Russia and Turkey sign intergovernmental agreement on Turkish Stream

Russia and Turkey sign intergovernmental agreement on Turkish Stream

An intergovernmental agreement on 'Turkish Stream' gas pipeline will soon be signed by Russian and Turkish presidents, Vladimir Putin and Recep Tayyip Erdogan in Istanbul, head of Gazprom Alexey Miller said.

"This intergovernmental agreement, which will be signed, stipulates the construction of two lines of gas pipeline via the Black Sea, the capacity of each line is 15 billion 750 million cubic meters of gas," RIA Novosti quoted him as saying.

One line, according to Miller, will supply gas to Turkey itself, while the second will supply Russian gas to Europe. Both of them will be constructed by December 2019.

 As senior analyst of Uralsib Alexei Kokin noted in an interview with Vestnik Kavkaza, the implementation of this project will allow Gazprom to transport additional volumes to the Turkish market and after some time will help to redirect some volumes from Trans-Balkan route, where Ukraine is a transit country.

"This is just an additional source of cheap gas for Turkey. Today, liquefied gas is the only alternative to Russian gas, but it is more expensive, even though it gradually gets cheaper. So we are talking about low-cost gas supplies, which may begin very soon," he explained.

However, he expressed doubt that Europe will be interested in Russian gas supplies via Turkey. "Gazprom has pretty weak position. It will be really difficult to negotiate in conditions of strong competition with Norway and liquefied gas, which gets cheaper," the expert believes.

Deputy Director of the Energy and Finance Institute Alexei Belogoryev focused on the fact that the agreement does not indicate that the project will be implemented, since the energy sector, and especially the gas sector, strongly depends on political issues. In addition, the expert expressed the opinion that it is too early to say that Turkey is planning to increase the amount of exported Russian gas by 2020s. 

According to him, this intergovernmental agreement itself does not carry any risks for the companies, because it is just a framework agreement. "We should wait until companies sign obligatory contracts on the construction of the pipeline. As for intergovernmental agreement, it is just a more advanced version of the memorandum of intent," he concluded.

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