Additional line to Turkish Stream would face US sanctions

File photo of pipe-laying of TurkStream by Pioneering Spirit. [Gazprom.com]

EXCLUSIVE: US sanctions will apply to any additional lines to the Russia-sponsored pipeline Turkish Stream, EURACTIV has learned. Serbia has already competed and Bulgaria is building expensive infrastructure to import gas from Turkish Stream and carry it to Hungary and Austria.

On 20 December, US President Donald Trump imposed sanctions on two offshore pipelines designed by Moscow to bypass Ukraine and increase gas supplies via the Baltic Sea to Germany (Nord Stream 2), and via the Black Sea to Turkey (Turkish Stream, also called TurkStream).

The sanctions on Nord Stream 2 received plenty of media attention, with Germany and the EU also issuing critical statements.

Germany and EU condemn US sanctions on gas pipeline

Germany accused the US of interfering in its internal affairs on Saturday (21 December) for imposing sanctions on companies working on a major project to supply Western Europe with Russian gas.

The US sanctions have already hit the construction of the offshore section of Nord Stream 2, with the Swiss-Dutch company AllSeas in charge of laying the pipes withdrawing from the project. Russia is trying to replace this with its own equipment, although it doesn’t possess the advanced technology of its foreign sub-contractors.

Putin warns Washington that Russia has vessel to build Nord Stream 2

Russian President Vladimir Putin said his country has a “pipe-laying vessel” to complete the construction of the Nord Stream 2 gas pipeline to Germany, Kommersant daily reported citing unnamed sources on Thursday (26 December), following sanctions imposed by Washington.

Moreover, the US clearly stated that its intention is “to stop” the construction of Nord Stream 2, and Russia was forced to recognise that the project would not be completed before the second half of 2020.

The US intervention is unlikely to impact on the construction of the offshore section of Turkish Stream, with works of the first pipe being reportedly completed, and in advanced stage for the second pipe. The Kremlin said that Russian President Vladimir Putin plans to travel to Turkey to inaugurate the project with his Turkish counterpart Recep Tayyip Erdoğan on 8 January.

EURACTIV spoke to US officials and obtained clarifications which indicate that companies involved in additional lines to the second pipe of Turkish Stream would be subject of sanctions if and when gas starts flowing.

The first pipe of Turkish Stream is intended for Turkey’s domestic use (15.75 billion cubic meters a year). Another pipe with an additional 15.75 bcm/y is intended for the European market, the route being Bulgaria, Serbia, Hungary, ending in the Baumgarten gas hub near Vienna.

A US official explained that the sanctions passed in the ‘National Defense Authorization Act for Fiscal year 2020’ apply only for the offshore section of Turkish Stream, but made it clear that after the undersea portion is completed, sanctions will apply to any additional lines built in the future.

A spokesperson of the US representation to the EU stated:

“The longstanding commitment of the United States to European energy security has not changed. The Kremlin’s energy policy aims to create national and regional dependence on Russian energy supplies, leveraging this dependence to exert an inappropriate level of political, economic, and military influence. Nord Stream 2 and the second line of TurkStream are a threat to European energy security. We are working closely with our European partners and allies to ensure that Russia cannot use Europe’s reliance on its energy exports to exert a malign political and economic influence.”

Bulgarian Prime Minister Boyko Borissov met with Trump on 25 November, with energy  high in the agenda. A joint communiqué commended Bulgaria for “investing in the reverse flow capacity of the Trans Balkan Pipeline to diversify Eastern Europe’s gas imports in compliance with the rules of the European Union”. The Trans Balkan Pipeline currently carries Russian gas from Ukraine and Romania across Bulgaria to Turkey.

When Turkey receives direct supplies under the Black Sea, Bulgaria plans to reverse flows and carry Russian gas from Turkey to Serbia. Bulgaria has signed a €1.1 billion contract with the Saudi-led Arkad group for a 308km pipeline section to Serbia. Work is still ongoing. For its part, Serbia has already reported having completed the pipeline section across its territory, leading to Hungary.

Bulgaria is calling “Balkan Stream” the continuation of Turkish Stream across its territory and does not seem to be concerned by the threat of US sanctions, possibly comforted by the wording of the joint communiqué. But the US possibly has a different interpretation of the text: by “investing in the reverse flow capacity of the Trans Balkan Pipeline to diversify Eastern Europe’s gas imports in compliance with the rules of the European Union” the US understands using this pipeline for using gas from sources other than Russia.

The “rules of the European Union” to which the US authorities refer, concern the access of alternative suppliers to any pipeline. According to the information available, the Trans Balkan Pipeline’s capacity would need 100% of its capacity to carry the gas from Turkish Stream’s second pipe.

EURACTIV asked the Bulgarian authorities if they were aware that US sanctions could concern any additional lines to Turkish Stream, including Balkan Stream via Bulgaria. No answer was received at the time of publication.

(Edited by Benjamin Fox)

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