How the Announcement of the
Without saying that it is impossible for the Turk Stream to ever be built, I want to describe the benefits that Russia enjoys by simply announcing the project. That is the benefits that Russia enjoys before even starting the project. When examining the benefits of the Turk Stream there are three things that must be kept in mind. The first one is that according to experts it is very difficult for both the Turk Stream and TANAP to be constructed because there is not enough demand in the Balkans to make both projects viable, and there are no pipeline networks which can transfer the natural gas of the Turk Stream and TANAP to the rest of Europe. The Turk Stream will carry 63 billion cubic meters of natural gas per year, and TANAP will reach a capacity of 31 billion cubic meters by 2025. TAP will initially carry 10 and will finally reach a capacity of 20 billion cubic meters per year.
The second one is that the European Union, which will buy this natural gas, has a clear preference towards the Southern Energy Corridor (TANAP-TAP), in order to reduce its dependence on Russia. The third is that Turkey, which is the country that both the TANAP and the Turk Stream must cross in order to reach Europe, has a clear preference towards the Southern Energy Corridor too. These three factors must be taken into account when examining the benefits of the announcement of the Turk Stream for Russia.
The first benefit for Russia is that she is threatening the European Union and Ukraine, in order to convince them to relax their stance on the issue of the crisis in Ukraine and Crimea, and the economic sanctions that have been imposed on Russia. Russia has informed the European Union that as soon as the Turk Stream will start operating, Russia will stop supplying natural gas through Ukraine. That would be a great problem for both the Europeans and the Ukrainians, who badly need the Russian natural gas. Moreover if the Europeans take seriously what Putin says, they will have to construct pipelines which will connect their countries to the Greek-Turkish borders, in order to keep importing Russian natural gas. Therefore Vladimir Putin is also trying to give the Europeans a motive to build a pipeline network that will bypass Ukraine in order to keep importing the Russian gas.
However this threat is not very credible as you can read at the following Euractiv article, titled 'Šefčovič: Turkish Stream will not work', February 2015. According to the EU Energy Commissioner, Maros Sefcovic, Gazprom cannot unilaterally stop supplying its clients through Ukraine, because the contracts specify specific delivery locations, and these locations cannot be unilaterally changed. That is even more relevant in the case of the Greek-Turkish borders, because there is not a pipeline network which have the ability to carry the natural gas from there to Central Europe.
Maros Sefcovic also mentions that the western part of Turkey only needs 15 billion cubic meters of natural gas, and the other neighbouring countries another 15 billion, and therefore he claims that he can not see who is going to buy the 94 billion cubic meters of natural gas that will be delivered to the Greek-Turkish borders by the Turk Stream and the TANAP pipelines. According to the European Energy Commissioner the EU and Gazprom must jointly find a solution which will satisfy both parties. The article also mentions that the European Union does not have many alternatives to the Russian natural gas, because TANAP will initially carry only 16 billion of natural gas. By saying so the article seems to agree with the European Commissioner, that the EU and Russia should sit down and find a solution.
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Šefčovič repeated that it was very"unusual" for a company such as Russia to communicate with its clients via press conferences. Indeed, the first announcement about Moscow's change of plan was during a press conference of President Vladimir Putin, in Turkey.
The Commission Vice-President also said that none of the countries or companies involved in the South Stream project had been officially notified of the project‘s cancelation.
The same happens with Turkish Stream, Šefčovič said, calling it a"radical proposal", which is hardly in conformity with the bilateral agreements individual companies have signed with Russia, which stipulate a precise place of delivery.
"I doubt that this place of delivery is the Greek-Turkish border," Šefčovič said, referring to Russian statements that Turkish Stream will bring gas to a hub at the Greek-Turkish border.
On top of it, he said he was questioning the economic viability of the project, because in his words Turkey needed some 15 billion cubic metres per year (bcm/y), and the other countries of the region needed another 15 bcm.
"Why (do) you need to ship to that part of the world more than 60 bcm of gas?" he asked, referring to the fact that Russia said Turkish Stream will have the same capacity as South Stream, that is, 63 bcm.
"This will not work. I cannot see that this would be the final solution. I think that we will have to come back to a more rational debate on what should be the economically viable solutions for this project, and for overall gas cooperation between Gazprom and the European countries," Šefčovič said.
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He added that he didn‘t agree with this reasoning, because Kyiv was committed to energy reform, and that the EU and other financial institutions were going to provide funding for the modernisation of the gas transmission system. Moreover, he said that
it was not possible that the current volume of transit of Russian gas of over 100 bcm could be immediately rerouted.
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It also remains unclear what alternatives to Russian gas the region has, except some of the 10 bcm/y which would become available via the Southern gas corridor, when gas from Azerbaijan will start coming through the planned TANAP pipeline via Turkey, and the TAP (Trans-Adriatic) pipeline via Greece and Albania, by 2019- 2020.
http://www.euractiv.com/sections/energy/sefcovic-turkish-stream-will-not-work- 311836
At page 10 of the following article of the Oxford Energy Institute, of Oxford University, titled 'Reducing European Dependence on Russian Gas', October 2014, you can see the demand for natural gas of individual European countries, and what this demand is expected to be by 2030.
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http://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/10/NG- 92.pdf
You can see that by 2030 demand for natural gas will be 3.6 billion cubic meters in Greece, 2.3 billion in Serbia, 3.3 billion in Bulgaria. Turkey will need 70 billion cubic meters of natural gas by 2030, but today Turkey needs only 45 billion cubic meters of natural gas per year, and from this amount only 15 billion is needed by Turkey's western part, which will supposedly be supplied by the Turk Strem or TANAP.
At the following article of the Turkish newspaper Today's Zaman, which is the English version of the daily newspaper Zaman, titled 'Ukrainian ambassador calls Turkish Stream too bad to be real', March 2015, you can read a very interesting interview given by the Ukrainian ambassador in Turkey.
http://www.todayszaman.com/interviews_ukrainian-ambassador-calls-turkish-stream- too-bad-to-be-real_374469.html
According to the Ukrainian ambassador there is no chance that the Europeans will spend all this money that is required to connect Central Europe with Turkey, in order to substitute the gas they receive from Ukraine, because there is already a network that is doing that through Ukraine. Moreover, according to the Ukrainian ambassador, the Turk Stream cannot be constructed because its construction would mean the end of TANAP, and the end of Turkey's ambition to become an independent energy hub. He mentions that Putin and Erdogan only singed a memorandum of understanding for the Turk Stream, and not a final agreement. At the journalist's question about why Erdogan signed the memorandum of understanding, he answers that when an energy superpower like Russia asks you to consider a project, you have to say 'yes, sure'.
By announcing the Turk Stream, Putin is also trying to punish Bulgaria. Even though Bulgaria traditionally has good relations with Russia, she has been obedient to the European Union regulations, and asked Russia to respect the EU regulations on energy issues. Bulgaria, even though very unhappily, announce on June 2014 that all Bulgarian projects related to the South Stream would be halted, until a solution was reached between the EU and Russia. You can read the following article of the Russian state owned RT (Russia Today), titled 'Bulgaria halts Russia's South Stream gas pipeline project', June 2014.
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Bulgaria‘s prime minister, Plamen Oresharski, has ordered a halt to work on Russia‘s South Stream pipeline, on the recommendation of the EU. The decision was announced after his talks with US senators.
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Earlier this week, EU authorities ordered Bulgaria to suspend construction on its link of the pipeline, which is planned to transport Russian natural gas through the Black Sea to Bulgaria and onward to western Europe. Brussels wants the project frozen, pending a decision on whether it violates the EU competition regulations on a single energy market. It believes South Stream does not comply with the rules prohibiting energy producers from also controlling pipeline access.
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In Bulgaria, the ruling Socialists support the South Stream project, while Movement for Rights and Freedom leader Lyutvi Mestan told parliament on June 5 that Bulgaria should defend its strategic interests ' in cooperation, not in confrontation ' with Europe. Earlier Serbia has said it has no plans to delay the start of construction of its leg of the South Stream pipeline, scheduled for July. Serbian Energy Minister Aleksandar Antic said that the position was not decisive: ' I believe the European Commission and member states will find a solution because this is a European project in the best interests of energy security .' Hungarian Prime Minister Viktor Orban also said June 5 that the pipeline should be built, as there was no alternative to the project.
http://rt.com/business/164588-brussels-bulgaria-halts-southstream/
There are two routes by which Gazprom can enter Southern Europe, if Ukraine is taken out of the equation. The first one is Bulgaria, and the second one is Turkey. Putin thought that Bulgaria was very obedient to the European Union regulations and brought forward the Turk Stream to retaliate. Bulgaria is addicted to the Russian natural gas which reaches Bulgaria through Ukraine with the Trans-Balkan pipeline. Therefore Bulgaria needs either TANAP or the South Stream to increase her energy security, but also because she desperately needs the investments that are related to these projects, because Bulgaria is the poorest country of the European Union.
Bulgaria was disappointed twice, first with the cancellation of Nabucco pipeline, and then with the cancellation of the South Stream. Bulgaria is a battlefield between the European Union and the US on one side, and Russia on the other, as you can read at the following article of the American state owned Voice of America, titled 'Bulgaria Key Battleground in US-Russia Energy War', February 2015. According to the article the United States is trying to construct a nuclear energy plant in Bulgaria, in order to reduce Bulgaria's dependence on Russian oil and natural gas.
Bulgaria is also very rich in shale gas, and the American companies have developed the techniques required to exploit this gas. Bulgaria had signed a contract with the American multinational Chevron, in order to exploit her shale gas reserves. This would be a very positive thing for the US and the EU, because it would reduce Bulgaria's dependence on Russia for energy. But the exploitation of Bulgaria's shale gas was abandoned due to heavy criticism and protests from pro-environment organizations.
According to the article the Americans claim that the environmental campaigns were funded by Russia.
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The U.S. recently pledged to send an energy envoy to Sofia and is promoting an American company to build a nuclear power plant there. Washington is also looking to help fund new gas pipelines and terminals in the region. "In the area of energy security, we're not just talking the talk, now we're walking the walk,' U.S. Assistant Secretary of State of European Affairs Victoria Nuland said in January of U.S. intentions.
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The U.S. moves come amid renewed charges that Russia" through its state-controlled energy company, Gazprom" has successfully blocked shale gas exploration in Bulgaria through a shadowy but well-funded campaign waged to protect its regional energy dominance.
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Despite paying some of the highest prices in the world for energy, Bulgaria in 2012 issued an open-ended ban on hydraulic fracturing, cancelling a license for unconventional gas exploration granted less than six months earlier to the U.S. energy giant Chevron.
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When Chevron moved into Bulgaria in 2010, it became the single largest investor of the shale era. "They introduced a completely new business culture, put down €30 million [$38 million] up-front. It was an unheard of amount of money and triggered a chain reaction when the Russians realized Chevron meant business," Vassilev said.
http://www.voanews.com/content/bulgaria-key-battleground-in-us-russia-energy- war/2655196.html
Obviously the United States did not give up and tried to build the nuclear power plant that I mentioned in order reduce the Russian influence on Bulgaria. As you can read at the following article of the World Nuclear Organization, titled 'Nuclear Power in Bulgaria', April 2015, Bulgaria covers 1/3 of her energy needs with nuclear energy. Bulgaria has 2 nuclear reactors, and she had another 2, which she had to close down when she joined the EU, because they were very old and they did not satisfy the European regulations.
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Bulgaria has two nuclear reactors generating about one-third of its electricity. Two others, shut down under duress as a condition of Bulgaria joining the European Union, could be restarted. Bulgaria's first commercial nuclear power reactor began operating in 1974. Government commitment to the future of nuclear energy is strong, though finance is lacking. Construction of a new nuclear plant was planned, but instead, a 1200 MWe unit will be added to the present plant.
http://www.world-nuclear.org/info/Country-Profiles/CountriesA-F/Bulgaria/
At the following Wall Street Journal article, titled 'Bulgaria Signs Deal With Westinghouse on Nuclear Power Plant', August 2014, you can read that an American company agreed with the Bulgarian government to build a nuclear power plant, in order to reduce Bulgaria's dependence on Russian know how and Russian nuclear technology, and to reduce Bulgaria's dependence on Russian natural gas and oil. At the 18th paragraph the article mentions that this success for the Americans came after their failure in Hungary, where the Russian state owned nuclear energy company Rosatom agreed with the Hungarian government to construct two nuclear power plants.
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An American nuclear engineering company and Bulgaria Friday reached a long- sought deal paving the way for the European Union state to diversify its energy generation and nuclear fuel sources away from Russian to Western technologies while meeting the EU's strict carbon-emission reduction targets.
Pennsylvania-based Westinghouse Electric Co. Ltd. said after seven months of negotiations it signed an agreement with Bulgaria's state-owned nuclear power plant operator Kozloduy Nuclear Power Plant PLC giving the American company a 30% stake in a project company that aims to build a new 1,000 megawatt reactor worth over $5 billion.
Westinghouse will provide all of the plant equipment, design, engineering and fuel. The project will be a major employment booster in the EU's poorest member state by economic output per capita. The company said during the construction phase some 3,500 local workers will be employed on site with an additional 15,000 workers involved in the associated supply chain. Once the reactor is complete, it will employ up to 800 specialists.
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This agreement comes as EU state Hungary earlier this year made a deal with Russian nuclear company Rosatom in which the Russian side will fully finance the development and construction of two new reactors at the PAKS nuclear power plant in Hungary at a cost estimate to be in excess of €10 billion ($13.39 billion).
http://www.wsj.com/articles/bulgaria-signs-deal-with-westinghouse-on-nuclear- power-plant-1406890323
Victor Orban, the President of Hungary, is very close to Russia and he fights the European energy regulations and the European Energy Union which is promoted by the EU, as you can read at the following article of Euractiv, titled 'Orban says EU's Energy Union is a threat to Hungary', February 2015.
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Hungarian Prime Minister Viktor Orbán said his country has a"major problem" with Brussels because of the European Commission‘s plans to set up an Energy Union, which in his words hinders national sovereignty. Orbán, who two days ago hosted Russian President Vladimir Putin from whom he obtained major gas price discounts, said his country does not agree that he must inform the Commission of his gas supply agreements with Russia. One of the key elements of the Energy Union is that member states‘ energy deals with non-EU nations should be scrutinised by the European Commission before they are signed. Russia has always insisted that those deals are confidential.
http://www.euractiv.com/sections/eu-priorities-2020/orban-says-eus- energy-union-threat-hungary-312290
With the European Energy Union, all the energy deals of the individual EU member states will be scrutinized by the relevant European authority. Therefore the corrupt political systems of Eastern Europe and the Balkans will not be able to agree higher prices with Russia, passing the higher costs to consumers. This kind of indirect funding is one way that corrupt politicians are financed by Russia, in order to promote Russia's foreign policy and combat the European energy regulations. In other cases Putin offers lower prices to friendly governments, and higher prices to pro— European countries.
I must say one more thing about Bulgaria's nuclear energy plants. Russia tried to build in Bulgaria one more nuclear energy plant, in order to prevent the construction of a plant by a western company. But as you can read at the following Financial Times article, titled 'Bulgarians see Russian hand in anti-shale protests', November 2014, even though the Russian company Rosatom managed to agree on the construction of a new nuclear plant, in the end the Bulgarian government backed out. I guess the Bulgarian government backed out due to pressures from the EU and the US.
At another part the Financial Times article mentions that many people in Bulgaria believe that the anti-shale protests in Bulgaria were financed by Tsvetan Tsvetanov, a Bulgarian oligarch who is very close to Russia. The article also mentions Bulgaria's dependency on Russia for natural gas.
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It took barely a week of street protests by environmentalists in January 2012 beforeBoyko Borisov, Bulgaria‘s prime minister, relented and cancelled a licence for Chevron, the US energy company, to explore for shale gas in the Balkan country‘s prime wheat-growing region.
When another wave of protests prompted by sharp rises in electricity and fuel pricestoppled Mr Borisov‘s centre-right government 13 months later, it seemed as if civil society had finally come of age in the EU‘s poorest member state.
Yet some in Sofia believe a Russian hand helped foment the protests for its own ends. They point to Kremlin links to local groups that supplied demonstrators and funded an anti-shale media campaign. The goal, they believe, was to punish the pro- European Mr Borisov for pursuing policies that might reduce Bulgaria‘s dependence on Russian energy.
"We must remember the anti-shale protests and the other organised actions against the government of Boyko Borisov. This was a well-planned scenario developed by local corporate, oligarch and economic interests connected with Russia," said Tsvetan Tsvetanov, a former interior minister who is a close Borisov confidant.
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These days, energy has been at the centre of the relationship. Russia‘s Gazprom supplies 90 per cent of Bulgaria‘s annual gas via a pipeline that runs through Ukraine. Its dominance means that Bulgaria‘s state energy company" despite its relative poverty" pays 30 per cent more for its gas than importers in Germany.
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It was not Mr Borisov‘s only affront to Moscow. In January 2013, he called off a €7bn project backed by previous governments to build a 2,000-megawatt nuclear plant at Belene on the Danube river which was led by Russia‘s state-owned Rosatom group. His government also awarded a concession to explore for gas off Bulgaria‘s Black Sea coast to an international consortium headed by Total of France.
Those who suspect Moscow‘s involvement in the unrest in Sofia point to a media campaign" said to be worth €20m" backing the anti-shale protests. It was handled by several local media and advertising companies with Russian connections.
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The outgoing socialist-led government was a keen backer of South Stream. Even though it suspended participation in June under pressure from Brussels it still allowed on-the-ground preparations to continue.
http://www.ft.com/intl/cms/s/0/e011d3f6-6507-11e4-ab2d-00144feabdc0.html
Bulgaria has approximately 1 trillion cubic meters of shale gas reserves, which is quite impressive if it is taken into account that the richest countries in shale gas have approximately 30 trillion cubic meters of shale gas reserves. At the following Reuters article, titled 'Bulgaria bans shale oil and gas drilling', January 2012, you can read about the Bulgarian shale gas reserves.
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Initial estimates showed Bulgaria may have significant shale gas reserves, up to 1.0 trillion cubic metres.
The centre-right government, initially a staunch supporter of shale gas on hopes it may reduce the country's almost total dependence on gas imports from Russia's Gazprom, has changed its position after growing opposition to fracking.
http://www.reuters.com/article/2012/01/18/bulgaria-shalegas-ban- idUSL6E8CI2ML20120118
The Burgas (Bulgaria)" Alexandroupolis (Greece) oil pipeline was another battlefield between the US and Russia in Bulgaria. The pipeline was agreed in 2007 between Russia, Bulgaria and Greece, and it was meant to shadow the Baku (Azerbaijan)- Ceyhan (Turkey) oil pipeline that was promoted by the Americans. See red line for Burgas-Alexandroupolis oil pipeline, and brown line for the Baku-Ceyhan pipeline.
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The Bulgarian government once more backed out from the Burgas-Alexandroupolis pipeline, while the Baku-Ceyhan pipeline has been built, and it is operating. At the following article of the Bulgarian site Novinite, titled 'Russia, Turkey Fall Out over Samsun-Ceyhan Oil Pipeline Project', September 2010, you can read that after the cancellation of the Burgas-Alexandroupolis pipeline Russia tried to promote the Samsun-Ceyhan oil pipeline, but the plan was abandoned, because Russia claimed that Turkey's economic demands were unacceptable.
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Russia and Turkey will be starting their negotiations for the construction of the Samsun-Ceyhan oil pipeline from scratch because of disagreements, announced Russian company Transneft.
'[Turkey's] offer is to sign an intergovernmental agreement in which they are trying to get us to agree to economically unacceptable terms. Of course, we don't agree, and we are starting the new round of talks practically from scratch,' declared the CEO of Transneft, one of the Russian partners in the Samsun-Ceyhan project, Nikolai Tokarev, as cited by RIA Novosti.
The Samsun-Ceyhan oil pipeline is a project to transport Russian and Caspian oil from the Black Sea to the Mediterranean by circumventing the Turkish Straits. It has been described as the major competitor of the Burgas-Alexandroupolis oil pipeline, a project of Russia, Bulgaria, and Greece, whose fate is uncertain over environmental concerns of the Bulgarian government.
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The agreement for the construction and operation of the Samsun-Ceyhan oil pipeline