Gazprom to build Turkish Stream at its own expense

Investment in the Turkish Stream gas pipeline project are estimated at $6 bln, the project can be implemented only at the expense of Gazprom, Deputy Chairman of Gazprom Management Committee Andrey Kruglov said at a press conference.

"The volume of the planned investments in the Turkish Stream is around $6 bln. As for the project’s financing, we said that such opportunity exists to finance the sea part of the project. Nevertheless, we planned that the Turkish Stream could be implemented only at the expense of Gazprom," TASS cited Kruglov as saying.

Gazprom has started construction of the offshore section of the Turkish Stream gas pipeline along the bottom of the Black Sea on May 7. The first string of the gas pipeline is intended for Turkish consumers, while the second string will deliver gas to southern and southeastern Europe. Each string will have the throughput capacity of 15.75 billion cubic meters of gas per year. 

"The project is being implemented strictly according to the plan, and by the end of 2019 our Turkish and European consumers will have a new reliable route for the import of the Russian gas," the company’s CEO, Alexei Miller said.

A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to a correspondent of Vestnik Kavkaza, noted that it's only about the lack of targeted loans for the construction of the pipeline. "In any case, Gazprom will be credited for its investment program. The thing is that Gazprom does not intend to involve anyone in the Turkish Stream within the framework of the first thread. There really is no need to involve anyone, because the first string's gas is intended only for Turkey. Shell or OMV may enter the second string," he said.

The statement may be connected with the sanctions being prepared in the US against companies participating in new Russian pipeline projects. "And the question arises whether Gazprom will be able to formalize the Turkish Steam in a way that it does not relate to the new ones. It is already being implemented, which means that it cannot be recognized as new. But yet the US will make claims to those trying to finance it. In essence, the US will try to gradually squeeze Russia out of the European gas market," Igor Yushkov warned.

The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, also stressed that there is no other way for Gazprom to finance the project, since Russia is under the most powerful sanctions imposed by major Western investors.

According to him, it's not an easy situation for Gazprom, but the company successfully fulfills its investment obligations, pays all debts in time. "We must realize the Turkish Stream, it is critically important for us. Europe needs our gas, and we need a European market," Bessel assured.

"Therefore, the only way is to realize the Turkish Stream, taking into account the political risks of pumping gas through Ukraine and considering the fact that the former Soviet gas transportation system was established in 1984 and its current status is unknown. Thus, Gazprom is doing absolutely right: these long-term investments will be undoubtedly paid off," the executive vice-president of NewTech Services explained.

The expert admitted that, as a rule, large investment projects are implemented at the expense of loans, which is beneficial for both parties: banks and investors who then earn colossal money, and companies which, through borrowing money, can spend their operating profits on the development of internal projects . "But now Russia is in a difficult situation, but the Soviet Union had a huge experience of sanctions pressure from Western countries, so I do not see a big problem," Valery Bessel concluded.