Yesterday’s meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin may have provided a significant first step towards the development of Turkish Stream, Russia’s latest natural gas pipeline proposal for supply to the EU, across Greek territory, but, under no circumstances, means construction activity is now all set to begin.
Both leaders were cautious in their remarks about the project. Putin spoke about examining the possibilities of construction, while Tsipras underlined that Greece will respect EU law.
According to sources, as a first step, Greek and Russian officials will begin holding talks within the current month with the objective of reaching an agreement on the establishment of a company to develop the infrastructure project’s Greek segment.
The following step, if the project is to proceed, will entail arranging funding for the pipeline’s draft plan and preliminary construction studies. At the same time, procedures will need to be launched to secure an Independent Natural Gas System (INGS) licence for the project, as part of the EU Third Energy Package, aiming to make the European energy market fully effective. This license will also recognize the right of access to the pipeline by third parties.
Should the project’s licencing matters be cleared by the European Commission – which was not the case with Russia’s now-shelved previous natural gas pipeline proposal, South Stream, whose route was intended to cross the Black Sea to Bulgaria – then prospective buyers of the natural gas to be carried by the pipeline will need to be found.
The annual capacity of Turkish Stream, planned to bypass Ukraine and reach the Greek-Turkish border area for supply into the EU, is expected to be 47 billion cubic meters, beginning in 2019, when the pipeline’s launch has been scheduled. This new pipeline is planned to cover the natural gas supply needs of countries now served by the TransBalkan System, a pipeline that crosses Ukraine and ends up in Bulgaria and Greece.
If natural gas buyers are found, then final plans for the project will be drafted and construction will commence. It should be noted that construction of one segment, a costly submarine crossing through the Black Sea, has already begun. Initially intended to make up part of the canceled South Stream project, this section will be rerouted to end up further south, in the eastern Thrace region, rather than Bulgaria to the north, as had been planned for the previous project.
Judging by Putin’s reaction at yesterday’s news conference, Russia will not have any objections to Turkish Stream’s Greek section being renamed, as Tsipras pointed out. This segment may be named Greek Stream.
Little was said yesterday on Greece’s request for a Russian revision to a misjudged, by Greece, take-or-pay clause included in an agreement between DEPA, the Public Gas Corporation, and Russian supplier Gazprom.
Greek officials overestimated the country’s gas order for 2014 amid the ongoing recession’s weakened demand, which subsequently activated the supply agreement’s take-or-pay clause, resulting in a cost believed to exceed 100 million euros for Greece, if strictly upheld. However, despite the lack of news on the matter yesterday, sources said the penalty will finally not be imposed by Russia. Sources said details on the issue may be announced later this month, when DEPA and Gazprom officials are expected to meet.
Also, no news was offered on a Greek request for a natural gas price reduction by Russia. This prospect appears to be linked to the outcome of Turkish Stream’s Greek section.