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Gazprom starts construction of TurkStream

11/05/2017 | 2 min read
Header Gazprom

Russian energy giant Gazprom operates gas pipeline systems. Recent announcements of Gazprom state that the company began the construction on the Black Sea portion of the Turkish Stream natural gas pipeline last Sunday.

Recent announcements of Gazprom state that the company began the construction on the Black Sea portion of the Turkish Stream natural gas pipeline last Sunday. The pipeline, which has a total length of 1,100 kilometers passes through the Black Sea and reaches from Russia to the European part of Turkey. From there, Russian gas is supposed to be distributed to South European countries. The construction of the first pipeline will be completed by the end of 2019. After finalization of the second line, the two lines are capable of carrying 15.75 billion cubic meters of gas per year each.

TurkStream will complement the existing Blue Stream pipeline, which connects Russia and Turkey. In addition to that, TurkStream replaces the aborted project “South Stream”. This project was rejected due to a political crisis between the two parties after shooting down a Russian combat jet by the Turkish military. Therefore, TurkStream was postponed for two years.

With TurkStream Russia aims to not only reinforce its capacity to deliver gas to Turkey, but to also make it a transit country in place of Ukraine. This would remove the transit risk based on political quarrels between Russia and Ukraine.

Currently, the shares of Gazprom are trading around USD 4.61 (date: 11th May). Bloomberg analysts do assess a 12-month target price of USD 2.46 (date: May 11th) . Six analysts recommend BUY, four recommend HOLD and three recommend SELL. However, since the share’s performance depends on corporate-, industry- and economic-related conditions, investors should always consider the risk of their investments. Developments could turn out differently than expected by investors.

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