Russian flows to Europe via TurkStream hit second-highest monthly level

Russian gas supply in July via the TurkStream pipeline to southeast Europe reached the second-highest monthly volume level since the pipeline began operations, an analysis of S&P Global Commodity Insights data showed Aug. 2.

Russian gas deliveries via TurkStream into Europe at the Strandzha 2 entry point on the Turkey-Bulgaria border totaled 1.41 Bcm in July, averaging 45.5 million cu m/d, as Russian gas demand in the region remained strong.

It was the highest total since August 2023 when deliveries -- which began in 2020 -- hit an all-time monthly high of 1.43 Bcm.

Russian deliveries into Europe by pipeline are currently limited to flows via the European string of TurkStream and through Ukraine, entering at the Sudzha point on the Russia-Ukraine border.

Total pipeline flows to Europe, excluding Moldova, hit a year-to-date high of 2.52 Bcm in July, up 15% from June -- when TurkStream underwent annual maintenance, reducing flows to zero for five days-- and up 11% year on year.

Two of the main beneficiaries of gas via TurkStream are Hungary and non-EU Serbia, both of which maintain relatively close ties with Moscow.

Hungary, one of the few EU countries still importing significant volumes of Russian pipeline gas, agreed to a 15-year deal with Gazprom in September 2021 for the supply of 4.5 Bcm/year and also imports additional volumes, with total Russian gas exports to Hungary in 2023 exceeding 5.5 Bcm.

Russian gas via TurkStream can also be delivered to Romania, Greece, North Macedonia and Bosnia and Herzegovina.

Ukraine transit

Russia's Gazprom continues to export gas to Europe via Ukraine despite the ongoing war, with deliveries stable so far in 2024 at around 42 million cu m/d, including deliveries to Moldova.

However, the five-year gas transit deal between Russia and Ukraine is due to expire at end-2024, affecting several countries that still import Russian gas via Ukraine, with Austria and Slovakia the most impacted.

Austria's OMV has been emphatic in saying it will not look to sign any new transit contract for Russian gas deliveries.

On July 31, OMV CEO Alfred Stern said the company's contract with Gazprom designates the Slovakian-Austrian border as the supply location when asked about potential outcomes when the Ukraine transit deal expires.

"We continue to assume that the contractual handover point will be that border crossing point," Stern said. "We will not make a transit contract through Ukraine but insist on the contractually agreed supply location."

According to Stern, OMV is prepared for any interruption in Russian gas supplies.

In May, Slovakia's SPP told Commodity Insights that it considered the creation of a European consortium to take delivery of gas at the Russia-Ukraine border as "feasible" to ensure continued supplies of Russian gas via Ukraine post-2024.

SPP said there are "several alternatives" for how the situation could develop before the Russia-Ukraine gas transit contract expires.

"One of them is the continuation of gas transit via Ukraine, in the event that a consortium of European countries takes over the ordered gas supplies from Gazprom on the Russian-Ukrainian border," SPP said. "This possibility seems feasible to us."

In comments to Commodity Insights on May 24, Hungary's MVM expressed support for "any solution which contributes to the security of supply of Hungary".

According to Platts price assessments by Commodity Insights, gas for January 2025 delivery is currently the most expensive delivery period for the Dutch TTF.

Platts assessed the January 2025 TTF at Eur41.27/MWh compared with a day-ahead assessment of Eur36/MWh Aug. 1, Commodity Insights data showed.

Azerbaijan role

Azerbaijan has also been approached by Kyiv and the EU to help facilitate the potential extension of the Russia-Ukraine deal, President Ilham Aliyev said July 20.

Aliyev said Baku was also in talks with Russia regarding future gas transit via Ukraine.

"We've been approached by Ukrainian authorities and the EU to facilitate in prolongation of this contract," Aliyev told delegates at the Global Media Forum in Shusha, Azerbaijan. "It seems that both sides are interested in that."

According to Aliyev, "We are also in the process of negotiations with Russia on this matter. If we can help, we will. I think that it is possible to prolong this deal."

Aliyev said without Russian pipeline flows via Ukraine, countries such as Austria and Slovakia "would be in serious trouble".

"Either they will have to pay hundreds of millions more to get gas from other sources or physically they will have no access to additional gas," Aliyev said.

Russian gas deliveries to Europe via Ukraine totaled 14.65 Bcm in 2023, falling 28% year on year and down 65% versus the same period in 2021.