The politics and economics of gas in the MoscowAnkara-Brussels triangle
Political tensions and economic crises have brought about new developments in gas pipeline strategies. South Stream is dead, but a new possibility -- Turkish Stream -- is now a reality despite significant political challenges. This project has drawn objections from Brussels, and Ankara recently also become quite skeptical. However, even with these challenges, the project -- in its restricted version -- is likely to go ahead despite announced delays In the mid-2000s, Russia began reconsidering its energy pricing and transportation policy in the former Soviet space. The Commonwealth of Independent States (CIS) summit in Kazan, Russia, in 2005 was an important turning point. Moscow made a strategic decision to switch to more “pragmatic” market-based energy relations with its neighbors, denying subsidized energy prices to governments it deemed “disloyal” to Russia. Another important change -- known as the “strategy of transit avoidance” -- was implemented in order to directly link Russian energy hubs and Moscow’s major clients in Europe, bypassing transit countries. The volume of oil in transit was significantly reduced after the construction of the two lines of the Baltic Pipeline System (BPS), allowing Siberian oil to be shipped directly from Russia’s ports in the Baltic to customers in Europe.
A reduction in the amount of gas delivered via Ukraine has also become an issue of strategic importance for the Russian leadership, which considers Ukraine’s gas transmission system the weakest link of Gazprom’s gas supply chain and also regards the country as an unreliable transit partner. Speaking on April 13, 2015, in Berlin at the “Europe and Eurasia: Towards the New Model of Energy Security” conference, Russian energy giant Gazprom’s CEO, Alexei Miller, said, “Ukraine’s gas transmission network -- used as a manipulation tool -- has explosive confrontational potential.”
A number of pipelines avoiding Ukrainian territory have been built since 2003. The Blue Stream -- a major trans-Black Sea gas pipeline with a transportation capacity of up to 16 billion cubic meters (bcm) per year -- has been carrying Gazprom’s “blue fuel” from Russia to Turkey since November 2005. Russia has also built the transBaltic Nord Stream pipeline. The first line of the Nord Stream pipeline was inaugurated in November 2011 and the second in October 2012. This offshore trans-Baltic gas pipeline linking Russia and Germany has allowed Gazprom to significantly reduce its transit via Ukraine.
In 2013, Gazprom set a post-2008 record in gas deliveries; the total volume of natural gas supplied