Russia And Turkey Reach Deal On "Southern Stream" Gas Pipeline, Infuriate Washington

One and a half years after Russia and Turkey signed a deal to build the strategic "Turkish Stream" gas pipeline in October 2016, putting an end to a highly contentious period in Russia-Turkish relation which in late 2015 hit rock bottom after the NATO-member state shot down a Russian jet over Syria, on Saturday Russian state energy giant Gazprom and the Turkish government reached a deal on the construction of the land-based part of the Turkish Stream branch that will bring Russian gas to European consumers.

According to Reuters, the two counterparts signed a protocol that would allow the construction, which was stalled by a legal rift over gas prices, to go forward.  Gazprom and Turkey’s state-owned BOTAS agreed on the terms and conditions of the project, Gazprom said in a statement, adding that the deal “allows to move to practical steps for the implementation of the project.”  The actual construction would be carried out by a joint venture called TurkAkim Gaz Tasima which will be owned by Gazprom and BOTAS in equal shares, Gazprom said.

Earlier on Saturday, Turkish president Erdogan said that Gazprom and BOTAS resolved a long-running legal dispute over import prices in 2015-2016, and as a result Turkey would gain $1 billion as part of the gas-price settlement reached with Gazprom, in which Turkey and the Russian natgas giant agreed on a 10.25% price discount for gas supplied by Russia in 2015 and 2016.

"We agreed on a 10.25% reduction in the price of natural gas in 2015-2016,” Erdogan announced while speaking at a rally on Saturday. “We got our discount. We get about $ 1 billion worth of our rights before the election,” the Turkish President said, as cited by Anadolu Agency.

BOTAS had refused to approve the building of the land-based part of the pipeline until the import price issue was resolved. Until now, it only permitted Gazprom to construct the undersea part of the line. The construction is currently underway.

Russia and Turkey officially agreed on the project, which consists of two branches, in October 2016. The first branch will deliver gas to Turkish consumers, while the second one will bring it to the countries in southern and south-western Europe. The European leg is expected to decrease Russia’s dependence on transit through Ukraine. Each of the lines has a maximum capacity of 15.75 billion cubic meters a year.

Gazprom finished the construction of the deep-water part of the first line of the Turkish Stream in April. The first Russian gas could start flowing through both legs of the Turkish Stream by December 2019.

The greenlighting of the Turkish Stream project is sure to infuriate the US which previously announced it was considering sanctions of European firms that would participate in the Nothern Stream Russian gas pipeline.

President Trump went as far as to threaten Angela Merkel two weeks ago, telling her to either drop the Russian gas pipeline or the trade war with the US was set to begin.

How Europe reacts to US threats involving the Northern Stream and, soon, the Turkish Stream, will determine whether Europe will once again find itself a subservient vassal state to US military and energy lobbying powers, or if Brussels will side with Putin in this growing conflict, resulting in an unprecedented breach within the so-called "democratic west."



BaBaBouy Sun, 05/27/2018 - 11:01 Permalink

I wonder if the Gas will be marketed in USD's, Yuan, Or GOLD ???

We know what Russia has been buying up, and what Turkey has been repatriating lately...

Jim in MN sabaj49 Sun, 05/27/2018 - 11:26 Permalink

I fail to see the point of yelling at Europe about their gas supply.  I guess it makes some company lobbyist get paid but there's no substance behind it. 

Eurasian integration, with as little USA involvement as possible, is a good thing, as well as an inevitable one.

It's the bane of the planet, the incessant fouling up of peace and prosperity with fake issues intended to get folks poor, killed, or both.




That is all.

In reply to by sabaj49

HenryHall caconhma Sun, 05/27/2018 - 12:10 Permalink

The deal (land part of TurkStream) was announced just days after the Bulgarian leader visited Moscow to meet with President Putin to ask for a new SouthStream deal. The story goes that the EU third energy package does not apply if Bulgaria is the end consumer rather than transit to another EU country.


I don't think so.

In reply to by caconhma

TheDayAfter monk27 Sun, 05/27/2018 - 19:17 Permalink

Well, yes, but according to the final Treaty of Lausanne , which is considered the Title of ownership for Turkey, they do NOT have the right to block at whim the free passage of the Black Sea countries. So their "control" is not so much !

The truth is that even in the worst days of Erdogan-Putin , if turkey would block the passage, putin would open it by force, and for sure the US would never have started a war against Russia for Erdogan's sake. 

In reply to by monk27

TheDayAfter Stan522 Sun, 05/27/2018 - 19:26 Permalink

You are Absolutely Correct Sir.

Everybody and their mother can see that Erdogan is trying, to play both sides for personal gain, and some day to replace the Ataturk bust and picture in EVERY Turkish building with his own, after he looted enough billions for his family and cronies.

The result is that EVERYONE has enough of this lying, looting tyrant , and i would not be surprised if he ends up hanging  from the rafters of his megalomaniac "presidential palace".

In reply to by Stan522

JohninMK HenryHall Sun, 05/27/2018 - 12:33 Permalink

Being a few years old those maps are not indicative of current reality.

The first map shows the onwards pipeline going through Greece and then north. AFAIK currently the Turkstream pipeline ends just after it meets landfall, this is the bit that the Turks will now build, from the beach to a new terminal). Quite what happens then is not decided as that involves the EU 3rd Energy Directive restrictions on pipeline ownership so whilst the Greek pipeline was an aspiration back in 2015 its status now is in serious doubt. The most logical route would be to turn right and head north through Bulgaria, which as you say could be a result of that meeting.

I would have thought it probable that the Bulgarians would need to lay a full size pipeline all the way across the country just in case of a big new gas consumer just their side of their Serbian border :) As Serbia is not in the EU they could build a pipeline onwards to their Austrian border ready for linking into the major transit terminal in Austria.

Were this to unfold it would place the EU in an interesting position if indeed the Russians do not renew the Ukraine transit deal on 1/1/2020. Do they allow these pipes to be connected or do they see southern Europe's gas supply shrink to very little in the middle of the 2019/20 winter?

The second map includes the real SouthStream which is now dead due to US pressure via the EU, as mentioned. Nor does it show that this TurkStream pipe follows exactly the same route before turning south at the point that SouthStream would have gone straight on to Bulgaria. A prudent Russian pipeline layer would probably leave an unused junction stub at that point, just in case they needed a direct link to Bulgaria negotiating card against Turkey in the future.

In reply to by HenryHall

HenryHall JohninMK Sun, 05/27/2018 - 12:49 Permalink

Yes, there was talk on the Sevastopol forum (in Russian) a month or two back about building less capacity in Krasnodar Oblast because of the possibility that the land part of TurkStream might never happen. Both threads of the underwater part of TurkStream would still be built but then run at half rated throughput in that case (that Turkey would be only end consumer, not transit). But there was no point in building infrastructure on land in Russia if it were to go unused.

There is also a possibility of building an LNG liquefaction plant on the Turkish Aegean coast.

In reply to by JohninMK

JohninMK HenryHall Sun, 05/27/2018 - 12:56 Permalink

Good comment, the Russians are not stupid.

Also neither map shows the existing BlueStream pipeline from Russia to Turkey that has recently been upgraded satisfying Turkey's need for gas. The location of the new gas terminal, west of the Bosphorus, does not meet any real Turkish demand for gas.

There is an interesting sidebar to this. The EU, Turkey and Russia are well aware that this new terminal could play a part in the routing of Qatari/Iranian (ignoring how it gets to Turkey) onwards into the EU. Similarly with gas from the possible/probable Israel/Lebanon/Syria/Cyprus fields.

In reply to by HenryHall

Tarzan JohninMK Sun, 05/27/2018 - 13:06 Permalink

President Trump went as far as to threaten Angela Merkel two weeks ago, telling her to either drop the Russian gas pipeline or the trade war with the US was set to begin.

So, back to the Russian collusion thing, remind me,

was Trump colluding, for or against Russia?

And why the hell does the US Gvt care where eastern Europe gets it's natural gas, if not to float the federal Reserve's magic "money", by force, by the blood of our young men? 

How long will we allow this crap to continue?

In reply to by JohninMK

Jballsquared oncemore1 Sun, 05/27/2018 - 17:50 Permalink

You miss the point though. Leaving Syria allows for Iran (presuming leaving Iran which of course we should not presume) to develop South Pars and run their own line through Iraq and Syria. 

The destruction of the Shi’a crescent eliminates all future competition issues with the non Petro dollar club. Well, except issues with Russia which is how we are where we are today. 

In reply to by oncemore1

MoreFreedom macholatte Sun, 05/27/2018 - 12:01 Permalink

" .... how many millions of lives have been destroyed by the failed Syria pipeline..."

Exactly how does a pipeline kill people?   Or are you saying countries involved in energy production and sales, go to war to ensure their markets?  That's greedy politicians killing people, not pipelines. 

I for one, see no reason for the US to be getting involved in how other countries negotiate with each other to buy, sell and transport products such as oil or gas.  And I especially don't want the US going to war to restrict competition for US energy producing company owners.  Let the free market do its work.

In reply to by macholatte

Ace006 macholatte Sun, 05/27/2018 - 19:17 Permalink

Lives have not been lost because of the "failed Syria pipeline" but because the scum who are the U.S. political elite and their Saudi and Qatari pals think they have a God-given right to run a pipeline through whatever country it suits them to do so.  The Syrians had the audacity to tell them to stick it in their ear.  Qatar invested huge amounts to liquify natural gas and made a mint from that.  What was so all fired important about another $20B (?) a year?

In reply to by macholatte

HenryHall Jim in MN Sun, 05/27/2018 - 11:42 Permalink

>> I wonder if the Gas will be marketed in USD's, Yuan, Or GOLD

Presently, Russia's pipeline gas customers are offered a choice - they can have a contract in USD, Euros or Russian Rubles.

Belarus chose Russian Rubles, Ukraine chose USD, the rest chose Euros.

As to the Chinese, I don't know and I don't think it is public knowledge.

In reply to by Jim in MN