Russia lays out conditions for 'Turkish Stream 2'

 Russia lays out conditions for 'Turkish Stream 2'

Russia is ready to work to extend the Turkish Stream gas pipeline to other European countries only after obtaining substantial legal guarantees from Brussels, Russian Foreign Minister Sergei Lavrov said, speaking at a briefing with members of the Association of European Businesses (AEB).

According to the diplomat, the extension of the second line of the Turkish Stream in the territory of the European Union could satisfy the growing needs of the southern and south-eastern Europe.

"We see great interest to this issue from a number of EU governments. And you are ready for this, but given the unsuccessful experience with the South Stream, we will be ready to start such work on the Turkish Stream, its lead-in in the EU only after obtaining solid legal guarantees from Brussels," Sputnik cited Lavrov as saying.

A senior analyst of 'Uralsib Capital', Alexei Kokin, speaking to Vestnik Kavkaza, noted that first of all for Russia it is important to be sure that an exception will be made for the Turkish Stream 2, concerning gas sources. "We can assume that it's about a guarantee that Europe will not insist on diversifying gas sources in the pipeline. Now everyone understands that the European part of the pipeline will be built by other companies, not by Gazprom, but still Gazprom will remain the source of gas. And it contradicts the Third Energy Package, according to which, all interested parties should have open access to gas supplies using all European pipelines. It is possible that Lavrov speaks of a guarantee of no requirements to put someone else into the pipeline, especially since it is not clear who else could supply gas along this route," he said.

However, the European Union is unlikely to give any exceptions to the Third Energy Package for Gazprom. "In principle, it is possible, but the European Union would need a justification for this. And even in this case there may be countries that will oppose the project. Nord Stream-2 is a typical example: it should not be affected by the Third Energy Package, but Poland does its best to block the implementation of the project. And the same can happen with the Turkish Stream - if there are objections against it, it will be very difficult to obtain any exceptions to the European rules," Alexei Kokin warned.

Sberbank CIB analyst Valery Nesterov recalled the negative experience of Gazprom, related to European export projects. "At one time, Gazprom concluded a large number of intergovernmental gas agreements, and it was believed that this is enough to build the South Stream. Now the construction of new large gas pipelines to Europe without political support and consent from Brussels is impossible or very difficult. This is exemplified by the Nord Stream-2 and the second thread of the Turkish Stream, where the political interference of Brussels can stop these projects or even disrupt," he pointed out.

Gazprom has no right to build gas pipelines on the territory of importing countries for gas transit to Europe, new gas transmission systems should be built by the participating countries themselves. But these projects are very expensive, often beyond the capacity of some European countries. They need support, including from Brussels, but Brussels' position is ambiguous, which preserves all the risks for the implementation of the second thread of the Turkish Stream project," Valery Nesterov stressed.

Sberbank CIB analyst explained that Brussels seeks to find an alternative to Russian gas for political reasons and therefore delays Gazprom's projects. "Brussels has alternative projects: increasing gas production on the Black Sea shelf, developing a large-scale gas production in the Eastern Mediterranean with supplies to southern Europe. It also tries to leave a place for LNG. In addition, it actively supports the EastRing project - a gas corridor from Poland to the Balkan Peninsula, so that non-Russian gas was more widely represented in the Eastern European market," he said.

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