Gazprom and Turkey agree that first gas will flow through Turkish Stream by end of 2016

By bne IntelliNews May 7, 2015

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The first consignments of Russian gas will flow through the planned Turkish Stream pipeline by the end of 2016, Gazprom CEO Alexei Miller said on May 7 after talks with Turkish government officials in Ankara.

Miller met Turkey’s Minister of Energy Taner Yildiz for consultations on the pipeline, which is due to be built under the Black Sea from Russia and later extended through Turkey and into the EU via Greece.

"Agreement was reached on the commencement of operation and gas supply via 'Turkish Stream' in December 2016," Miller said in a Gazprom statement. 

In December during a visit by Russian President Vladimir Putin, Turkey and Russia signed a memorandum of understanding for the construction of an offshore gas pipeline to Turkey with an annual capacity of 63bn cubic metres, after Moscow decided to abandon its South Stream project.

The fourth and final section of the Turkish Stream pipeline to the Greek border is expected to be completed by 2020, according to Gazprom. Work on the new line will coincide with modernisation of the existing Blue Stream pipeline under the Black Sea to Turkey, Miller added in remarks quoted by TASS.

The Russian company currently supplies around one third of Europe’s gas, and wants to build alternative supply routes before it ceases piping gas through Ukraine, also by 2020. However, Putin cancelled South Stream in December amid frictions with the EU and Bulgaria, where the line was planned to come onshore. 

The new line will deliver an estimated 47 billion cubic metres of gas a year to a planned hub at the Greek border, from which EU customers can help build and own the line's extension into Europe, Gazprom says.

The Greek government has been actively courting Russia in hope of receiving billions of dollars of advance payment for its role in extending Turkish Stream into the EU.

The pipeline work and operation will fully comply with EU laws, the Russian side emphasises. The European Commission in April charged Gazprom with violating anti-trust laws by overcharging several European clients and obstructing fair competition. Gazprom and the Russian government rejected the charges as ungrounded.

Despite these tensions and a protracted legal battle in a Swedish court with Ukraine over billions of dollars sought in compensation by both sides, analysts predict healthy growth in Gazprom’s stock value in the coming years as new gas exports to China start.

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