Russia and Turkey Agree on New Oil Pipeline

The planned route of the Turkish Stream pipeline.

At the twenty-third World Energy Congress, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan gave the Turkish Stream pipeline the green light. The pipeline will run across the Black Sea to Western Turkey, supplanting the current transportation that runs through Ukraine.

There are two parts of the project. First, the line will be dedicated to Western Turkey as previously mentioned.  Second, a separate pipeline will follow the same route before connecting with existing infrastructure in Southern Europe. The second part is not yet agreed upon and will take further negotiation.

The Turkish Stream serves as a replacement and expansion of the previously planned South Stream pipeline, which would have serviced Southern Europe via a route through Bulgaria. However, this previous proposal was scrapped in late 2014 following the crisis in Crimea and the resulting breakdown in relations.

The new pipeline is expected to be completed in 2019. The project had been originally announced in December 2014, but was temporarily abandoned in 2015 following the much-disputed shooting down of a Russian jet by Turkey.

The project still faces many technical and financial challenges if it is to succeed. The compressors needed to safely transport natural gas can, at present, only be sourced from Japan, as European and American sanctions prevent purchase from Western markets. The pipeline is expected to cost around $12.5 billion, but the gas price has not been settled.

If the first part of the pipeline succeeds, it would cement Russia’s place in the Turkish energy market, likely preventing competition from Azerbaijani and Iranian firms. Should the second part see its completion, it would increase southeastern European dependence on Russia for gas supplies.

Likewise, Ukraine would largely be bypassed as a conduit for Russian natural gas (Moscow has already ended the agreement to service Ukrainian pipelines), especially if Russian plans to build an extension to their existing Nord Stream pipeline succeed.

It is important to note, however, that any expansion of Russian pipelines into Southeastern Europe are presently limited by existing infrastructure in the region. Currently, only one pipeline in the Balkan region would accommodate new supplies, severely limiting throughput. The canceled South Stream pipeline would have overcome this problem by building a new route through Serbia and Hungary to connect with larger lines in Austria. However, the Turkish Stream as presently planned would stop in Western Turkey, and would thus be hampered unless new capacity is built.