Shifting relationships - Part 2

The following brief report seeks to highlight the major Russian pipeline projects in light of the mentioned economic and political developments.

The East Route gas pipeline

The ongoing East Route gas pipeline (38 billion m3/y) is the most important pipeline project for Russia, because it ends Europe’s status as the only major piped gas market for Russia. Known also as the Russian-Chinese gas pipeline and the Power of Siberia, the pipeline is the largest project for both countries as part of the US$400 billion Sino-Russian comprehensive energy deal of 2014.

Being built along the East Siberia Pacific Ocean’s route, the Power of Siberia (4000 km; 52 in.; 61 billion m3/y) will enable Russia to export piped gas to China from the Irkutsk and Yakutia gas production centres to Russia’s Port of Vladivostok and China.

The Gazprom and CNPC joint venture has two segments. The construction of its first segment (3200 km Yakutia-Khabarovsk-Vladivostok Line) began on 1 September 2014 in Yakutsk, which is set to go online in late 2017. The construction date of its second segment (800 km Irkutsk Region-Yakutia) has yet to be decided.

On 17 December 2015, Gazprom and CNPC signed an agreement to design and construct the Power of Siberia’s cross-border section, including its submerged section under the Amur River. China will start receiving Russian gas upon the scheduled completion of the entire East Route gas pipeline in 2018.

Nord Stream II

Nord Stream II is still on track for construction despite cancelling certain tenders for domestic contracts in December 2015 and January 2016. Reportedly, the cancelled work includes four tenders for constructing over 400 km of a trunkline (Ukhta-Torzhok 2 pipeline; approximately 970 km) to feed more gas into the Nord Stream pipeline system. With reported values ranging from US$170 - 220 million, Gazprom has stressed that the cancellations will have no impact on the Nord Stream II timeline, including completion by the end of 2019.

The Nord Stream II will export 55 billion m3/y of Russian gas to Germany via twin offshore pipelines (each 27.5 billon m3/y; 1200 km) through the Baltic Sea.

The pipeline seems to run against the EU’s energy and political objectives and plans towards Russia, reversing Brussels’ policy of decreasing the EU’s dependency on Russia by consolidating and expanding Russia’s supplying role in the EU gas market.

The planed doubling of Russian gas supplies to the EU also questions the necessity of building the Trans Adriatic Pipeline (TAP), scheduled to begin in 2016. By enabling Russia to completely bypass Ukraine for gas exports to the EU, if it so decides, the project will weaken the EU’s policy of supporting Ukraine in its territorial disputes with Russia, for which Brussels has imposed sanctions on Russia.

The Turkish Stream gas pipeline

The fate of the Turkish Stream gas pipeline is uncertain because of deteriorating Russian-Turkish relations since last November. As the gap between their opposing policies towards Syria is widening, the mentioned shooting down of the Russian military aircraft has seemingly weakened Moscow’s enthusiasm for making the Turkish Stream a reality.

The Turkish Stream emerged last year as a replacement for the South Stream pipeline. Following the latter’s cancellation, Gazprom’s Chairman Alexey Miller and Turkey’s Botas Petroleum Pipeline Corporation’s Chairman Mehmet Konuk signed a Memorandum of Intent for its construction in the same month to help Russia increase gas exports to the EU without requiring Brussels’ approval.

However, the conclusion of the Nord Stream II’s agreement prompted Gazprom in October 2015 to reduce Turkish Stream’s capacity from 63 billion m3/y to 32 billion m3/y of which half would be for Turkey and the rest for export to the EU region through neighbouring Greece.

The pipeline system, consisting of four offshore strings (each 910 km), will pass 660 km under the Black Sea within the South Stream pipeline’s decided corridor, followed by 250 km within a new corridor towards the Turkish European area. The Turkish onshore line is reportedly 180 km, while that of Greece is unknown.

Written by Hooman Peimani and edited by Stephanie Roker

To read the full version of this article, please download a copy of the March 2016 issue of World Pipelines.

Read the article online at: https://www.worldpipelines.com/special-reports/28032016/shifting-relationships-part-2/