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Turkish Stream eyes Balkan gas market, East Med hinges on prices

Cyprus is still far from producing gas and getting gas from the East Med to Greece is a challenge, let alone to Bulgaria

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VOULIAGMENI, Athens – Gazprom is looking to supply the Balkans with Russian gas via Turkish Stream after 2019 when the contract with Ukraine expires, former BOTAŞ CEO Gokhan Yardim told New Europe in Athens.

Russian President Vladimir Putin inaugurated on June 23 the construction works for the first pipeline that will cover Turkey’s existing gas needs, Yardim said on the sidelines of an IENE energy conference in Athens, focusing on Energy Security in Southeast Europe.

Yardim argued, however, that although Gazprom, Italy’s Edison and Greece’s DEPA signed a cooperation agreement aimed at establishing a southern route for Russian gas supplies from Russia to Europe, which will run across Turkey to Greece and further to Italy, if a second line of Turkish Stream will be built, it will be to supply the Balkans.

“I don’t see Russia completing the second Turkish Stream to Italy because there is no need to bring that gas to Italy. For the Russians, the Balkan area is more important than the Italian sector because after 2019 there will be no gas transmission through Ukraine to Balkans. So what are the Balkan countries going to do? How are they going to get the gas?” he asked.

Yardim, who used to head the state-owned crude oil and natural gas pipeline company BOTAŞ in Turkey, said the decision to build the second Turkish Stream pipeline is up to the Russians. “If they see that there is a market for a second pipeline they can build it. But I think they will build the second pipeline because otherwise for only one pipeline the project is not feasible. If they build two-parallel pipelines at the same time with the same ship it is feasible,” Yardim said.

He pointed out the Turkey and Russia recently reached an agreement with Syria and geopolitically relations between Moscow and Ankara have improved. He said that unlike the scrapped South Stream, Russia is very committed to build the second Turkish Stream pipe through Turkey instead of Bulgaria.

Meanwhile, Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on the sidelines of the IENE conference in Athens, “Cyprus is still far from producing gas and getting gas from the East Med to Greece is a challenge, let alone to Bulgaria”.

Provided the required quantities of gas justify it, there are three potential ways to do this, by pipeline through Turkey, through the East Med pipeline or as liquefied natural gas (LNG) to the forthcoming Alexandroupolis Floating Storage Regasification Unit (FSRU), and then through the Interconnector Greece Bulgaria (IGB), he said. “But in all cases the delivered gas would be too expensive in comparison to other possible supply options, unless of course Bulgaria and the Balkans are prepared to pay higher prices,” Ellinas said.

“That’s why, for example, such pipelines have not been built so far, other than talking about them, even though Leviathan was discovered in 2010 and Aphrodite in 2011,” he said, referring to the Israeli and Cyprus fields respectively.

“[US company] Noble would have been the first to push for the East Med pipeline so that it could monetise its gas discoveries as soon as possible and recover its investments. It has not done so because it is not viable commercially. Gas prices in Europe would need to rise substantially for this to happen, something which is not likely to happen now or in the longer term,” Ellinas said.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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