The developments of the Turkish Stream makes clear that Russia is ready to make some important concessions in exchange of support for Russia’s geopolitical position. While Gazprom is confirming its role of a foreign policy instrument of Putin, since it often acts against its economic interests in order to maintain the governmental line. After having renounced to the South Stream project to launch an alternative one through Turkey, Russia is facing problems to reach a final agreement on Turkish Stream with Botas. Russia promised a 10,25% discount on gas for participation in the project, but Turkey must be waiting for further concessions. Russia definitely needs this project more than Turkey at least in the short run. Its realization is fundamental for switching gas transit from the Ukrainian territory, which Gazprom is planning to complete by 2020, when the russo-ukrainian transit agreement expires. Moreover, Ukraine itself is planning to stop importing gas from Russia, hoping to compensate these volumes by the reverse flows from the European countries like Slovakia as it actually did this winter.
According to the Turkish Stream project, Russia will deliver gas to the hub at the border with Greece, but the European partners are not eager to construct new infrastructure to buy russian gas at the greek border. This fact made Russia’s position less uncompromisable as Vladimir Putin during his visit in Hungary made it clear that Russia is open to the discussion and is basically ready to realize a project almost identical to the South Stream one, which means construction of gas pipeline in South-East Europe on Gazprom’s expenses but with support of Hungary. In turn Gazprom agreed on making an exception for Hungary that will allow it not to pay 3 billion euros for the gas it did not take, which is contrary to the take-or-pay system, adopted for the export of Russian gas in Europe.
Gazprom already lost $5-6 billion cutting gas supply to Europe last year to prevent its reverse supply to Ukraine, all this made Gazprom an unreliable supplier in the eyes of European consumers and made Europe search alternatives to the Russian gas, now it imports two times less of the Russian gas than back in 2009.
At the same time, Russia is urgently looking for buyers elsewhere, often on less favorable economic conditions.