Natural gas in Russia

The latest diplomatic crisis with Russia, which started when a Russian airplane was downed by Turkey on Nov. 24, has exposed many significant points about the fragility of the situation in the region. One of the most crucial points that this crisis has shown is Turkey's urgent need to diversify its energy sources. 

Russian Energy Minister Aleksandr Novak on Thursday announced that the Turkish Stream natural gas pipeline project negotiations have been suspended.

TASS quoted Gazprom CEO Alexei Miller as saying earlier in the day:

Bulgaria said on Wednesday that supplies of Russian natural gas to the country and the volumes for transit to its neighbours are flowing normally - several hours after Russia said it has stopped supplying gas to Ukraine.

Bulgaria, which is almost entirely dependent on Russia for its gas imports, receives them via a transit pipeline crossing Ukraine and Romania.

Gazprom has cut in half the planned capacity of its Turkish Stream gas pipeline project, Interfax reported.

"We will certainly pay great attention to the southern direction [of gas flows] in our strategy of diversification of transport routes," Gazprom CEO Alexey Miller told reporters on Tuesday, according to the Russian news service.

Russia's Economy Ministry said on July 28 it expected gas production at Gazprom to decline to 414 billion cubic metres (bcm) this year, an all-time low, due to sluggish demand and a decline in upstream investments.

Gazprom has told pipeline makers to suspend deliveries of pipes for expanding Russia?s network to be connected to the proposed Turkish Stream project, an industry source said on July 6.

The delay is another snag in Moscow?s plans to build a gas pipeline via the Black Sea to Turkey, and on to south Europe in order to bypass Ukraine.

Turkey and Russia's Gazprom are likely to finalize a deal on natural gas prices by mid-July, Turkish officials told Reuters, after Ankara warned last week it could seek international arbitration if they failed to agree.

Gazprom halted gas deliveries to Ukraine on Wednesday and said it won't resume supplies until Kiev makes a pre-payment.

Ukraine announced on June 30 the immediate suspension of all Russian gas purchases after EU-mediated negotiations aimed at keeping supplies running for at least three more months broke down.

Ukraine's state-owned utility Naftogaz has said it will stop purchasing gas from Russian energy giant Gazprom as of July 1, until a pricing dispute has been settled.

Kiev maintains the price of USD 247 per 1000 cubic meters currently proposed by the Russian concern is not acceptable, and that the rate should be slightly above USD 200.