Russia's Gazprom starts dismantling Turkish Stream pipeline

Gazprom has abandoned the hope of turning the Turkish Stream project into a gas pipeline for mass exportation to Europe.

As Interfax reported on Monday, the Russian gas company is preparing to begin dismantling the Southern Gas Corridor pipelines which were initially constructed for the South Stream and were later transferred to the Turkish Stream.

According to the plan, the Turkish Stream was supposed to supply Turkey and the EU with 63 billion cubic meters of gas per year. However, a framework agreement could only be reached with Ankara concerning two of the four pipelines.

Due to the 50% reduction in the Turkish Stream’s capacity, Gazprom ended up with 506 kilometers of surplus pipe along the Pocinki-Anapa route from the Saratov province to Krasnodar Krai. Both the pipes and the Morshansk gas measuring station are to be dismantled.

The construction of the third and fourth sequences of compressor stations will be put on hold “until the decision is made to realize the facilities in question”, according to information from Gazprom. The total cost of the facilities which were prepared for the South Stream and then the Turkish Stream, and which ultimately ended up as incomplete construction projects on Gazprom’s balance sheet, was estimated at 46 billion rubles at the start of 2017.

Currently Gazprom is proceeding with the laying of two lines of the Turkish Stream along the bottom of the Black Sea, with a total capacity of 31 billion cubic meters per year.

However, three sources in the gas sector told Reuters that Turkey has only agreed to have one line of the stream with a capacity of 15.75 per year in its territory, to provide gas for its own needs.

With respect to the second branch, which Gazprom hopes to use for transit to Europe and of which nearly a thousand kilometers have already been laid on the bottom of the Black Sea, Ankara has only given permission for it to reach Turkey’s coast.

The likelihood that the second line will remain a pipe to nowhere is growing: one gets the feeling that even Moscow has begun to view the prospect of launching it soon “with a bit more skepticism”, Fitch analyst Dmitry Marinchenko observed.

Without Turkey’s permission, it will not be possible to establish a specific route. It is unclear who will be pipe’s owner and operator, or whether Turkey will demand payment for gas transit and at what rates, Marinchenko added.

  Turkish Stream, Gazprom, Russian gas, Turkey