Bečarević: Two-step/three-step for gas from Azerbaijan

By: Almir Bečarević

This situation with TurkStream and Milorad Dodik's interest in gas from Azerbaijan is interesting. At first glance, everyone would think it's about the IAP (Adriatic-Ionian gas pipeline), but that's only at first glance because BiH is not on the route of that gas pipeline at all. The route was determined more than 10 years ago and passes through Albania, Montenegro, and Croatia, while BiH has only a planned branch from this gas pipeline, a connection from the south, known as the Southern Interconnection.

Now, a bit more about Dodik's interest and the real reasons for gas from Azerbaijan.
TurkStream was built as an alternative for transporting Russian gas instead of the route through Ukraine. Ukraine has a contract with the Russians for gas transport until 2024, and there are indications that the contract will not be extended.

For Hungary, Serbia, BiH, and other southern countries, only TurkStream remains. TurkStream has a hourly capacity of 1.6 million Sm3. Hungary is already drawing 1.0 million Sm3 from TurkStream. Hungary's annual gas needs are approximately 9.0 billion Sm3, which corresponds to the current hourly consumption.

In the event that Hungary contracts all its quantities solely through TurkStream and solely from Russia, it corresponds to an hourly quantity of at least 1.0 million Sm3. Serbia draws its quantities entirely from TurkStream, which is an average hourly consumption of 350,000 Sm3. In the winter period, due to significant consumption in the residential sector, hourly capacities increase to up to 600,000 Sm3.

This practically means 1.0 million Sm3 for Hungary and 600,000 Sm3 for Serbia, and the TurkStream gas pipeline is full. For these reasons, there is a frantic search for gas from Azerbaijan or Greek LNG terminals. That's why Croatia is increasing the capacity of its KRK LNG terminal.

In FBiH, they are still practicing a two-step/three-step approach, while serious energy countries are preparing for what is coming. Serbia is completing the interconnection with Bulgaria, and only gas from Azerbaijan will flow through that pipeline. IAP, even if all countries finally agree, cannot be built even in 5 years starting from today, because there isn't even a project for that gas pipeline.

The Bulgaria/Serbia interconnection will, to some extent, relieve TurkStream, but everyone wants gas from Azerbaijan now. Dodik wants it, Vučić wants it, Bulgaria wants it, Hungary wants it, and when Nurkić scores, perhaps our people will finally understand when they see what's left of Russian gas in Europe and of the former transport pipelines. As things stand, TurkStream remains, and in terms of diameter compared to old gas pipelines to Europe, it's a village pipeline.

Orban, Erdogan, Aliyev, Vučić, Dodik are the group that understands what is happening with Russian gas and transport routes. It should be said here honestly that Denis Bećirović also opened this possibility with Mr. Aliyev, but who is interested in that in FBiH. IAP requires years, and TurkStream can be filled to its full hourly capacity this winter, and then there won't be enough gas for everyone.

There are gas storage facilities, but that costs money, and therefore gas from Azerbaijan is something that everyone will need. The KRK LNG terminal can be significant for the region as well, and the Bulgaria-Serbia connection should be filled with gas from Azerbaijan starting next year.

The meetings in Hungary were also about gas and preparations for what is to come, and Hungary has taken the first step in deciding to take all quantities from Russia via TurkStream. Here, we are discussing what Dodik wants, while the real question is what we want. As always in energy, it's just a two-step/three-step approach, and then if Nurkić scores. Apologies to Nurkić, but I couldn't find a better association.