GAS AND POWER: Russia's latest energy clash with West is in Balkans

• Date: 01 June 2015
• Published date: 01 June 2015
• DOI: http://doi.org/10.1111/oet.12256

GAS AND POWER

Russia’s latest energy clash with West is in Balkans

A new front in the energy battle between Russia and

the West has opened up in the small Balkan state of

Macedonia. What began as an apparently internal dis-

pute over the result of this year’s general election has

become part of a wider argument between Moscow and

the West. Opposition groups have taken to the streets

demanding the resignation of the Prime Minister,Nikola

Gruevskiandhisgovernment,allegingarangeofmal-

practices during and since the election. Some ocials

in Moscow, however, see these protests as desig ned to

undermine a government that they regard as broadly

sympathetictoRussia,andtoreplaceitwithamorehard

line pro-western administration.

Russian concern

e immedi ate cause of Russian conc ern is what is seen

as a Western-led move to block the building of a major

gas export pipeline from Russia to Central and Western

Europe through the Balkans. Russia’s Gazprom wants

to end the practice of exporting gas to Europe using

pipelines that cro ss Ukraine to counter what it sees as

thethreatofafuturegovernmentinKievshutting-o

supplies of Russian gas to countries in Europe.

To this end, Gazprom has begun the construction of

anewgaspipelineacrosstheBlackSeatoTurkey.e

newline,knownasTurkishStream,ismeanttoformthe

rst stage of a new export route into Central and Western

Europe via the Balkans. From Turkey it is planned to

cross into Greece and from there through Macedonia

andSerbiatoCentralEurope,whereitwillconnectto

the main gas transmis sion networks of Central, Western,

and Southern Europe.

Following talks in Moscow in April,Greece appears to

have agreed in principle to a connection to the pipeline

at the Turkish border, while Serbia and Hungary have

also indicated their willingness to take Russian gas by

this route. is will requirethe building of a pipeline link

through Macedoniato these countries. Moscow believes

it has the support of the Macedonian government for

such a link, but fears that the current unrest there could

bring about a change of government, which could delay

or even prevent the const ruction of the pipeline and it

is being suggested in some parts of the Russian govern-

mentthattheprotestsinMacedoniaarepartofaUS-and

European Union-inspired plan designed to bring about

the eventual blocking of the northern extension of the

pipeline.

Uneconomic pipeline?

While Turkish Stream is design ed initially to supply sub-

stantial volumes of gas to the rapidly growing Turkish

market, it would be uneconomic without further sal es

into Europe. Even if Greece were to agree to a link

to the scheme, Turkish Stream would remain uneco-

nomic without further sales elsewhere in Europe, hence

Moscow’s anxiety about the situation in Macedonia.

eTurkishStreamprojectbeganlifeasaneast–west

transcontinental pipeline under the name of South

Stream,whichwasdesignedtopassthroughBulgaria

en route to Serbia, Hungary, and Austria, where it

would connect to the main Europe an gas transmis-

sion network. A further link was planned to Italy vi a

Greece. South Stream was designed to carry 6.1 bn cfd

of gas to supplement a 5.3bn cfd pipeline known as

Nord Stream from Russia to Germany, which began

operation in 2010 and runs under the Baltic Sea. e

addition of South Stream to the Balti c route was meant

to eliminate entirely the 9.7 bn cfd exported to Europe

via Ukraine.

e ultimate aim of Turkish Stream is to carry the

same volumes as the original South Stream pipeline.

eonlyrmcustomersofar,however,isTurkeyand

Turkeyh as other options in future to supply its gas needs .

At present, Turkey imports about 98% of its natural

gas, of which just over 60% comes from Russia. e

remainder comes either by pipelinefrom Azerbaijan and

Iran or as liqueed natural gas (LNG). Ankara is actively

exploring the idea of importing from Kurdistan and

Iraq in future and has also announced plans to exploit

what are believed to be extensive shale gas deposits in

the Diyarbakir region of south-eastern Turkey, all of

whichislikelytomeanthatGazpromwillhavetosell

anyadditionalgastoTurkeyviaTurkishStreamata

discount.

© 2015 John Wiley& Sons Ltd