(Bloomberg) -- Russia is one step closer to tightening its natural gas grip on Turkey and southern Europe just as the U.S. aims to curb the expansion of Kremlin-backed energy projects.
President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan will celebrate Monday the completion of the 930-kilometer (578 miles) underwater part of the TurkStream dual pipeline, which is set to transport Russian gas across the Black Sea to Turkey from next year. It may even stretch further, to the southern borders of the European Union.
The two leaders will meet in Istanbul and watch via videolink the pipeline being completed on Turkey’s coast, according to a statement on the Kremlin’s website.
Completion of TurkStream’s underwater section comes as the U.S., itself an emerging gas supplier to Europe, opposes Gazprom PJSC’s pipeline projects, claiming they hurt the EU’s energy security.
While the U.S. administration hasn’t threatened specific sanctions against TurkSteam -- rather focusing on Gazprom’s other major pipeline project Nord Stream 2 -- the Kremlin does not rule out some U.S. restrictions on the Black Sea link.
“The United States adopts those measures in such a way that nobody is insured against them,” Putin’s spokesman Dmitry Peskov told reporters Monday ahead of the president’s visit to Istanbul.
TurkStream will help Gazprom reach two strategic goals: reducing dependence on transit routes via Ukraine and increasing its market share in Turkey, a top-three buyer of Russian gas and the largest market in southeastern Europe.
With the launch of the first line, Russian yearly gas supplies to Turkey will rise by as much as 54 percent -- or 15.75 billion cubic meters -- and secure Gazprom’s place in the region’s most enticing market. Last year, the Russian giant sent 29 billion cubic meters of natural gas to Turkey. The volumes were split evenly between supplies transiting through Ukraine and via the offshore Blue Stream line completed 15 years ago.
Turkey was the top gas consumer in southeastern Europe last year, according to data from the Oxford Institute for Energy Studies. The country’s demand reached 53.6 billion cubic meters, a rise of more than 15 percent on the previous year.
Once TurkSteam comes online, Gazprom aims to cut shipments via Ukraine, which remains the main transit route for Russian gas despite a standoff with the Kremlin. Last year, around half of Russian gas exports outside the former Soviet Union was transported through Ukraine.
TurkStream consists of two lines running together underwater. Turkey needs to complete the onshore part of one of the links in its country for Russian gas to start flowing to its market. If an agreement is reached with the EU on transporting gas supplies via TurkStream, Gazprom and its Turkish counterpart, Botas Petroleum Pipeline Corp., will jointly build the second onshore line also with the annual capacity of 15.75 billion cubic meters.
It remains unclear if and where the new Russian gas flows may enter the EU. Russian Energy Minister Alexander Novak recently outlined two options: Bulgaria with further supplies in the direction of Austria, and Greece with deliveries toward Italy, adding that the Bulgarian route “has a higher priority.” Yet strained political relations between Russia and the EU create uncertainties for the expansion.
(Updates with Kremlin spokesman’s comments in fifth, sixth paragraphs.)
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