Turkey Considers New Turkish Stream and TANAP Gas Pipelines to Be Most Important for It and for Europe

It is noteworthy that thanks to this project, Europe will for the first time have access to Russian gas through the territory of Turkey, which will strengthen the position of the latter as an important energy hub.

At the end of 2020, Southern Europe through Turkey will also begin to receive Azerbaijani gas via the Southern Gas Corridor (SGC), whose Turkish section TANAP was fully commissioned at the end of 2019.

“Turkey is becoming the center for the implementation of major projects aimed both at its own energy security and the energy security of Europe ... Let the Mediterranean countries (Israel, Cyprus) think about this, for which Turkey opens the door to the Turkish Stream and TANAP. These pipelines have great potential. Turk Stream has a total capacity of 31.5 billion cubic meters of gas per year, TANAP, may God help, will grow in the future from an annual capacity of 16 billion cubic meters to 24 billion cubic meters and further to 31 billion cubic meters. With our partners such as the Russian Federation and brotherly Azerbaijan, the gas pipeline development routes are successful,” Turkish President Recep Tayyip Erdogan said at the opening ceremony of Turkish Stream.

His Russian counterpart, Vladimir Putin, pointed out the importance of the political will of the Turkish leadership in implementing this project, which the United States tried to prevent at the end of 2019 through the imposition of sanctions.

The deterioration of US-Turkish and US-Russian relations at the end of last year could no longer stop the Turkish Stream, as by the time the sanctions were introduced, the gas pipeline had actually been built and filled with gas.

The Turkish Stream consists of two threads with a capacity of 15.75 billion cubic meters of gas every year, stretching from the Krasnodar Territory, then through the Black Sea to the Kiyykey point in Turkey near Istanbul.

The first line is intended for the supply of Russian gas to Turkish consumers (built by Turkish Botas and connected with its gas distribution system), the second - for gas supply to the countries of South and Southeast Europe (on January 1, 2020, gas began to flow to Bulgaria, and from 5 January through the new compressor station Strandja-2 on the Turkish-Bulgarian border, gas began to be sent to the Republic of Northern Macedonia and to Greece). As other potential markets for this branch of the Turkish Stream, its operator, the Russian Gazprom, considers Italy, Serbia and Hungary.

It is noteworthy that since 2003, Turkey has been receiving gas from the Russian Federation via the Blue Stream pipeline, a 1213-kilometer gas pipeline with a capacity of 16 billion cubic meters of gas per year, also laid through the Black Sea to the Turkish city of Samsun.

Even earlier, more than 30 years ago, Turkey received certain volumes of Russian gas from the Trans-Balkan gas pipeline, but the Turkish Stream, which was commissioned in January 2020, actually replaces this old gas pipeline.

Turkey’s gas demand is about 50 billion cubic meters per year and almost half comes from the Russian Federation, mainly due to deposits in Western Siberia.

For more than 30 years of Russian gas supplies, Turkey has received a total of about 450 billion cubic meters of “blue fuel” from Gazprom.

Iran has traditionally been the second largest supplier of gas to Turkey, but with the launch of the first stage of TANAP in the summer of 2018, Azerbaijan begins to “squeeze” its neighbor in relation to such supplies and, according to representatives of Azerbaijan and Turkey, may well take the honorable second place of the supplier in the coming years, after the Russian Federation. So, according to the results of 2019, the growth of Azerbaijani gas supplies to Turkey increased by 27.3% by 2018.

“Turkey seeks flexibility in gas purchases. We have successfully launched TANAP and Turk Stream. Now, in total, our gas pumping points are oriented to transshipment of 318 million cubic meters per day, but in 2021 this figure can increase to 450 million cubic meters per day,” Turkish Energy Minister Fatih Donmez said on January 8. On January 8, the head of the Turkish Energy Authority met in Istanbul with the Minister of Energy of Azerbaijan, Parviz Shahbazov, who was invited to the Turk Stream launch ceremony.

Currently, 79% of the Turkish population (about 53 million people) actively uses natural gas (10th place in the OECD).

According to the expert from East European Gas Analysis Mikhail Korchemkin, who spoke to ASTNA, in 2020 Turkey can receive about 4.4-4.5 billion cubic meters of gas through the Turkish Stream with further increase.

As for Europe, there is still a number of "pitfalls" in relation to the Turkish Stream.

GAS FOR EUROPE

In fact, on January 8 in Istanbul, only the first stage of the Turkish Stream was launched, as Bulgaria should complete the construction of the pipeline to Serbia in 2020 as part of the Turkish Stream project.

“Since January 2020, deliveries have already been made to Bulgaria, Northern Macedonia and Greece. Accordingly, further transit via the Turkish Stream to Europe will be in accordance with the declared terms that the Bulgarian side stipulated. When it will come to 15.75 billion cubic meters a year, it’s hard to say,” said Russian Energy Minister Alexander Novak in Istanbul.

The European continuation of the second line of the Turkish Stream should go along the route Bulgaria - Serbia - Hungary - Austria, and the construction of the Hungarian section has not yet begun. Only in mid-October 2019, the gas transmission operator FGSZ announced the launch of Open Season (pre-booking procedure for possible transit capacity) for the interconnector project with Serbia.

That is, the full completion of the Turkish Stream in Europe may require more time.

But the difficulty lies not only in the completion dates of the Turkish Stream in Europe, but also in compliance with the EU-NDAA requirements regarding the continuation of a stable volume of Russian gas transit through Ukraine (December 2019 agreement) and the balance of volumes for all pipes from Gazprom.

“If the supply of Russian gas through the Turkish Stream reduces the volume of transit through Ukraine, Romania and Bulgaria by more than 25% from the monthly level of 2018, then Gazprom risks falling under the NDAA 2020 sanctions. And apparently, the volume will depend on the launched Turkish Stream, the expert from East European Gas Analysis told ASTNA.

Do not forget that Turkey and Bulgaria have been actively purchasing liquefied natural gas since 2019.

In general, the European market at the beginning of 2020 is oversaturated with gas, which knocks down prices for this type of fuel and, in particular, may complicate the negotiations between Azerbaijan and Botas on continuing gas supplies to Turkey from Shahdeniz-1 (a 15-year contract ends in 2021 year).

As for gas from Azerbaijan for Europe, it is protected by 25-year contracts signed in 2013, that is, in any situation buyers will have to take Azerbaijani volumes, which will give an inflow to the treasury.

Recall that Turkey in 2020-21. may reach the peak of gas purchases from Shahdeniz-2 (goes via TANAP) - 6 billion cubic meters per year, while continuing to receive gas from Shahdeniz-1 - about 9 billion cubic meters per year through the Baku-Tbilisi-Erzurum gas pipeline.

Europe at the end of 2020 will see Azerbaijan’s gas for the first time thanks to SGC, while Greece and Bulgaria will buy 1 billion cubic meters of gas from Shahdeniz-2 per year for 25 years, Italy - 8 billion cubic meters per year.

In February 2020, the EU promised to clarify the issue of whether Europe would like to increase further gas purchases from Azerbaijan in the context of reducing dependence on gas from Russia.