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Possible Pipeline from Turkey to the European Union

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Jan. 23 2016, Updated 6:06 p.m. ET

Possible pipeline from the Middle East to Europe

Western Balkan countries like Albania, Croatia, Slovenia, and Montenegro could play an important role in the European (FEZ) gas market. These countries connect Italy through the Adriatic Sea, Hungary, and Austria by land. Slovenia also connects to Italy by land.

The above map shows the importance of these countries as a transit route for gas pipelines that could originate from the Middle East.

The TANAP (Trans-Anatolian natural gas pipeline) originates from the Azerbaijan gas fields. The pipeline is under construction. In the future, it could connect to countries in the Middle East like Iran, Iraq, Saudi Arabia, and Qatar. The European markets account for a significant portion of Russia’s (RSX) natural gas exports.

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The dotted line on the map represents the new “silk route” for gas suppliers from the Middle East to Europe (FEZ). The TAP (Trans Adriatic pipeline) is also under construction. It will act as a transit route between TANAP and the dotted line on the map. TANAP, TAP, and the dotted line could reduce Europe’s dependence on Russia’s gas pipeline network. BP (BP) and Statoil (STO) both have a 20% shareholding in TAP.

Other Balkan states could hinder these gas pipelines from connecting the Middle East to Europe. Alone, countries like Bulgaria and Greece can’t support the gas pipeline project from the Middle East. The pipeline also has to pass through Serbia and Romania. Serbia is one of Russia’s old allies. Other countries that share either land or water boundaries with Russia may not want to get involved in any controversies regarding natural gas pipelines.

Bosnia and Herzegovina lie between Croatia and Montenegro. They want to join NATO. In the future, this could be a green light for the gas pipeline network. Albania, Croatia, and Slovenia are already members of NATO. The above developments may signal a direct threat to Russian gas exporter Gazprom PAO (OGZPY).

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