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Business gas: talks suspended on Turkish Stream pipeline

The Turkish Stream pipeline, a Russian plan for undersea gas exports to Europe without going through Ukraine, has been put on hold.

The Turkish Stream pipeline is one of the ways Russia is trying to deal with an increasingly fractious relationship with Ukraine, traditionally the gateway for Russian gas into Europe.

Turkish Stream will be made up of four threads, each with the capacity of 15.75 billion cubic meters (bcm). The pipeline will pass 660km under the Black Sea then run 250km towards Europe on Turkish soil. The first line of the Turkish Stream will cost around €3.3 billion. Of the 63bcm of gas annual capacity, about 16bcm will be supplied to Turkey while the remaining 47bcm will go to a hub on the Greek-Turkish border to be transported to Europe.

Announced by Russian president Vladimir Putin on 1 December 2014 during his state visit to Turkey, the proposed pipeline aims to replace the cancelled South Stream project, which was to run from the Black Sea to Bulgaria and through Serbia, Hungary and Slovenia further to Austria.

Talks on the development of the Turkish Stream were apparently suspended after Russia failed to sign off a promised gas price discount agreement, Turkish officials told Reuters. Turkey has also complained that Russia has asked that construction permits be granted four planned lines, instead of the one granted so far.

Down but not out

This is not the first obstacle to be encountered: Gazprom subsidiary South Stream Transport BV, the company developing the pipeline, cancelled the pipe-laying contract with Italian contractor Saipem, Global Construction Review reported.

While the project is likely to be delayed, the current difficulties do not mean it will be dropped: Russian daily Kommersant claimed that negotiations will continue at the end of autumn when Ankara’s new government is to be formed; Putin and his Turkish counterpart Recep Tayyip Erdogan are apparently planning to meet. Kommersant quoted an unnamed Russian official as saying that the halt in talks is more down to Turkey’s lack of a cabinet of ministers than the dispute on cheaper gas prices, although that may not be the whole truth.

Impact on business gas prices

The failure to move the project on may result in an upward pressure on prices in Europe. Should further unrest break out in Ukraine, a cold winter could see demand cheap business gas tariffs become fewer. Yet the ‘dash for gas’, including gains from ‘fracking‘ and the development of floating liquid natural gas (FLNG) technology means there are many favourable deals on business gas out there if small to medium sized companies can spend the time to compare and switch supplier.

If that sounds like too much hassle, with both the no-obligation comparison of business energy suppliers and the switch to a new supplier takes a total of only 20 minutes. Fill in our simple form (also at the top right of this page) or give us a call on 0330 0100 251 now to start saving.


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