A Russian gas center in Turkey.. Why Putin's proposal raises concerns in Europe

Analysts and sources said that Russian President Vladimir Putin's plan to make Turkey a center for Russian gas may, in theory, allow Moscow to hide its exports amid fuel from other sources, but that may not be enough to persuade Europeans to buy..

Russia was represented 40% of the EU gas market before Moscow sends in 24 February tens of thousands of soldiers to Ukraine in what it calls “Special military operation”.

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The West has since imposed wide-ranging sanctions, including sanctions on Russian oil and gas, reduced purchases of fuel from Russian sources and sought alternatives..

After explosions, the causes of which are still under investigation, damaged the Russian Nord Stream gas pipeline to Europe under the Baltic Sea, Putin proposed in October to establish a gas hub in Turkey based on a southern route for exports..

Putin said without specifying that a center in Turkey could be set up relatively quickly, and he expected customers in Europe to want to sign contracts.

So far, no commitments have been made to get started, and analysts say investment and time will be needed.

asked Alexei Gromov of the Moscow-based Institute of Energy and Finance “Does Europe need the project, in light of the European Union's determination to give up Russian gas in the near future?”.

He also said that it is impossible to reconfigure the components of gas flows within the European Union, as there are no existing links that might link the proposed center from Northwest Europe, which used to get gas via Nord Stream 1..
* gas surplus

But gas and pipeline capacities are available.

Russia's exports to Europe fell by 43.4 percent this year, and the TurkStream pipeline to Turkey is operating at capacity well below its annual capacity 31.5 billion cubic meters.

Zhunshang Lui, senior analyst, Inc (Rystad Energy) that about 60 percent of the pipeline's capacity has not yet been used. This year's exports amount to about 10.6 billion cubic meters of gas 21 November.

He estimated that it would take at least three to four years to build the costly new infrastructure needed.

he asked “Even if a new pipeline could be built, who would buy that gas?”.

Others say buyers will be found.

A source at Gazprom, which has a monopoly on exporting Russian gas through pipelines, said he believed the center would facilitate sales.

The source, who requested anonymity due to the sensitivity of the matter, said: “This will not be Russian gas, but gas from the center” Turkish.

A trade source in Europe said that China, which took over Japan's position as the world's largest LNG importer in 2021, is already reselling Russian LNG without classifying it as “Made in Moscow”.

He said buyers in southern and eastern Europe would likely not be interested in the source of LNG.

Alexander Gryaznov, director of Standard & Global Ratings, said Europe may be willing to buy from Moscow through intermediaries, indicating that Europe has not imposed an embargo on Russian gas in exchange for oil..

And he went on to say “Europe is unlikely to want to enter into direct contracts with the Russian Federation, and buying volumes from the spot market in Turkey would be politically acceptable.”. He added that time and money would have to be spent to set up the centre.

Alexey Grivash of the Moscow-based National Energy Security Fund said the center offered business opportunities.

added “If the center starts working, there will be huge possibilities for all kinds of exchanges”.
*Turkish relations

Putin and Turkish President Recep Tayyip Erdogan have forged close relations in recent years despite a checkered past marred by the murder of Russian ambassador Andrei Karlov in Ankara in 2016 Turkey shot down a Russian plane on a mission to Syria a year earlier.

Turkey says the Trans-Anatolian Natural Gas Pipeline could also be included (rope), which transports natural gas coming from Azerbaijan to the Turkish border, in the proposed hub.

Turkey and Azerbaijan agreed last month to double the capacity of the pipeline from its current capacity 16 billion cubic meters “Short term”, and in 23 November, the head of Russia's Gazprom, Alexei Miller, and the head of the Azeri state energy company, SOCAR, Rovshan Najaf, meet in Moscow.

Neither Gazprom nor SOCAR provided details of the meeting, but Russia agreed this month to supply Azerbaijan with 2 billion cubic meters of gas under a new short-term contract..

Low, of Rystad, said the agreement “It raised some market concerns” On a possible gas exchange deal with Russia to export more gas to Europe.

With the Turkish Gas Center proposal, Russia returned to a long-standing idea of ​​adding two lines to the existing TurkStream pipeline to double its annual capacity to reach 63 billion cubic meters.

This fully corresponds to the combined volumes sold from Russia via various routes to Austria, Bulgaria, Hungary, Italy, Serbia, Slovenia and Turkey in 2020, according to Gazprom data..

Russia pumps gas through pipelines to Europe, mainly via Ukraine, at a rate of more than 40 million cubic meters a day, less than half the amount it used to sell to the EU.

It also pumps gas to southeastern Europe, including Hungary, via TurkStream.

The cost of the current TurkStream line 3.2 billion dollars, and required the construction of the Nord Stream gas pipeline 2 which has not been launched across the Baltic Sea 11 Another billion dollars shared by Gazprom and its Western partners.

Neither Gazprom nor the Kremlin provided an estimate of the cost of the Turkish center idea. Kremlin spokesman Dmitry Peskov declined to comment this week when asked by Reuters at a daily briefing about how Azerbaijani gas was being used at the center..


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