Hungary's MOL Joins Turkstream

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Hungary's MOL Joins Turkstream

Mon, 06/29/2020 - 11:32
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MOL Group headquarters (copyright by Shutterstock)
MOL Group headquarters (copyright by Shutterstock)

While Nordstream stutters on its way to Europe, Turkstream is proceeding apace:  Hungary's MOL announced last week that it would join the Turkstream pipeline consortium. The regulator approved a 10-year development plan that includes the construction of a new Serbian-Hungarian gas inter-connector, with a capacity of 6 billion cubic meters annually.

Turkstream avoided the fate of Nordstream 2 only because it was completed one month before the onerous U.S. sanctions against both pipelines came into effect.

While Turkstream is up and running with customers drawing supplies on 1 January of this year, it may be a mixed blessing, for it coincided with drastic changes in the European gas market, none of which augur well for Gazprom's European strategy:  precipitous drop in gas prices, weakened demand, heightened competition from other gas producing states like Azerbaijan and its Southern Gas Corridor pipeline as well as LNG shipments from Australia and the United States.

Turkstream arose when Russia pulled the plug on Southstream in 2014.  Southstream was Nordstream's original counterpart and with it Gazprom would have been able to supply most parts of Europe.   The economics of Turkstream will be closely watched as volatile market forces exact their toll.

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