Russia to clinch Europe with two more arms: Nord Stream 2 and TurkStream
- Written by Adrian Stoica
The Russian Federation continues the pipeline offensive to the heart of the European Union, melting the Brussels’ plans to limit dependence on Russian gas. Nord Stream 2 and TurkStream are the Gazprom’s latest spearheads and, in order to be certain of success for these projects, Russia has taken as allies the large energy companies in Western Europe. As for Romania, which hardly awoke from the dream called Nabucco, it is not on either of the two axes. The hopes are related to the hydrocarbon reserves in the Black Sea.
In 2016, Gazprom sold record quantities of natural gas to Europe and Turkey - 180 billion cubic meters, up by 12% against 2015, Russia covering a third of Europe’s gas consumption, which is a record. Moreover, according to a presentation by Gazprom CEO Alexei Miller, by 2025 Europe would need to import extra 100 billion cubic meters of natural gas per year and extra 150 billion cubic metres by 2035. Given that currently Gazprom covers 34% of Europe’s gas consumption (in 2035 the share will reach 65%), the continent’s dependence on Russian gas will increase, especially since it is the closest and cheapest source. To ensure this increase in deliveries, Gazprom does not hide its intentions to continue the construction of gas pipelines to Western Europe.
POWERFUL ALLIES FOR NORD STREAM 2
First of all, the construction of Nord Stream 2 is envisaged in order to double the operational capacities towards Germany via the Baltic Sea. Eastern countries, Poland first, oppose the stream, but the Russians have secured important allies for this project, especially as they face opposition from Brussels, which claims that, by building the new pipeline, the competition laws would be violated. The list of allies includes western companies Engie, Shell, OMV, Uniper (E.On group) and Wintershall (BASF Group). In 2015, Gazprom and the above-mentioned companies have signed an agreement for the Nord Stream 2 project, which means the construction of two pipelines besides the already existing two, so the ability to transport gas would double to 110 billion cubic metres per year. Gazprom will invest in the project approximately USD 1.9 billion.
WHEN WILL THE CONSTRUCTION START OFF?
The Austrian group OMV wants to be sure there will be no impediments and to begin works on the Nord Stream 2 project as quickly as possible, which should mean an even deeper energy connection between Europe with Russia, bypassing Ukraine, according to the Tass news agency.
“Next year the construction should begin. We are in the stage of concluding agreements with European partners, we consider what steps to take to avoid an event such as cancelling our commitments again,” OMV CEO Rainer Seele said recently, quoted by Tass. “Each participant has a favourite model. We have to reach a joint stance on the model, supported by five potential European partners and by Gazprom, but we still haven’t reached one,” he added.
TURKSTREAM ALREADY HAS THE LICENSES TO START THE WORKS
The new Russo-Turkish alliance has as collaboration’s spearhead the energy project TurkStream and things start to move. The construction of the first line of the pipeline will start at midyear, following the obtaining of building permits for the first two parts of the project. According to information published by russianconstruction.com, at mid-March, Russian Energy Minister Alexander Novak said that the Russian side is already taking care of obtaining rest of the permits for the part to be built on the Turkish coast. The route’s length is 900 kilometres, taking into account the 660 kilometres of route included in the South Stream gas pipeline project. “All licenses for the first line of the offshore section up to km 660 have been granted and confirmed by the Turkish side, work is already underway, and by mid-2017 we will begin installing the pipeline,” the Russian minister said.
The pipeline will pass under the Black Sea from Russia (from Russkaya – the compressing station in the Krasnodar region, to the receiving terminal on the coast of Turkey) and will consist of two lines with a projected overall capacity of 31.5 billion cubic meters of natural gas per year. The commissioning of both lines is scheduled on December 30, 2019. The length of the offshore section will reach approximately 920 kilometres, whereas the offshore transit line will be of approximately 200 kilometres. Italy’s ENI has already announced it wants to extend the pipeline to the peninsula.
TAP, BLOCKED BY AN OLIVE GROVE
The construction of the Trans Adriatic Gas Pipeline (TAP) officially began in May last year, a gas pipeline designed to bring natural gas from the Caspian Sea basin to European markets, in view to reduce Europe’s dependence on Russia.
With a length of 870 kilometres, the Trans Adriatic Gas Pipeline is part of a larger project called Southern Gas Corridor, of over 3,500 kilometres. The EUR 5 billion project will cross Georgia, Turkey, Greece and Albania to reach southern Italy via the Adriatic Sea.
The Trans Adriatic Gas Pipeline would connect the Trans Anatolian Pipeline (TANAP) at the Kipoi border post between Greece and Turkey, and the South Caucasus Pipeline in Georgia.
The Trans Adriatic Gas Pipeline (TAP) project is implemented by a consortium having as shareholders BP, SOCAR, Snam, Fluxys, Engas and Axpo.
The European Bank for Reconstruction and Development (EBRD) is analysing the granting of funding to TAP of up to EUR 1.5 billion, the largest loan ever granted by the EBRD.
For the time being, the project is blocked by a centuries-old olive grove in the Italian region of Puglia, according to international press. Moving the grove endangers the deadline for completing the project worth EUR 40 billion. If the olive trees will not be replaced until April, then there will be a growth period of six months when the trees cannot be moved, and the TAP consortium must wait until the end of November to complete the replacement. Considering a rate of 20 trees removed every day, it would take about a week to transfer the first batch of olive trees. However, even if TAP will be able to move all the olive trees until the end of April, the project must meet more than 30 other conditions, which means it could lead to new delays, the spokesman for the consortium that implements the project said.
BRUA, THE FIRST STEPS
In early March, the Ministry of Energy announced it has issued the building license for the BRUA pipeline, a new European gas transport corridor which will interconnect Bulgaria, Romania, Hungary and Austria. The license, issued on February 27, 2017, is the preliminary step to commencing the works in our country, the institution informs. “The BRUA project was blocked when taking office, as the building license could not be issued, Romania risking delaying in works and the European funding of about EUR 180 million,” Energy Minister Toma Petcu said.
The works on BRUA interconnector will include 11 counties, the deadline for the completion of Phase I being scheduled in 2019. The new pipeline will have a total length of 550 kilometres and a maximum capacity of 1.5 billion cubic meters per year to Bulgaria and 4.4 billion cubic meters per year to Hungary.
“The most important benefit through the construction of BRUA is that Romania is diversifying the sources of gas supply. On the other hand, a larger number of suppliers lead to the increase of Romania’s bargaining power to obtain the best possible prices for consumers. Once commissioned, BRUA can be an outlet for gas reserves in the Black Sea, which will bring us closer to the goal of being an energy hub and a pole of stability in the region,” Toma Petcu (photo) added.
The pipeline is part of the Southern Gas Corridor which will transport gas from Azerbaijan to Italy via Turkey, Greece, Albania. Thus, Romania will have access, through BRUA, to the Shah Deniz II gas deposit in Azerbaijan.
WHAT DOES BRUA MEAN FOR ROMANIA?
This project involves the developing of the transport capacity of natural gas between the existing interconnection points to the natural gas transmission systems in Bulgaria (at Giurgiu) and in Hungary (Csanadpalota) by building a new pipeline with a total length of about 550 kilometres on the direction Giurgiu – Podisor – Corbu – Hurezani – Hateg – Recas – Horia and three compression stations located along the pipeline (SC Corbu, SC Hateg, SC Horia).
Practically, through BRUA, Romania will reduce dependence on Russian gas, in the context of completing new projects aimed at diversifying the gas transport routes from the Caspian Sea region to Central Europe, as well as new sources of natural gas from the offshore blocks in the Black Sea. The new transport corridor will ensure the exploitation of natural gas volumes related to these sources on the Romanian and European markets and the possibility of permanent bidirectional flow through the interconnections with Bulgaria and Hungary.
The pipeline will be operational in 2019 and the total costs are estimated to EUR 560 million. The European Commission has endorsed, on January 19, 2016, the funding by almost EUR 180 million of the works to be carried out by Transgaz on the national gas transmission pipeline for the BRUA development, Phase I.
BRUA, CONNECTED TO THE TUZLA - PODISOR PIPELINE
To BRUA is also related the Bucharest authorities’ project to bring gas from the Black Sea to Giurgiu. This second project aims at building a pipeline on the route Tuzla - Podisor, from the Black Sea shore to Giurgiu. Thus, the gas extracted from the Black Sea will join the BRUA mainland transport network and, further on, will be transported to Hungary, Austria and Western Europe.
Transgaz has already announced that it will start building this pipeline, by publishing the decision on meeting the stage set by the National Agency for Environmental Protection in the assessment process of environmental impacts and appropriate assessment for the project ‘gas transmission pipeline in the area of Black Sea coast – Podisor’, proposed to be located in the counties of Constanta, Giurgiu and Calarasi. The feasibility study for the pipeline that brings gas from offshore to the shore is ongoing (to be financed entirely by OMV Petrom and ExxonMobil), but neither the consortium nor Transgaz do not mention the onshore location for the pipeline.
“The project consists of building a transmission pipeline from the Black Sea to the Podisor Technology Hub (Giurgiu County), to connect the natural gas available from the Black Sea to the Bulgaria – Romania – Hungary – Austria corridor. The completion deadline of this project is estimated in 2020 and the related investments amount to around EUR 278.3 million,” the Transgaz website reads.
From Podisor, the gas brought from the Black Sea will enter the BRUA pipeline, which is also to be connected to Bulgaria and the Caspian Sea. The network of pipelines to transport gas from the Black Sea and the one coming from Azerbaijan will be 530 kilometres long and will cost EUR 550 million. Both BRUA and Tuzla - Podisor are part of the Transgaz development strategy for 2015-2023 for the construction of pipelines connecting Romania to Western Europe.