Erdogan steps up support for Russia’s Turkish gas hub project

Turkish President Recep Tayyip Erdogan has affirmed his interest in strengthening control over Russian gas transit flows to Europe and expanding his country’s regional influence.

Addressing the Turkish parliament on Wednesday, Erdogan announced that he had agreed to partner with Russian President Vladimir Putin to build a natural gas hub in Turkey to supply gas to Europe.

Russia already ships gas to Turkey across the Black Sea via the Blue Stream and TurkStream pipelines, with Russian gas giant Gazprom seeking to boost its TurkStream throughput capacity by an additional 31.5 billion cubic meters per year.

The proposal to make Turkey a regional gas hub for Russian exports to Europe was announced last week at a conference in Moscow to the visible surprise of Turkish Energy Minister Fatih Donmez, who was attending at the event.

The day after the announcement, Erdogan ordered Turkey’s energy ministry to start working on the proposals, stressing that there would be “no waiting”, according to Russian media.

However, Russian and Turkish government officials have not yet announced a timetable for the completion of the TurkStream expansion, nor any potential arrangements for Turkey to help Gazprom build the deepwater pipeline segments.

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The expansion would involve pipelaying work carried out in water depths of more than 2,000 meters, and Gazprom is unlikely to be able to secure pipelaying contracts from Western specialist contractors, due to sanctions imposed on Russia following its invasion of Ukraine in February. .

A partner at Moscow-based energy consultancy RusEnergy, Mikhail Krutikhin, said it was “too early to predict whether the project will see the light of day” once feasibility studies are completed.

Presidential elections

He believes Erdogan could use Russia’s hub proposal to help secure a lower price for Russian gas as part of his efforts to improve his country’s economy ahead of presidential elections scheduled for June 2023.

Turkey saw an increase of more than 83% in consumer prices between January and September, according to CNBC, and the Turkish lira fell to a new high against the US dollar, after losing 28% of its value this year. .

Earlier in October, Bloomberg reported that Turkish state gas importer Botas had asked Gazprom to defer some gas payments until 2024 to help mitigate the effect of high energy prices on the country’s economy – an arrangement which could be similar to the exemption granted to the Hungarians. importer of MVM gas.

Russian volumes have increased to cover around 45% of Turkey’s gas consumption since the start of the TurkStream gas pipeline at the end of 2019.

Restored TurkStream Operator License

The security of Russian gas supplies through TurkStream came under scrutiny this summer after Dutch authorities revoked a key maintenance and construction license for Dutch-registered gas pipeline operator South Stream. Transport, due to international sanctions against Russia.

However, South Stream Transport said on Tuesday that the license must now be renewed after Dutch authorities heard arguments from the company that it should be exempt from the penalties.

Turkey is already home to the Southern Gas Corridor – a key transit pipeline that transports gas from Azerbaijan to Greece and Italy.

European authorities have considered expanding the capacity of the Southern Gas Corridor, with plans to more than double Azeri gas imports to 20 bcm per year by 2027 as a medium-term option to help secure alternatives to the Russian gas supply.

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