Gazprom is ready to build the “Turkish stream” at a loss


"Газпром" готов строить "Турецкий поток" себе в убыток

The cost of the gas pipeline “Turkish stream” grew to a billion dollars. The construction of the pipeline is likely to be financed through the budget of “Gazprom”, as foreign banks interest in the project is not shown. “Previously, we said that the project will cost about $ 6 billion, are now estimated somewhere around $ 7 billion. We do not exclude the possibility of project financing. But, given the current reality, most likely the “Turkish stream” will be financed from the budget “Gazprom” in the future will be refinanced in the form of issue project bonds”, — said at a meeting with investors in London the Chairman of the Board “Gazprom” Andrey Kruglov.

Sea gas pipeline “Turkish stream”, we recall, consists of two strings. Each can provide the transportation of natural gas in the amount of up to 15.75 billion cubic meters (31.5 billion cubic meters). The length of the offshore section is approximately 930 km Pipeline runs under the Black sea from the Russian Anapa to the Turkish settlement Kyukei. The gas supplied through line, intended for the Turkish market. The second will take place towards the borders of Turkey with the EU.

It is expected that the transportation of gas “Turkish stream” will begin in December 2019.

According to the expert on oil and gas market, the partner of consulting company RusEnergy Michael Krutikhin increase in the value of the “Turkish stream” is due to the fact that the project is trying to cash in contractors.

“The increased appetite of the contractors, because we see that the main task of the pipeline is not economic. Gazprom has already indicated that the construction costs will be reimbursed after many many years, and losses will be deferred to the future. The only meaning of the project was the enrichment of contractors enjoying the special relationship with the government,” said Krutikhin.

— The terrestrial part of the “Turkish stream” was completed before the birth of this project — says a leading expert of the national energy security Fund, lecturer of Financial University under the government of the Russian Federation Igor Yushkov. Since it was part of the “South stream” to lock it. The pipes were purchased, too, mostly earlier (they were kept in Bulgaria until recently).

There is a version that “Gazprom” still, still hopes that the second string of the gas pipeline will not go to Turkey and to Bulgaria, in fact, on the route “South stream”. Therefore, the second thread slowly build up to the territorial waters of Bulgaria (where it is possible to dramatically expand in the direction of Turkey in case of need), waiting for the reaction of the Europeans. According to this version, the cost of construction is because it increases the time of rental vessels-pipelaying. Of course, this can not increase the cost of the pipeline from a billion dollars.

“SP”: — what is the reason of such sharp rise in price of the project?

— It is possible that just the initial cost it was not carefully calculated. I will remind that the decision on the construction of “Turkish stream” was adopted after just a few days after Vladimir Putin announced the closure of the project “South stream” and the signing of the Treaty with Turkey on the construction of “Turkish stream.” In such a short time to prepare all the documentation to provide accurate estimates is extremely difficult or even impossible. Now, when the implementation of the project is “Gazprom” in fact re-assess its value.

“SP”: — And can be, according to Mikhail Krutikhin, contractors raise the prices to increase profits?

At this stage the role of contractor performs only the Swiss firm-pipelay Allseas Group SA. With it initially signed a contract for the provision of services and raising prices at the construction stage is nonsense. The expert sees all desire “Gazprom” to act in the interests Rottenberg, however, does not confirm their calculations with concrete. In this case, the foreign Swiss company has nothing to do with Russian entrepreneurs.

“SP”: — And how are negotiations on the second line of the “Turkish stream”, which, in theory, via Turkey have to go to Europe?

— Still no movement. “Gazprom” announced that he was going to bring the gas pipeline to the EU border, and to supply about 15 billion cubic meters of gas to Europe. The Minister of foreign Affairs of Russia Sergey Lavrov said that we can even continue at their own expense the pipeline on the territory of the EU. But we must have guarantees that Brussels will not oppose this construction. And now it is turn of the EU to react somehow — if he was going to buy Russian gas, and in what amounts. While there is no response. Possibly, “Gazprom” and would attempt to negotiate, but now all efforts are thrown to the “Nord stream-2”, which for the company and for Russia as a whole is more important.

“SP”: — And if the Europeans still refuse to release the gas from Turkish stream and act is only one thread, the pipeline will be unprofitable?

— The danger is there. But “Gazprom” strategic goal — to remove the transit through the TRANS-Balkan pipeline, which now goes through Ukraine. Or create an alternative. The logic of all the bypass pipelines Russia that Ukraine ceased to be the only transit country and could not dictate. To achieve this goal Gazprom is ready to go to great expense that will pay off, but not soon. But we must understand that ten years from now, if Ukraine continues not to invest in the reconstruction of its gas transportation system, we simply will not be able to pump gas through its territory, because the system is unusable. Therefore, if we intend to continue to sell gas to Europe, an alternative must be created.


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