Russia May Freeze Turkish Stream Gas Project

Source: Reuters 12/1/2015, Location: Asia

Russia may freeze work on the Turkish Stream gas pipeline project for several years in retaliation against Ankara for the shooting down of a Russian air force jet, two sources at Russian gas giant Gazprom told Reuters.

The Kremlin has imposed trade sanctions on Turkey over last week's jet incident although so far the measures have not affected the Russian energy exports to Turkey that are the core of their economic relationship.

Russian Economy Minister Alexei Ulyukayev said on Tuesday that no decisions had been made on the project and on a nuclear power station that Russia is building in Turkey.

Freezing work on the pipeline - intended to pump Russian gas, via Turkey, into southeastern Europe while bypassing Ukraine - would have a more symbolic than practical effect because the project is already beset by delays and doubts over its viability.

Any freeze would also not affect another Russian project to boost gas exports to the north of Europe. Gazprom is going ahead with plans to expand the Nord Stream pipeline to Germany despite resistance from several ex-communist states in eastern Europe.

Gazprom sources said no decision had been taken inside the company about changes to the Turkish Stream schedule in response to the row with Ankara, but added that they were awaiting instructions from President Vladimir Putin.

"We're expecting that the head of state, in all likelihood, could declare a freezing of Turkish Stream, or at least some kind of timeout should be announced," said one Gazprom source, who spoke on condition of anonymity.

A second source in Gazprom, who also did not want to be identified, said: "We are still hoping that Turkish Stream will be pushed back by a few years, rather than completely canceled."

Ulyukayev said last month that Turkish Stream could be among the projects affected by sanctions against Turkey, but he did not specify how. On Tuesday he left open the future of the pipeline and nuclear power station.

"There have been no decisions at this stage on suspending, freezing or ending financing for these projects," he told reporters in Brussels. "We are working on the assumptions that they will be carried out as they were agreed."


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