New opportunities for US LNG to gain Greece-Turkey-Ukraine Gas Corridor

New opportunities for US LNG to gain Greece-Turkey-Ukraine Gas Corridor

August 22, 2019 | Budapest LNG Summit | news

Moscow’s long standing regional dominance regarding LNG supply to Europe may come to a halt. Whilst the world focuses on the Russian / American fight for market share,  –hence the decade low prices– under-reported changes are afoot in southeast Europe that can help to ease the geopolitical pressure and establish a bidirectional north-south corridor linking Greece and Turkey to Ukraine along the Trans-Balkan pipeline.

Russia’s two gas pipeline projects—Nord Stream 2 and TurkStream— are the quest of the day, but the US influence and interests implemented through the new corridor, placing Ukraine in the hot-seat might just bring on a new outlook in the Eurasian sphere.

The south-bound corridor has been the main artery for gas shipped from Russia to Bulgaria, Greece, the Republic of North Macedonia, and Turkey across Ukraine, the Republic of Moldova, and Romania for more than three decades. The Ukrainian incumbent Naftogaz and Gazprom’s long term contract vouched for that, but it’ll expire at the end of this year. Moscow’s aim is to introduce a new route and to divert current exports to TurkStream 1 and 2, freeing up the Trans-Balkan pipeline.

Realizing the long-awaited opportunity to tap LNG and transport fuel from south to north, the US is keen on seizing the market interest, energy partnership of Greece and Turkey, triggering unprecedented transformations in the region’s gas dynamics.

Technically it is not easy to reverse flows. The participants would need to boost compression, upgrade metering stations, and align transmission and cross-border trading rules. The costs are relatively small, yet the time to implement such changes is quite short and the willingness of the countries involved to take those steps and make those changes become a reality are questionable.

Southeast Europe and Turkey have witnessed some of the most dramatic gas sector changes in recent years, especially this year. Within Turkey’s rising share of LNG imports, US deliveries have been soaring. Traditionally, Russian pipeline gas covered more than half of Turkey’s needs, but recently it is on par with the LNG off-takes, 0.9 bcm of that was US- sourced LNG in the first four months of 2019. It is double the volume of US imported LNG throughout the whole of 2018, making Turkey become the second largest US-sourced LNG importer of Europe, right behind Spain, the winner for this year.

Neighboring Greece has not just received a US-sourced LNG cargo for delivery to Bulgaria for the first time ever in June, but also expanded its importing capacity.Definitely signs of the country’s willingness to go along with US plans of revising the energy map of Europe.

Bulgaria, now an EU member but ex-communist country that almost entirely depended on Russian gas until recently, has been able to diversify supplies with US-sourced LNG arriving through its Greek interconnection point. The interconnection capacity between the two countries is set to rise further in 2020 when the 3 bcm/year Interconnector-Greece-Bulgaria (IGB) will be commissioned and linked to the Alexandroupolis terminal in northern Greece.

Russia’s TurkStream 2, a pipeline of equal capacity, is expected to carry gas to Hungary via Turkey, Bulgaria, and Serbia. However, there are indications that the project—which will rely on existing infrastructure, some of which is part of the Trans-Balkan line, as well as new pipelines built inside Bulgaria—will be delayed at least until 2021 due to ongoing legal issues.The high cost of the construction and later of the gas to be delivered are not negligeable either. The milestones reached and dynamics currently shaping up are only the beginning of a wider regional transformation that could see LNG reaching markets as far north as Romania, the Republic of Moldova, and Ukraine if transmission capacity is made available on the Trans-Balkan pipeline.

With import and transit capacity expanded in Turkey and Greece, and Ankara looking to sign an interconnection agreement with Sofia to allow Turkish exports, LNG could reach the entire region as early as January 1, 2020.

Based on

by Aura Sabadus