UPDATE 3: Gazprom says Turkish Stream construction to start in 2018

(Adds details in paragraphs 10–11, 17)

MOSCOW, Oct 11 (PRIME) -- Construction of Russia-led Turkish Stream gas pipeline will start in 2018, gas giant Gazprom CEO Alexei Miller told Rossiya 24 television channel on Tuesday.

“A start to the project implementation has been given. Under our plan, construction will begin in 2018,” he said.

Late on Monday, Russia and Turkey signed an agreement to build the pipeline, which will consist of two branches with a capacity of 15.750 billion cubic meters each. One of them is to supply gas to Turkey and the other to transit gas to the European countries through Turkey.

Under the agreement, the pipeline should be built by December 2019.

Gazprom will own 100% of the maritime stretch of the pipeline’s both lines and will fully finance its construction, Miller said.

The gas transportation infrastructure for the first line for supplies to the Turkish market will be built by Turkey’s Botas, and a joint venture will be set up to create transit infrastructure on Turkey’s territory for gas supplies to the European market, he said.

According to the Russia-Turkey agreement, Gazprom and Botas may invite other companies and raise external financing for the pipeline.

Miller also said that gas coming to Europe through the Turkish Stream pipeline will not compete with gas supplied through the Nord Stream-2 pipeline.

“That gas, which will go through the Turkish Stream to the European market, will not compete with our Russian gas, which will go to Europe through Nord Stream-2. These are completely different target markets, and of course supply volumes through Nord Stream-2 will be significantly higher,” he said.

According to the agreements between the countries, Russia will have the right to cancel construction of the pipeline’s second branch, but it will have to pay compensation, whose procedure and the amount will be defined by a further agreement.

If any disputes emerge between Gazprom and Botas and the two companies are unable to solve them in six months through consultations and negotiations, the dispute will be transferred to the International Court of Arbitration in Geneva.

Miller also said Gazprom plans to start negotiations on the Poseidon pipeline project, which could connect Italy to the Turkish Stream, with the European partners in November–December, Miller said.

“The Poseidon project has a status of a project of everyone’s interest. No doubt, of course, the position of the E.U. countries which will be the transit states is important,” Miller said.

“In particular, this applies to Greece and also to the countries recipient of Russian gas, and, importantly, I should say, the main thing is an agreement at the corporate level, because we should synchronize the creation of capacities on the side of Turkey and Europe.”

Poseidon is a project of the maritime part of the Interconnector Turkey – Greece – Italy (ITGI), with a capacity of 8–10 billion cubic meters. Edison and Greece’s DEPA own it on a parity basis.

Gazprom, Edison and DEPA signed a memorandum envisaging Russian gas supplies via Poseidon in February.

A representative for the Russian Energy Ministry told PRIME separately that Minister Alexander Novak met with his Turkish counterpart Berat Albayrak and discussed possible development of a gas transportation route from Russia to Greece.

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