Moscow Plans to Shift EU Export Routes to Turkey
Gazprom wants to rearrange its natural gas pipeline transit routes to Europe through Turkey after the two Nord Stream pipelines were damaged in an apparent sabotage attack. Aside from Nord Stream, which connected Russia directly to Germany under the Baltic Sea, the two remaining export routes for Russia run through Poland and Ukraine, two of Moscow’s and Gazprom’s fiercest opponents. If the plans materialize, it could bolster Turkey’s ambitions to become a significant regional gas hub. But it is unclear how serious Moscow is about the scheme. Relations with Moscow and Ankara have also been patchy at best, which could bring up further uncertainty over future transit risks.
Russian President Vladimir Putin floated the idea to expand the capacity of the Turk Stream offshore gas pipeline to Turkey on Oct. 12 with a view to redirect volumes to Europe from the damaged Nord Stream pipelines. Turkish leader Recep Tayyip Erdogan then instructed the government to immediately begin technical studies. Turkey has long considered turning into a gas hub as it imports gas from several sources. Ankara will likely seek to sell gas from Azerbaijan and, potentially, Turkmenistan for the hub to gain enough liquidity, industry experts say.
Where the investments would come from is a big question mark for the project. The EU is seeking to completely phase out Russian pipeline gas imports by 2027, so it would be difficult to justify pumping more money to expand cross border pipeline infrastructure between Turkey and the EU, especially if it means opening the door to more Russian gas, the experts say. The cost of transporting gas from Turkey through Austria’s Baumgarten hub and onward to northwestern Europe would also be quite high, the experts add. A similar argument was used when considering sending gas from Turkey into the EU through the unused Trans-Balkan pipeline corridor. Shipping gas through that route is not only considered too expensive but would only ship northward to countries that may not be too keen in receiving extra Russian gas.
Gazprom has said it would no longer build pipeline infrastructure inside the EU following the cancellation of the South Stream project in 2014 due to opposition from Bulgaria and Brussels. Turk Stream, the project that eventually replaced South Stream, did not involve any Russia-financed capacity construction in the EU, only in non-EU Serbia. Gazprom floated the idea of selling their gas on the Russian border instead of directly in the EU through a trading department set up in St. Petersburg in 2018. It also launched its Electronic Sales Platform where it sold spot gas to European players from various interconnection points.
It is not clear how serious Moscow is about putting all its chips in using the Turkish export route, given the numerous technical and political obstacles. Gazprom says it has the technical capacity to double the throughput of Turk Stream from its current 31.5 billion cubic meters per year to 63 Bcm/yr, which was South Stream’s planned capacity. Gazprom CEO Alexei Miller said last week during the Russian Energy Week conference in Moscow that the new transit through Turkey could fully replace the lost Nord Stream capacity, potentially alluding that Gazprom intends to increase Turk Stream capacity even further than the planned 63 Bcm/yr.
Western sanctions on Russia also significantly limit the pipelaying vessel fleet available to Gazprom. There are serious doubts that Russian vessels used in the construction of the Nord Stream 2 pipeline in 2021 can operate in the Black Sea. The Black Sea is over 2,000 meters deep in parts, compared to the maximum 210 meter depths of the Baltic Sea.
Putin said Europe must make it clear that it needs the gas from an expanded Turk Stream before Moscow starts investments. Moscow is likely betting that Europe will be desperate enough to need the volumes, with a possible halt of transit flows via Ukraine potentially acting as leverage. The Kremlin has already threatened to impose blocking sanctions on Ukrainian gas company Naftogaz, which would mean a stop to Ukrainian transit volumes.
Miller said that Europe will struggle during the 2023-24 winter period as EU gas stocks will have depleted to 5% of its capacity and it is still not clear how the bloc will replenish stocks in the summer. Europe might face a daily shortage of up to 800 million cubic meters per day during winter demand peaks, with Gazprom previously supplying 600 MMcm-700 MMcm/d or more to the region in previous years, he said. The Russian piped gas export monopoly is currently supplying slightly over 40 MMcm/d via Ukraine and slightly more than 30 MMcm/d via the Europe-bound string of Turk Stream.
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