Putin’s ‘Turkish Stream’:
Who Knows What?
John Roberts
Energy Security Specialist, Methinks Ltd
2030 EU Energy Security
The Role of the Eastern Mediterranean Region,
Brussels
10 December 2014
What Do We Know?
SGC:
• A contracted set of projects.
‘Turkish Stream’:
A plan that presumably embraces existing
contracts.
The Southern Gas Corridor:
SCP-X,TANAP & TAP
Source: BP Shah Deniz 2 project. A newer version of this can be found at:
http://www.bp.com/en_az/caspian/operationsprojects/Shahdeniz/SDstage2.html
SGC Costs
Initial costings:
Total:
$45 bn. (BP, various).
• SD2:
$22.5bn
• SCP-X
$5.4bn
• TANAP
$11bn, $12.8bn or $20bn…….?
• TAP c.
$4bn - 5bn.
Rovnag Abdullayev: $48bn total (8 Dec 2014)
• Implementation under way: $9bn of contracts issued.
SGC: Gas Sales Agreements
Gas sales to EU buyers signed in 2013:
Axpo, GDF Suez, Gas Natural, E.ON, Shell
Hera, ENEL, Bulgargaz, DEPA
Gas to Europe to start ~1 yr later than 1st gas
Gas sales volumes (bcma)
Shah Deniz Field
South Caucasus Pipeline Expansion (SCPX)
Trans Anatolian Pipeline (TANAP)
Trans Adriatic Pipeline (TAP)
ACQ: Annual Contract Quantity
Gas sales to BOTAS
Stage 2 sales signed in 2011
(First Gas in 2018)
Complementing current Stage 1 sales
South Stream & ‘Turkish Stream’: December 2014
Putin’s Ankara declaration (1 December 2014):
• “Taking account of the fact that until now we have not received permission from
Bulgaria, we believe that in the current conditions Russia cannot continue with the
realisation of this project.” (Source: BBC)
• A new 63 bcm/y system to Turkey
• A 50 bcm/y distribution centre on the Turkey-Greece border.
QUESTIONS:
• Who knew of this plan?
• What destination?
• How many strings?
• EU negotiations?
• Turkey: The residual market?
South Stream: Route Options 2009-2011
Source:
Gazprom
South Stream: The November 2012 Choice
Source:
Gazprom
South Stream – A Declaration
• “The European Commission has been pretending for quite a while
that it has heard nothing about South Stream. Then, at some
stage, receiving from the related countries copies of these
agreements, the European Commission stated that all of them
failed to comply with the EU Third Energy Package norms, that is,
they should be denounced or revised.
• “In the end, these six countries collectively asked the European
Commission to undertake negotiations with Russia, to which
European Energy Commissioner Gunther Oettinger agreed.”
Vladimir Chizhov, Russian Ambassador to the EU. 22 Jan 2014.
South Stream: July 2014
Source:
Gazprom
Ukraine’s EEZ and South Stream Black Sea Routes
Source: East European Gas Analysis
South Stream: Actual Contracts
• January 2014: First String physical pipe contracts
€1bn
• Mid-March 2014: Saipem (Italy) gets contract for
Saipem VII to lay first string (scheduled start: 4Q 2014)
€2 bn
• Late March: Second String physical pipe contracts
€0.8bn
• 30 April: 2014: Allseas (Switzerland) gets unspecified value contract for
Pieter Schelte to lay second string (scheduled start: mid-2015)
Est.€1.2-1.5bn
‘Turkish Stream’: Hypothetical Development
• 1. Saipem VII is already in the Black Sea ready for pipe laying.
• 2. The July 2014 South Stream route was c. 230 kms in Russian waters
and EEZ; 470 kms in Turkish EEZ; and 230 kms in Bulgarian EEZ and
waters.
• A landfall in Turkish Thrace would add c. 70 – 100 kms to an offshore
pipeline compared to the South Stream landfall near Varna. But roughly
three-quarters of planned South Stream route could be utilised.
• Required: A new pipeline across Turkish Thrace to proposed distribution
hub on Turkey-Greece border.
• Question: Would this hub be located near Kipoi?
The Turkish String: Who Will Pay For It?
• “South Stream Transport is honoured to announce that a Final
Investment Decision (FID) has been taken for the South Stream
Offshore Pipeline in accordance with the Shareholders Agreement.
The FID was made today in a Shareholders’ meeting subsequent to
the meeting of the Board of Directors of South Stream Transport.
The minority Shareholders maintain the right to leave the
Project in case certain conditions will not be satisfied in the
future.”
South Stream Transport,14 November 2012, Amsterdam
September 16, 2011: OAO Gazprom, Eni S.p.A., EDF and Wintershall Holding GmbH (BASF
Group) sign the shareholder agreement for South Stream Transport in Sochi, Russia.
The Bottom Line (Technical):
Comparative Capacities
SGC:
• Azerbaijan-Georgia (c. 450 km); (8-9 SCP and 30-33 SCP-X)
• Georgia-Turkey (c. 240 km); (SCP-X, using compression only):
• TANAP Turkish Border with Georgia to Eskisehir (c. 1600 km):
• TANAP Eskisehir to Kipoi (c. 300 km):
• TAP Kipoi to Lecce (870 km):
c. 40 bcm/y
24 bcm/y
33 bcm/y
20-24 bcm/y
20-24 bcm/y
Turkish Stream:
• String One, 15.75 bcm/y: Essentially replaces existing Western route to Turkey & Greece
• String Two, 15.75 bcm/y: Additional supply to Turkey and European markets accessible via Turkey
using infrastructure currently under development.
• String Three, 15.75 bcm/y: Additional supply to Turkey and European markets accessible via Turkey,
BUT REQUIRES NEW INFRASTRUCTURE TO CARRY GAS BEYOND TURKEY
• String Four, 15.75 bcm/y: Additional supply to Turkey and European markets accessible via Turkey,
BUT REQUIRES NEW INFRASTRUCTURE TO CARRY GAS BEYOND TURKEY.
Blue Stream:
• Can be expanded from 16 to 19 bcm using additional compression. An additional string would be
required for any subsequent expansion.
The Bottom Line: Legal & Political
Two Key Questions:
1. Is there anything to prevent Gazprom from booking capacity in
TAP to take advantage of its second phase expansion to c. 23-24
bcm/y?
2. What are the implications of ‘Turkish Stream’ for the longer-term
development of the Southern Gas Corridor?
Questions?
• John Roberts
• Energy Security Specialist
• Methinks Ltd
• New Mill House
• Jedburgh TD8 6TH
• Scotland UK
• Email: john.roberts@methinks.org.uk
• Tel: +44-1835-863725 (home)
+44-7966-290354 (mobile)