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Will the "Turkish stream 2" bury Hungary?

Without waiting for Russia's final decision to build a second, so-called European branch of the Turkish stream, 22 in May, Serbia began to build its 80-X km long pipeline, 2 kilometers north of Belgrade, at a cost of may amount to about two billion euros.

Energy minister Aleksander Antic, during an interview with local television, said that 20 had already delivered about 7 thousand tons of pipes to Serbia in May and expected more than 50 thousand tons. The completion of the construction of the gas pipeline from the border with Bulgaria to the border with Hungary, the Serbian side plans to December 18.

The largest investment in Serbia was opened without an official ceremony

The beginning of the "Turkish stream of 2" was unnoticed. Without an official ceremony, without cameras, or government representatives, "wrote an independent Belgrade daily Danas newspaper. "Silence," the "Free Europe" radio reported, while the only media that had the opportunity to watch works directly on the spot in the Serbian village of Shaikash.

This is rather surprising for a country investing in several tens of millions, not to mention two billion euros, rarely carried out without the personal presence of Serbian President Alexander Vuchich and a dozen journalists.

By the way, it should be recalled that just over a year ago, Vucic was present in Turkey at the opening ceremony of the Trans-Anatolian gas pipeline (TANAP), built for the purpose of transporting Azerbaijani gas to Turkey, and hence through Greece and Albania to Europe.

The "Turkish Flow" project consists of two branches across the Black Sea, the first of which, with a capacity of 15,75 billion m³, is designed to meet the needs of Turkey, and the second - Europe.

It is unlikely that the route of the second line of the "Turkish Stream" will flow through Greece, the Ionian Sea to Italy. In the absence of comments from Gazprom, Executive Director of the Moscow Center for Energy Management SKOLKOVO Vyacheslav Mischenko said in May that Athens did not implement the initiative to expand the Turkish pipeline through the territory of Greece.

"We know that the" Turkish stream 2 "will pass through the territory of Bulgaria, and the Bulgarian side has done much to make Bulgaria become the center of transit of Russian gas," he said.

While there is no mention of the start of the work on the website of Gastrans doo, a wholly controlled subsidiary of South Stream Serbia AG (a joint venture between Gazprom and Serbian state-owned company Srbijagas), which has a license to administer the construction of the Turkish Stream 2 pipeline "In the Serbian territory.

Since Gazprom owns 51% of South Stream Serbia, while Srbijagas owns the rest of 49%, it is unlikely that the construction of the gas pipeline began without the consent of the Russian gas monopoly. At the same time, one can not but mention that Gazprom has not yet announced the final decision on the second branch of the "Turkish Stream". According to officials of Gazprom, the company intends to build a European branch, but only after obtaining clear guarantees from the European Union.

Two questions

In addition to the above, in the history of the "Turkish stream 2" unanswered while there are several questions. Two of them arise immediately when it comes to the final fate of the project, regardless of the work that has already begun in Serbia.

The first question concerns the effectiveness of the activities of the Secretariat of the European Energy Community (EEC), which represents the European Commission in non-EU countries when it comes to the implementation of European energy legislation.

The head of the EEC Secretariat, Janez Kopach, told the Serbian agency Tanjug in May that the Serbian energy regulator AERS, exempting Gastrans from the need to provide access to the future gas pipeline to a third party, did not fulfill the so-called " "Third Energy Package". "We have given the green light to this project under certain conditions, which, in our opinion, will lead to more competition in the gas market in Serbia," Kopac said. "Today we are negotiating with the Serbian Ministry of Energy in order to take additional measures on a voluntary basis in order to overcome the official decision of the AERS, which in our opinion was not good," he said.

Whatever it was, the fact that Serbia began to build a pipeline is a clear answer to the first question.

The second question concerns the long-term economic implications of the project. Moreover, it is not about whether the participating countries will be able to use this gas effectively, but whether Gazprom will have the incentive to invest in the gas pipeline if it fails to secure a market for its gas exports.

In this context, the statement by Hungarian Foreign Minister Peter Siyyarto that his country may decide to replace Russian gas with the Romanian if the US-Austrian coalition Exxon Mobil-OMV will take until September the final investment decision to develop a large gas deposit in Romania offshore is very important. the Neptun Deep project in the Black Sea, which went completely unnoticed.

"Exxon Mobil can change the power supply system in Europe. But they must finally take their final investment decision. Unless they make such a decision by September, I will have to conclude another long-term deal with the Russians, "said Sisyarto in an interview with Reuters during an interview in Houston, where he opened the Hungarian Consulate. The current long-term Hungarian-Russian gas supply agreement is valid until 2021 year.

At the end of last year, OMV and Exxon Mobil postponed a final investment decision on the Neptun Deep project, as long as Romania did not change several controversial gas tax regulations. In particular, the one that says that 50% of gas produced in the Neptun Deep project should be marketed in the Romanian market.

Experts from the leading global consulting company Deloitte say that the Black Sea reserves of Romania are a potential challenge for Gazprom's monopoly in Central and Eastern Europe. Neptun Deep has stocks of 42 to 84 billion m³ of gas, while OMV Petrom (Romanian daughter OMV) and Exxon planned to start production at 2020 billion m³ a year starting from 6.

Earlier, Hungary expressed readiness to buy almost all the gas extracted from Neptun Deep for its own needs.

Answers will be in September

September is also the date when Russia, Ukraine and the EU should agree on a possible transit of Russian gas through Ukraine through the final tripartite meeting. The fact remains that Gazprom is still sufficiently dependent on Ukrainian infrastructure on gas supply to European customers. On the other hand, it is in the interests of Kiev to maintain its transit status, which gives it strategic importance, and annually fills the state treasury with 3 billion dollars received as a payment for gas transit.

Recently, the executive director of Naftogaz NJSC Yuriy Vitrenko said that the company is planning to propose Gazprom's future negotiations to reserve 60 billion m³ of transit capacity of Ukraine's GTS for ten years. He noted that the company will be able to provide power in 90 billion m³ per year. Based on this, the volume in 30 billion m³ will remain free for booking by other companies.

Despite speculation about the possible cessation of supplies through Naftogaz's infrastructure, it is unlikely that Russia will resort to such an option, as it will significantly damage its reputation as a reliable gas supplier and will undoubtedly give a strong argument to the opponents of the construction of the North Stream 2 pipeline.

Conclusion on the second question can be reduced to simple mathematics with a few "if". That is, if Exxon Mobil and OMV will make the final investment decision for the Neptun Deep project by September; if Hungary decides not to sign a new long-term contract with Gazprom in September on gas supplies starting in 2021 year; if Gazprom agrees with Naftogaz in September about the extension of the gas transit contract through Ukraine to the EU after 2019 year and, accordingly, will receive green light for the North Stream 2 gas pipeline, Gazprom will be able to secure its exports to Europe from 170 to 200 billion m³ of gas. Thus, the economic feasibility of investing in the gas pipeline "Turkish Stream 2", with a capacity of 11,2 billion m³, is lost for it.

That is why the start of the construction of the Serbian section of the "Turkish stream 2" in the Serbian village of Shaikash was held without fanfare, vocation and cameras.

Dusan Dukovich, Igor Fedyk