Russia will be ready to continue work on the construction of the second line of the Turk Stream only after receiving legal guarantees from the European Union, Russian Foreign Minister Sergei Lavrov said.
The construction project of the second string of the pipeline can meet the growth in gas consumption in the countries of southern and south-eastern Europe, Lavrov reminded. “But given the bad experience with the South Stream, we will be ready to start this work only after receiving solid legal guarantees from Brussels”, he stressed. “Moscow wants to be sure that the EU will not start to obstruct when the construction of the Turk Stream is on its way to completion and an issue will arise with connecting the pipe to the European infrastructure, as it was before. These guarantees are needed right now and should be obligatory”, one of the Federal officials told the Russian newspaper Vedomosti the words of the Minister.
The Turk Stream project involves the construction of two pipeline strings through the Black Sea. The construction can be completed by the end of 2019. The cost of the project is about 6 billion euros. The length of the underwater part of each of the strings is about 900 km. One of the strings (with a capacity of 15.75 billion cubic meters per year) is designed to supply gas to the domestic market of Turkey. The volumes of gas that Gazprom now supplies to Turkey via the Ukrainian route (about 14 billion cubic meters per year) can be redirected there. The second string of the Turk Stream is to ensure gas transit through Turkey to the EU. Gazprom has already signed a roadmap for the development of a national gas transit system with the relevant ministries of Bulgaria, Serbia, and Hungary, Interfax reported on October 23 with reference to Minister of Energy of Russia Alexander Novak. However, it is possible that the second string of the pipeline will go to the Turkish-Greek border and not to Bulgaria. In this case, Italy may become the main market for the supply of gas from the second string, said Novak. The final route has still not been determined yet.
Meanwhile, Gazprom has already built a total of about 430 km of the Turk Stream, Bloomberg reported with reference to the representatives of South Stream Transport B.V. operating the project. The minister’s statement on the need to obtain solid legal guarantees is an excellent news, says Tatyana Mitrova, Director of the Skolkovo Business School Energy Center. “This is a normal balanced approach in the context of the current regulatory and political risks, including the possibility of new sanctions, Gazprom has now to work under in the EU. There are too many contracts in the European market, the dynamics of demand is extremely unstable, the competition will be very high in the coming years. Therefore, any investment decisions require serious guarantees”, says Mitrova.
Previously, the rhetoric was different: “Gazprom was ready to take the pipe to the border between Turkey and Greece and wait till Europe completes the necessary infrastructure on its side”, Dmitry Marinchenko says. “The new approach is good news for investors. This reduces the risk that the constructed pipe is not going to pay for itself.”