Turkish Pipe On Stream in December 2016, Says Gazprom Amid New Geopolitical Twists
While Russia is apparently succeeding in its strategy to deliver its gas to Europe via Turkey and Greece, Ukraine raised its voice, saying that it won its “winter battle” against Moscow. At the same time, the Kremlin is getting ready to push its ties with China to another level, in the attempt to decrease its dependence on the European markets.
GAZPROM AGREES ON TURKISH STREAM DELIVERING GAS TO TURKEY IN 2016, ASKS ATHENS TO TAKE DECISIONS, READIES TO MEET CHINESE PRESIDENT
During a meeting between Gazprom’s Alexey Miller and Turkish Minister of Energy Taner Yildiz, the parties sent a resounding message to gas markets: the Turkish Stream will be brought on stream in 19 months.
“We had very efficient and crucial talks today. It was agreed to bring onstream Turkish Stream and to start gas supplies in December 2016. Gazprom, while implementing its portion of work under the Turkish Stream project, will follow the agreements reached today,” Miller said in a note released on Thursday.
In this sense, despite the recent tensions between the two countries over Russian President Vladimir Putin’s attendance of the ceremony in Yerevan to commemorate the Armenian victims of the 1915 events, the Turkish and Russian delegations renewed their commitment to increase energy ties. It might sound weird, but the they are showing an unexpected pragmatic take on the gas industry. In other words, they have more important battles to play, and their mutually beneficial relations could not pay the price of divergent geopolitical interests.
On the Russian side, the move seems a strong reaction to European Commissioner Maroš Šefčovič’s announcement that Ukraine would remain a key transit country for Russian gas to Europe. However, to make this strategy effective, Greece is a necessary piece of the jigsaw - if Russia wants to avoid shipping gas through its former Soviet ally, it needs to clinch a deal with Athens to build pipelines connecting Turkey to the rest of Europe.
Against this backdrop, it comes as no surprise that Putin said on Thursday that Moscow would be ready to provide financial support to Greece, as long as its government signs up to a project connecting the Turkish Stream to European markets.
‘Russia confirmed its readiness to consider the issue of funding the public and private Greek companies that would be involved in the project’ reads a note published on the Kremlin’s website, referring to the gas transportation system on the Greek territory.
Waiting for an answer from Prime Minister Alexis Tsipras, Putin will have enough on his fork. Chinese President Xi Jinping will take part to the World War II anniversary celebrations in Russia, where he is expected to sign a flurry of deals meant to step up Bejing’s alliance with Moscow.
Adding to these developments, Russian have other reasons to be optimists. Reading between the lines, several Slovak and Hungarian officials said that trade ties with Russia are unavoidable and necessary.
“As a member of the EU we voted for the sanctions, and of course we stand by them, but they are hurting” Hungary’s Parliamentary State Secretary László Szabó said on Thursday in Budapest, speaking about the EU embargo against Russia.
According to the Hungarian politician, as a result of the ongoing tug of war, the country is losing USD 1 million every 3-4 days. The IMF reported that, in 2014, Hungary’s GDP was $137,104 million. If the two figures are right, the EU sanction against Russia translate into a 0.75% decrease in the country’s GDP.
WE WON THE WINTER BATTLE, SAYS UKRAINE
Moscow is moving forward with its agenda, and Kiev is trying to do the same. After adopting the gas law on Tuesday, Ukraine’s President Petro Poroshenko said on Wednesday that Ukraine won the winter battle against Gazprom.
“Winter has passed without potbelly stoves and nightlights. We have won the winter battle against Gazprom. However, it is too early to speak of the complete victory in this war. We have finally put an end to the monopoly of this political-energy structure in supplying gas to Ukraine. In the first quarter of 2015, the share of Gazprom in the import of gas to Ukraine equals 37%. The rest is related to the supplies from our European partners,” Poroshenko said on Wednesday.
The Ukrainian President added that Kiev learnt the diversification lesson and that it now receives gas from more than 10 European companies. He said that Kiev does not want any energy supplier to hold more than 30% share of the total Ukrainian market.
Moreover, as a sort of daily rite of passage, Poroshenko did not forgot to remind Western countries of his campaign against corruption.
“Policy of deoligarchization and demonopolization fully meets national security interests and I am confident that neither the Cabinet of Ministers, nor the Parliament will retreat from it” he said in a separate communiqué.
Finally, also on Wednesday, Naftogaz was reported as saying that the country is considering a change in the system of tariff formation for Russian gas.
“The Regulatory Asset Base system includes the so-called ship-or-pay principle and the use of this system would lead to a substantial increase in gas transit fare," Yuriy Vitrenko, director for business development at Naftogaz, said as written by China.org.
Sergio Matalucci
Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci