Russia has already awarded contracts for some phases of the Southstream construction

South Stream route change proposed by Turkey

Turkey wants Russia to change the route of the South Stream pipeline foreseen to carry gas from Black Sea to Europe to run through its territory as it fears Ukrainian supplies cut-off.

The 2,400km South Stream pipeline, expected to be delivering some 60 billion cubic metres of gas to the EU through Bulgaria by the end of this decade, will be discussed during the upcoming talks between the two countries taking place in Ankara next week.

The project, of which Russia hoped would cement its dominance over the European energy market, is currently facing difficulties due to the ongoing tension between the EU and Russia over the situation in Ukraine and Russia’s annexation of Crimea.

The European commissioner for energy, Guenther Oettinger, said in March that discussions with Russia over South Stream's regulatory approval in the European Union were on hold - a move underlining Europe’s efforts to wean itself off Russian gas.

For Turkey, the prospect of South Stream running through its territory presents a convenient solution for its growing demand for gas.

"We are open to assessing any request for the line to pass through Turkey's territory," Yildiz told reporters when asked about South Stream.

"It is said that there could be such a demand. If there is a request, we will consider it," said Yildiz, due to hold talks with Alexander Medvedev, deputy head of Russian state-controlled Gazprom, in Ankara on Monday.

As 12.5 per cent of Turkey’s gas supplies currently come from Russia through Ukraine, Turkey has grown concerned about the possible cut-off, with which Russia’s President Vladimir Putin has threatened if Ukraine (with the help of the EU) doesn’t pay for its growing gas debt.

To eliminate such transit risk for Turkey, Ankara proposes to have South Stream enter land in the Thrace region of northwest Turkey rather than Bulgaria, to avoid routing it directly from Russia into an EU country.

"That way Russia will be able to feed directly with the line the Marmara region of Turkey, which has the highest level of consumption," said an analyst, who declined to be identified.

The construction of a second Blue Stream pipeline, complementing an existing one that runs under the Black Sea from Russia to central Turkey, could also come onto the agenda soon, sources close to the matter said.

According to Gazprom, who leads the South Stream consortium, any extensive changes to the pipe’s route are unlikely at this stage, as it would require additional cost and delays. However, Gazprom declined to comment officially.

An alternative for Turkey could be suspending the line's extension from Bulgaria towards Italy and instead use its gas to supply western Turkey, a short distance south of its Bulgarian landfall.

Replacing Italy with Turkey as South Stream's final destination could make sense as Turkey's gas demand is rising while Italy's is falling.

"Turkey may overtake Italy as Gazprom's second-biggest customer in Europe after Germany within a decade, and the Turks have already requested an extension to Blue Stream, which brings Russian gas via the Black Sea to central Turkey," said an advisory source who works with Gazprom on European supplies.

Italian gas demand peaked around 85 bcm in 2005 and has since fallen to about 77 bcm, similar to levels last seen in 2000. Turkish gas demand has more than tripled since 2000 to almost 47 bcm, with further rises expected along with economic and demographic growth.

South Stream's plans for extension as far as Italy are already in doubt as one of Gazprom's main partners in the project, Italy's Eni, has said the future of South Stream has been put in question by the escalating dispute over Ukraine. The EU has also postponed clearing the project.

Besides Gazprom and Eni, the other shareholders in the project are France's EDF and Germany's Wintershall.

Russia has already awarded several contracts to build the conduit, especially in its offshore and Bulgarian sections, and Gazprom has said it would start laying pipes this autumn despite the crisis.

Bulgaria remains supportive of the project despite the official EU stance.

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