Wednesday, October 26, 2016

Who Suffers From Russia, Turkey Pipeline Deal?

Forbes Ken Rapoza
After kissing and making up from a downed Sukhoi fighter jet over Syria, Russia and Turkey are back to being business partners again. Gazprom and Botas Petroleum agreed on Oct. 10 to push ahead with the so-called Turkish Stream pipeline. This is going to hurt a few countries.

Turkey’s President Recep Tayyip Erdogan, right and Russian President Vladimir Putin, left, look at each other during a news conference following their meeting in Istanbul, Monday, Oct. 10, 2016. Putin and Erdogan voiced support for the construction of a gas pipeline from Russia to Turkey, called Turkish Stream, a project that was suspended amid tensions between the two countries. The pipeline would carry Russian natural gas to Turkey and onto European Union countries. (AP Photo/Emrah Gurel)

On the stock side of the equation, it’s impossible to say whether the pipeline is good for Gazprom’s share price, because the stock hasn’t been over $5 since April.

The deal is good for Turkey. It is not so good for Ukraine and Bulgaria, who will lose out now that the South Stream pipeline is no longer needed. Bulgaria was going to collect transit revenues from that deal.

“Turkish Stream hurts Ukraine because it deprives them of the trans-Balkan route that supplied Turkey via Ukraine, Moldova, Romania and Bulgaria. So it also deprives Bulgaria, Moldova and Romania of transit fees. Bulgaria is even more unhappy than the others of course since South Stream is dead,” says Sijbren de Jong, an energy sector strategist at the Center for Strategic Studies in The Hague.

Too bad for Bulgaria- Bulgaria wants to play a two-sided game with Russia and NATO

 It was Borisov who actually ruined all Bulgarian-Russian joint projects, including South Stream and propelled the military partnership (including bases) with the US. If such a player is opposed to NATO’s plans, it says a lot about their suicidal under text. On the other hand, recent reconciliation between Russia and Turkey may influence the change of behavior of the Bulgarian leadership (or at least part of it represented by the Prime-minister), because of huge Turkish influence in the country. That sign will be undoubtedly seen by the Russian authorities.
Russia/Turkey Pipeline Deal...

The Turkish Stream pipeline was designed by Gazprom as an alternative route into southern Europe instead of through Ukraine. It was to planned to have a total capacity of 63 billion cubic meters (bcm), consisting of four parallel pipelines each with a capacity of 15.75 bcm. Last October, Gazprom said it would cut the capacity by around 25%, citing its planned Nord Stream II pipeline. But that pipeline has now been dealt a mighty blow by a Poland anti-trust ruling.  Gazprom claims it will go it alone now that its main European partners, including Shell, are out for now.

Turkey was the second card up Gazprom’s sleeve.

It’s unlikely to be a full house, however.

The third and fourth line of the Turkish Stream are “hopelessly unrealistic,” writes de Jong in an op-ed published on Monday by the Royal United Services Institute in the U.K. The reason: there not enough demand for gas in the region to support the construction of all those pipelines.

This month’s agreement means the two sides are now committed to the construction of two pipelines. One would serve the Turkish domestic market, and the other would extend into southeastern Europe, replacing the old South Stream proposal with the Italian oil major Eni. Details of any pricing agreement remain elusive.
Recall at the time of the shootdown this posts?

If Oil Was Really A Consideration- Turkey Would NOT Have shot the Russian Jet down
"Turkey relies almost entirely on imports for its total oil consumption of about 720,000 barrels per day.
A large chunk of those imports come from Russia. In 2014 Russia also supplied 27 billion cubic metres of natural gas to Turkey, representing 56 per cent of its total consumption. 
Russia was Turkey's largest source of imports, supplying goods worth $25.3 billion, or more than 10 per cent of Turkey's total imports.
In this context, if oil was a consideration for the Turkish authorities in its decision to shoot down a Russian jet, it would have had good reason to hold fire"
As I had suggested at that time.. Turkey had nothing to gain by shooting down the Russian jet. But other parties did!

Russia/Turkey Pipeline Deal - Irking Ukraine
Turkish Stream doesn’t only irk Ukraine, and take away potential revenues from Bulgaria. It also may outsmart Iran and other gas producers further south.

“Russia knows it needs to use the surplus from the second pipeline to pre-empt future deliveries from Azerbaijan, and maybe even Turkmenistan and Iran,” de Jong says.
May and maybe aren't concrete- What's interesting is to see Ukraine get cut out. And Bulgaria? Sometimes it pays to play both sides against the other? And other times it doesn't?


  1. Russia has openly talked about another Greek pipeline (Burgas–Alexandroupoli pipeline alive?) bringing into focus the Israeli pipes through Cyprus into Greece, Turkey hub (Russian diplomatic carrot) and the latest super field find in Egypt (which will see delay after delay like Lebanon auctions or another color rev as leaks surface about Egypt selling mistrals back to Russia..). Israeli defense minister just warned of another war on Hamas in Gaza. Russia aerospace in Sinai as the Egypt counter terror general for Sinai was just assassinated in Cairo. Israeli citizen allegedly just killed on Sinai border.

    Watch Suez....and that complicated MIG mission in the Mediterranean after Russia just noted it doesn't need a carrier to control Syria airspace . What then is the complicated mission? North Africa, Egypt?

    Bulgaria just agreed to settle its NPP issue with Russia (the NPP that brought down the government that ended the Burgas pipe in a last strike). Bulgaria just opted out of the NATO Black Sea naval deployment. Kazakhstan got S300, Bulgaria got the headquarters of the Black Sea fleet after denying to participate. Norway just got is own 330 US marines..


  2. Also hurts israel and the offshore gas field they claim that really belong to Gaza.