more rational discussion on its gas policy with Europe. The EU energy commissioner said Gazprom’s proposed gas pipeline to the Greek-Turkish border and offering European companies themselves to build the infrastructure to deliver gas to the continent will not work.
“I cannot say that this is a final decision, and I think that we need to return to a more rational discussion on the energy policy that will be economically viable for the energy transportation project and the overall cooperation between Gazprom and EU companies in the gas sector.”
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