Gazprom to build new 63 bcm Black Sea pipeline to Turkey instead of South Stream

RIA Novosti/Michael Klimentyev
Gazprom CEO Aleksey Miller said the energy giant will build a massive gas pipeline that will travel from Russia, transit through Turkey, and stop at the Greek border – giving Russia access to the Southern European market.

The new pipeline to Turkey will have an annual capacity of 63 billion cubic meters. A total of 14 bcm will be delivered to Turkey, which is Gazprom’s second biggest customer in the region after Germany.

Russia’s energy minister Aleksandr Novak said that the new project will include a specially-constructed hub on the Turkish-Greek border for customers in southern Europe.

READ MORE: Putin: Russia forced to withdraw from S. Stream project due to EU stance

While the pipeline will be registered as a Russian company, Miller said that Gazprom will “consider offers from Turkish partners if they express an interest in buying into the project.”

For now, the supply of Russian gas to Turkey will be raised by 3 billion cubic meters via the already operating Blue Stream pipeline, Vladimir Putin said during a joint press conference with his Turkish counterpart, Recep Tayyip Erdogan. Last year, 13.7 bcm of gas was supplied to Turkeyvia Blue Stream, according to Reuters.

From a political point of view, Turkey and Russia are “poles apart,” but from an economic point of view the gas deal between two states have united Moscow and Ankara in a common interest.

“Turkey would in fact like the gas pipelines to go through Turkey, because they can collect rent from it,” Martin McCauley, an economics specialist from the University of London, told RT. “Turkey sees itself, if you like, as a partner – the in-between partner – who will take gas from Iran and Russia to Europe.”

December 1, 2014. Russian President Vladimir Putin at the concluding news conference in Ankara. (RIA Novosti/Michael Klimentyev)

Moscow will also reduce the gas price for Turkish customers by 6 percent from January 1, 2015, Putin said. Later, Novak said the discount could reach 15 percent, subject to negotiations.

Novak later confirmed that Vladimir Putin personally ordered for the South Stream project to be mothballed, and its existing facilities to be repurposed for the new Turkish pipeline.

The much-delayed South Stream was supposed to connect underwater Black Sea pipelines with a network in Eastern Europe, with Bulgaria as the entry point.

The project had run into difficulties, as it violated EU regulations on the same company owning the pipelines and the gas they transported. While several previous governments in Bulgaria, which is wholly dependent on Russian gas lobbied Brussels to make an exception, the current government said it would not give Gazprom a building permit. The cost of the underwater and Eastern European segments of the project was estimated at €23,5 billion, by a senior Gazprom official last month.

The new project will include a specially-constructed hub on the Turkish-Greek border. Russia’s energy minister Aleksandr Novak said it will supply customers in Eastern and Southern Europe.