President Vladimir Putin’s plan to make Turkey a hub for Russian gas may allow Moscow to mask its exports with fuel from other sources, but it may not be enough to convince Europeans to buy, analysts and sources cited by Reuters said.

Russia supplied 40% of the European Union’s gas needs until February 24 when Moscow sent tens of thousands of troops to Ukraine as part of what it calls a “special military operation.”

Since then, the West has imposed harsh sanctions, particularly on Russian oil and gas, reduced purchases of Russian fuel and is looking for alternatives.

After explosions, the cause of which is under investigation, damaged Russia’s Nord Stream gas pipeline system to Europe under the Baltic Sea, Russian President Vladimir Putin proposed in October to create a gas hub in Turkey on the southern route for exports.

Without going into specifics, Putin said the hub could be set up relatively quickly in Turkey and predicted that customers in Europe would want to sign contracts.

There has been no public commitment to this yet, and analysts say it will take investment and time.

“Does Europe need the project, given the decision of EU countries to abandon Russian gas in the near future?” asked Oleksiy Gromov from the Foundation of the Institute of Energy and Finance in Moscow. He also said that it would not be possible to change the configuration of gas flows within the European Union because there are no existing connections to the proposed northwest European hub, which previously supplied gas via Nord Stream 1.

Gas and pipeline capacities are still available. Russian exports to Europe have fallen 43.4 percent this year, and the Turkish Stream gas pipeline to Turkey is operating well below its annual capacity of 31.5 billion cubic meters (bcm).

Zongqiang Luo, a senior analyst at Rystad Energy, estimated that about 60 percent of the pipeline’s capacity is idle after exporting about 10.6 billion cubic meters of gas this year through Nov. 21.

Rystad’s Luo estimated that it would take at least three to four years to build the necessary expensive new infrastructure.

“Even if it is possible to build a new gas pipeline, who will buy that gas?” he asked.

Others believe that buyers will be found. A source at Russian gas exporter Gazprom said the hub would help sales. It will not be Russian gas, but the only hub gas,” said a source who did not wish to be named due to the sensitivity of the issue.

China, which overtook Japan to become the world’s largest importer of liquefied natural gas (LNG) in 2021, is already reselling Russian LNG that was not labeled as “made in Moscow,” a trade source in Europe said.

He said that buyers in southern and eastern Europe may not care where the LNG comes from.

Noting that Europe has not embargoed Russian gas, unlike oil, Oleksandr Gryaznov, director of S&P Global Ratings, said Europe may be willing to buy from Moscow through intermediaries.

“Europe is unlikely to want to enter into direct contracts with the Russian Federation, and buying free volumes on the Turkish spot market will be politically acceptable,” he said, adding that it would take time and money to create a hub.

Oleksiy Hrivatsi of the Moscow-based National Energy Security Fund said the hub opens up opportunities for trade.

“If the hub becomes operational, it will open up huge opportunities for all kinds of swap operations,” he said.

Source: news.ro