The natural gas hub in Turkey is a “lifeline” for Russia, but implementation is difficult

“Lifeline” so that Russia does not lose the profitable European market entirely, he recommends the international natural gas hub in Turkey, however, there are significant difficulties. Moscow has four years to decide on its participation in the international gas hub being implemented in Turkey, which could theoretically help it maintain at least some share of the European market, the Russian newspaper Nezavisimaya Gazeta mentions in its article. Experts say this is precisely the time period that global liquefied natural gas (LNG) producers need to complete the new investment cycle in order to fully replace Russian gas. That said, Russian gas may have to be sold at a discount, as it would become “Turkish” mixed with fuel from Azerbaijan or Iran, in order not to discourage potential customers.

Turkish officials are already in talks with their Russian colleagues, while Mr Vladimir Putin he said prices would be set by energy hub participants. To set the price in Turkey, the hub would have to have suppliers other than Russia, explained political scientist and economist Aydin Sezer, Turkey’s former trade representative to Russia. “It is not possible to be a hub or a central country with only Russian gas. Turkey needs to mobilize other natural gas resources, especially the TANAP (pipeline),” he noted. “The condition for this is that Russia recognizes it right of Turkey to re-export natural gas. Thus, European countries that cannot buy gas from Russia because they cannot pay in rubles will trade with Turkey,” the expert explained.

“The main issue of establishing a natural gas hub in Turkey is not technical. In addition to Russian, Azeri and Iranian gas, fuel from northern Iraq, Egypt, Israel, Cyprus, Central Asian countries may be delivered to the country under certain conditions. The main issue is how ready Europe will be to buy this ‘faceless’ or Turkish-named mixture of the node, while everyone will realize that there is a significant part of it that is Russian,” Stanislav Mitrakovich, a senior expert at the National Energy Security Fund, commented to the Russian newspaper. The agreement to create a hub in Turkey shows that Russia is not giving up efforts to retain at least a part of the European market. And possibly, with some settlement of the situation in Ukraine, this plan can work, but only with the consent of the customers, the expert added.

According to Mitrakovich, in the absence of a political settlement (in Ukraine) technical difficulties may also arise. “The first lines of the pipeline were laid by European companies and there is no certainty that Russia alone can cope in construction in deep-water parts of the Black Sea,” he explained.

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