Blue Stream
Blue Stream is a major trans-Black Sea gas pipeline operated by the Russian gas monopoly Gazprom that carries natural gas from Russia into Turkey. The pipeline was built with the intent of diversifying gas sources, according to Gazprom CEO Alexei Miller. By 2010, Blue Stream is expected to be operating at full capacity, delivering 16 billion cubic meters of gas per year. Total length of the pipe is 1213 km. The total cost of the Blue Stream pipeline came to $3.2 billion, including $1.7 billion spent on building its underwater segment.
The pipeline has not been a financial success. Since Turkey is a monopsony, it can dictate, to a large extent, the terms of purchase from Gazprom. Gazprom has made several concessions to the Turkish government, substantially cutting into its expected revenues.
In late August 2005, Vladimir Putin and Tayyip Erdoğan discussed building a second line, or an expansion of the Blue Stream line.
Political background
Building the Blue Stream pipeline was intended to be the foundation for a "strategic partnership" between Russia and Turkey, with joint participation in oil, energy, and transport projects. The political decision to sell Russian gas to Turkey was made in December 1997, when the two sides signed a corresponding inter-governmental agreement in which Russia undertook to supply 364.5 billion cubic meters of gas to Turkey between 2000 and 2025. The existing gas transit route went through Ukraine, Moldova, Romania, and Bulgaria. But this land route made the gas substantially more expensive, and there were continual reports of gas being illicitly siphoned off while being transported through Ukraine and Moldova. Russia considered that these problems could be solved by building a pipeline across the Black Sea floor.
The construction of Blue Stream was accompanied by environmentalist protests; but these had no significant effect, since the official environmental impact assessment found no transgressions.
Meanwhile, some Russian economic analysts objected that building a pipeline to Ankara meant tying Russia to a monopolist consumer, and Turkey was not a reliable partner.
One of the political goals of the Blue Stream project was to block the path of rival countries aiming to use the territory of Turkey to bring gas from the Middle East and Caspian area to Europe. In November 1999, the presidents of Turkmenistan, Turkey, Azerbaijan, and Georgia signed a four-party inter-governmental agreement on building a rival Trans-Caspian gas pipeline. Within a few months, major oil companies - General Electric, Bechtel, Royal Dutch Shell - had established a joint venture to work on the competing project. But Turkey was only interested in one pipeline project. By spring 2000, however, an argument had arisen among the Trans-Caspian participant nations over allocating quotas for Azerbaijan's use of the pipeline; as a result, all construction work was halted. Thus, Blue Stream won the battle for the Caspian.
In the lead-up to Blue Stream's opening ceremony, the United States publicly criticized the pipeline, calling on Europe to avoid becoming any more dependent on Russia for energy.
References
- Oksana Gavshina, "The Turkish Gambit", Nezavisimaya Gazeta, November 21, 2005