Kink in Turkish Stream project delay mutual benefits

Turkey and Russia agree on talks, but have not signed anything. As the two countries struggle to sign deals regarding natural gas projects, Turkish and Russian presidents are expected to have the final words



Negotiations over a possible natural gas deal between Turkey and Russia are encountering constant delay due to the sides' push to the other to sign the deal first. On Friday, Russian Minister of Energy Alexander Novak announced that negotiations on the Turkish Stream pipeline project, which is proposed to carry Russian natural gas to Europe over the Turkish-Greek border, continue and Moscow agreed to provide a 10.25 percent discount for ongoing sales to Turkey. The minister's statements came after the increasing concerns over the Turkish Stream's possible delay, but failed to lower tension. There was no new news in the statement, since that was what both sides have kept saying for five months.Last week, Russian Prime Minister Dmitry Medvedev said that negotiations on building the first line of the Turkish Stream would begin in the near future. "We hope that it will be built within the planned timeframe," Medvedev told the Delo daily of Slovenia and went on saying, "I should note that the Turkish Stream fully meets the interests of Russia and Turkey." Two days after the prime minister's statements, Russia's state-run Sputnik news agency reported that Moscow sent the first draft of the deal for the first phase. Russian officials highlighted that the aforementioned offer only covers the first stage of the pipeline project and that deals for other stages are to be made in different sessions. The project will transfer natural gas from Russia to Europe via Turkey, and the capacity of the pipeline would be 63 billion cubic meters. Fourty-seven billion cubic meters of that capacity would be transferred to Europe, as the remaining 16 billion cubic meters of natural gas is for Turkey. Last month, the Turkish government granted permission to Russian energy giant Gazprom to conduct engineering surveys for the offshore part of the Turkish Stream.On July 29, Novak said that the construction of an underwater pipeline to Turkey could be delayed if a related intergovernmental agreement was not signed soon. Sources from the Energy Ministry declined to comment on this issue, however, it is not a secret that a hard bargain on gas prices have been continuing on between the sides over the months.The problem starts at that point. In February, Energy Minister Taner Yıldız said that Ankara obtained a 10.25 percent price discount on the 28 billion to 30 billion cubic meters of natural gas it buys from Russia. However, after five months there is still no agreement signed between Russian state-owned energy giant Gazprom and Turkey's state-owned BOTAŞ energy company. While Ankara expects Russia to implement the agreed discount amount, Moscow insists on agreeing on the Turkish Stream project first.On July 14, Yıldız said that Turkey would like to take more roles in the project apart from being only the transport country and underlined that the Russian side changed their initial proposal. Turkey did sign the memorandum of understanding for the Turkish Stream project, but the intergovernmental agreement between BOTAŞ and Gazprom has not yet been signed. Reportedly, these issues became the two main sources that have prevented the Turkish and Russian side to reach an agreement.Russia is currently transporting natural gas to Turkey through two pipelines, the Blue Stream, which passes through the Black Sea, and the Western Pipeline through Ukraine. However, from the Russian perspective Ukraine is no longer a trustworthy partner due to the Crimean conflict. Russia already announced its plan to cease the transportation of natural gas over the Western Pipeline by 2019.Turkey wants every detail of the project to be guaranteed before it is launched, but Russia wants to start the project immediately and deliver the first shipment of natural gas in December 2016 by finishing the first phase of the project. Russia's insistence of Ankara to grant permission for the planned lines in the project is also considered as another standpoint, which deadlocks the agreement. The Turkish Stream was originally planned to have four pipelines, however, Turkey has so far only given licenses for the first line. Turkey's scrutinized stance on this issue also reportedly brought the negotiations to a halt.Apparently, obstacles to the Turkish Stream will remain in the near future until President Recep Tayyip Erdoğan and his Russian President Vladimir Putin agree on new terms. Both leaders are expected to meet in November at the upcoming G20 summit and will try to iron out the disagreements to give a boost to the Turkish Stream, however sources in Ankara believe that Erdoğan and Putin may come together before November and even discuss this issue over the phone in the coming days.