White Stream can De-Monopolize the Turkish Transit of Gas to Europe

Political risks to Caspian gas transportation have emerged westward of the Caucasus in Turkey, where such risks were least expected. Azerbaijan has become the first gas-exporting country to experience those risks, stemming from Turkey’s position as a transit monopolist. Turkey’s AKP government is practically blocking the transit of Azerbaijani gas to Europe and slowing down the Shah Deniz and Nabucco projects’ implementation.

Consequently, Baku is now seeking alternative export solutions for its gas. Possible solutions include Russia and Iran overland, as well as the proposed White Stream pipeline across the Black Sea to Europe (EDM, October 21, 22).

White Stream, a private venture, had never deliberately been intended to bypass Turkey. However, it can now be seriously considered for carrying Azerbaijani gas directly to Europe, without recourse to the Turkish route. Activating the White Stream pipeline project at the European Union’s level would demonstrate that Turkey cannot and must not behave as a transit monopolist on Caspian gas to Europe. The proposed White Stream is integrated, along with Nabucco, since November 2008 in the E.U.’s strategy for a Southern Corridor for natural gas to Europe.

Addressing the Azerbaijani government’s recent special session on gas issues, President Ilham Aliyev mentioned the possible export of Azerbaijani gas across the Black Sea. He referred both to White Stream and to liquefied natural gas (LNG) as possible solutions, currently under consideration (www.day.az, October 17).

White Stream is being promoted by a consortium of several small companies in London, currently including the White Stream Pipeline and the Pipeline Systems Engineering companies. It is the first fully private gas pipeline project in any of the former Soviet-ruled countries. The goal is to export Caspian gas via Georgia, the Black Sea, and Romania to markets in E.U. territory (Reuters, October 19).

The White Stream line is projected to branch off from the international South Caucasus Pipeline (SCP; also known as Baku-Tbilisi-Erzurum, BTE), which presently carries Azerbaijani gas via Georgia to Turkey. The SCP (BTE) pipeline is expected to also carry Central Asian gas, via Azerbaijan and Georgia, into the Nabucco pipeline on Turkish territory. White Stream would, however, branch off in western Georgia with a 100-kilometer pipeline to Supsa on the Black Sea coast. The line would then run on the seabed for some 1,100 kilometers to a landfall point near the Romanian port of Constanta. Using Romania’s gas transmission system, White Stream gas can reach E.U. countries farther afield or be marketed through swap operations.

The plan envisages laying four parallel strings on the seabed from Georgia to Romania, each with a throughput capacity of 8 billion cubic meters (bcm) per year, for a total annual capacity of 32 bcm ultimately. Each string would involve a distinct stage in the White Stream project’s development, correlated with the availability of growing volumes of Caspian gas for export to Europe via Azerbaijan and Georgia. The steel tubes, at 26-inch diameter each, are to be laid in ultra-deep water, the maximum water depth exceeding 2,000 meters below the surface in the central part of the sea. The development company proposes to use the J-Lay barge method for laying the pipes on the seabed. Some of the company’s personnel had previously been involved with Italy’s ENI, which designed and laid Gazprom’s Blue Stream One pipeline, from Russia to Turkey, on the seabed of the Black Sea.

According to White Stream’s general manager Roberto Pirani, the project company hopes to sign a project agreement in 2010, complete the design work by 2011, obtain an investment decision by 2012, start construction work by 2013, and see the first gas flow through the first of four strings by 2016 (Zerkalo [Baku], October 20).

An earlier version of White Stream would have laid the seabed section from Georgia to Ukraine’s Crimea, where White Stream was to connect with the Ukrainian transit network. That version was proposed almost simultaneously, though separately, in 2005 by Ukraine’s Prime Minister Yulia Tymoshenko and the White Stream company. In that case, the undersea route would have been shorter, the waters shallower, the costs correspondingly lower, and White Stream gas could have been pumped to Europe using the spare capacities available in Ukraine’s gas transit pipelines. However, the risks of Russian interference with the project in the Black Sea seemed high; a subsequent transfer of Ukrainian transit pipelines into Gazprom’s control could not be discounted; and, following the January 2009 Russian-Ukrainian gas conflict, the idea of increasing the volume of gas transit through Ukraine seemed unappealing. The White Stream company apparently has chosen E.U. member country Romania as the partner in this project.

Azerbaijan, Romania, and Georgia are also considering LNG as a possible solution for the export of Azerbaijani gas via the Black Sea (www.day.az, October 17). This would involve liquefaction in a Georgian port and re-gasification in Romania’s Constanta port. The costs of this method as well as those of White Stream have yet to be calculated and compared.