How Russia will turn Turkey into a gas hub

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Vzglyad business newspaper on Russia's initiative to turn Turkey into the largest international gas hub for trading Russian natural gas.

“This is unexpected news for industry experts as well,” Alexey Gromov says.

“Given the geopolitical situation, we do not have many opportunities to export gas to Europe,” the expert notes.

Gazprom now supplies about 16 billion cubic meters through the second line of the Turkish Stream and almost the same amount through Ukraine, that is, less than 40 billion cubic meters of gas in annual terms. Whereas in 2021, Gazprom exported a little more than 140 billion cubic meters to Europe through pipes (excluding Russian LNG supplies).

Transit through Ukraine can be interrupted at any moment, the risks are great. These can be sanctions from Russia or Ukraine, and infrastructure destruction, etc. Even if gas continues to flow through Ukraine, it will only be until 2024. The transit contract with Gazprom ends this year, and its extension now looks like a fantasy.

“Ideally, Russia needs to find where to supply at least 100 billion cubic meters of gas. But in the coming years, an increase in gas supplies will occur only to China through the Power of Siberia. This is plus 20-25 billion cubic meters to the current volumes, which is not so much.

By another 10 billion cubic meters, deliveries through the gas pipeline from Sakhalin-3 through Khabarovsk and Vladivostok to China can increase - this is the so-called "Power of Siberia - 3". On the "Power of Siberia - 2" decision has not yet been made, the negotiations are still underway. But even if it is accepted, Russia still needs to look for where to attach about 50 billion cubic meters of gas per year,” Gromov argues.

If Russia can sell a significant part of these volumes through Turkey, sharing gas revenues with Ankara, then this could be an interesting project, he adds.