Richard Melson

November 2005

Russia Turkey pipeline

Russia’s Putin Goes to Turkey for

Opening of Blue Stream Gas Pipeline

Created: 17.11.2005 11:40 MSK (GMT +3),

Updated: 15:10 MSK, 1 hour 13 minutes ago


On Thursday, Nov. 17, Russian President Vladimir Putin went to Turkey, to take part in the official opening of Blue Stream gas pipeline that has been delivering Russian natural gas to this Black Sea neighbor since February 2003.

The Russian President will participate in the ceremony alongside Turkish Prime Minister Recep Erdogan and Italian Prime Minister Silvio Berlusconi.

Presidential aide Sergei Prikhodko was quoted by the Interfax agency as saying that so far Blue Stream is "the largest project of export deliveries of Russian gas".

The Blue Stream pipeline, the world’s deepest undersea pipeline, which stretches from southern Russia under the Black Sea to an area outside the port city of Samsun and then on to the capital of Ankara, was constructed by Russia’s natural gas monopoly Gazprom (, Turkish pipeline concern Botas and Italy’s Eni. The total cost of the project was $3.2 billion, including $1.7 billion allocated for construction of the marine section of the pipeline and compressor station on the Russian coast of the Black Sea.

Despite the fact that it was ready for operation in 2003, the Blue Stream pipeline was shut down for several months that year, because after construction was completed the Turkish side declared that it considered the price of Russian gas to be too high. "It was impossible for a long time to have a ceremony," said Necdet Pamir, former deputy manager of Turkey’s state-run oil and gas exploration company, referring to the pricing problems. "There was nothing to celebrate." Pamir was quoted by Associated Press.

Today’s inauguration of the gas project demonstrates Russia’s growing economic influence in Turkey and burgeoning ties. Erdogan has already met five times with Russia’s Putin since he was elected Prime Minister in 2002. This year mutual trade turnover between the two countries is expected to reach $15 billion and officials from two sides speak of bringing it to $25 billion. The economic ties are, in fact, so strong that a Turkish general once proposed that Turkey consider an alliance with Russia instead of the European Union, Associated Press reported. Turkey currently gets 60 percent of its natural gas and 20 percent of its oil from Russia.


Russia-Turkey gas

November 17, 2005

The Blue Stream gas pipeline


Russia--Turkey gas pipeline (the Blue Stream) is the unique

gas transmission facility which is unparalleled in the world.

Thousands of specialists from Russia, Italy and Turkey took part in its construction. Domestic materials and equipment, for first place Italian, German and Japanese, as well as some western manufacturers were involved in construction of the gas pipeline.

The Blue stream is intended for deliveries of the Russian natural gas to Turkey going under the Black Sea, avoiding third countries’ issues. The project presumes an additional new way of gas delivery from Russia to Turkey in contrast to gas transportation via the Ukraine, Moldova, Romania and Bulgaria being under operation for years. Deliveries of gas by the Blue stream pipeline will essentially raise reliability of gas supplies to Turkey to develop gas market and gas infrastructure of this country.

At a time of construction of the Blue stream pipeline the Gazprom’s strategic partner Italian ENI Company had vast experience in construction of sea gas pipelines and the world's largest pipe-laying fleet.

Construction of the Blue stream pipeline added new pages to the track record of gas transportation technology development. Many experts abroad doubted the mere feasibility of a gas pipeline construction at water depths down to 2,150 meters in aggressive hydrosulphuric environment.


On 15 December 1997, the intergovernmental agreement between Russia and Turkey was signed. Within the framework of this agreement Gazprom has concluded a commercial contract with Turkish firm Botas to supply 365 bcm of gas to Turkey by the Blue stream gas pipeline over 25 years.

In February 1999, a Memorandum of mutual understanding between Gazprom and the Italian ENI company on mutual participation in realization of the Blue stream project was signed.

On 16 November1999, Gazprom and ENI registered in the Netherlands, on a par, the Russian-Italian Blue Stream pipeline B.V. company. At present, this company acts as the owner of a sea section of the gas pipeline, including Beregovaya compressor station. Gazprom owns and the operates a land section of the gas pipeline.

On 23 November 1999, Blue Stream Pipeline B.V. company signed the contract with the Saipem, Buig Offshore S.A., Katran K companies and the Japanese consortium consisting of Mitsui Co. Ltd, Sumitomo and Itochu on designing, delivery of equipment and turnkey construction of a marine section of the Blue stream pipeline. On 20 December 2000, the contract came into force.

On 27 November 1999, an Intergovernmental protocol to the Agreement of 15 December 1997 was signed providing for the Blue Stream project, among other, tax benefits.

On 16 June 2000, after ratification of the Protocol by the parliaments of Russia and Turkey, it came into force.

In April 2001, all preconditions to start a full-fledged financing of the project were fulfilled. In May of the same year credit agreements under the project for a total sum of USD billion 1.7 came into force with first drawings carried out.

In February 2000, construction was started of a land section of the gas pipeline on the Russian territory.

In August of 2001, construction of the Beregovaya compressor station was commenced.

In September 2001 through August 2002, a tunnel under the Mare ridge was constructed.

In September 2001, construction of a sea section was begun. Castoro-8 ship was involved in construction of a two-line gas pipeline in the shallow waters near the Russian coast.

From October 2001 through May 2002 Saipem-7000 pipe-layer accomplished construction of a deep-water part of a marine section. In June 2002, construction of a marine section was completed.

In May through September 2002, construction of a tunnel under the Bezymyanny ridge was completed.

On 30 December 2002, at the Durusu terminal in Turkey a protocol on commissioning the starting complex of the Blue stream pipeline was signed. It has marked the fact that the Blue stream pipeline was ready to start gas supplies.


The Blue stream pipeline is 1213 km long. The gas pipeline consists of three sections:

Russia’s land section is 373-km-long going from the town of Izobilnoye, Stavropol area, up to the settlement of Arkhipo-Osipovka, Krasnodar area, and to the Black Sea coast;

Russia’s marine section is 396-km-long going from the settlement of Arkhipo-Osipovka of the Krasnodar area (Russia) up to the Durusu terminal located 60 kilometers off the town of Samsun (Turkey);

Turkey’s land section is 444-kilometers-long going from the town of Samsun to Ankara.

The Russia’s land section integrates the Stavropolskaya in the Stavropol area and Krasnodarskaya in the Krasnodar area compressor stations (CSs).

The marine section of the gas pipeline is integrated with the Beregovaya CS, the world's largest and unique in performance. It has a 150 MW capacity keeping gas pressure at 250 atm.

The Blue stream gas pipeline is constructed of pipes with different diameters: mainland section, 1400 mm, mountainous section of inland pipeline, 1200 mm, marine section, 610 mm.

The designed capacity of the gas pipeline amounts to 16 bcm of gas per year.

Under the contract natural gas supplies by the Blue stream pipeline is structured as follows: in 2003, about 2 bcm, in 2004, 4 bcm, in 2005, 6 bcm, in 2006,8 bcm, in 2007, 10 bcm, in 2008, 12 bcm, in 2009, 14 bcm and in 2010, 16 bcm.


The total cost of the Blue stream pipeline is USD 3.2 billion, including USD 1.7 billion to construct the marine section of the pipeline and Beregovaya compressor station.

For realization of the project Gazprom and Blue Stream Pipeline Company BV have signed a USD billion 1.13 loan agreement with the bank consortium consisting of Bank Kommerchiale Italiana, Mediocredito Centrale and Westdeutsche Landesbank Zhirocentrale.

USD million 627 have also been drawn for construction of the gas pipeline from the Japanese bank for International cooperation and the bank consortium headed by bank FUDZHI with participation of Japanese insurance company NEKSI/MITI for the construction financing.

The total sum of loan facilities drawn by Gazprom amounted to USD billion 1.7. This provided Gazprom with money to finance the marine section of the project construction and the land section of the project in part. Part of financial resources for a marine section of the Blue stream project was due to sponsors of the project of Gazprom and SNAM S.p.A funding, as well as loans in a sum of USD million 866 drawn under the SNAM S.p.A.’s guarantee. Gazprom provided the rest part of financing of the land section of the project construction due to debt recovery. In particular, in December 2000 Gazprom drawn for these purposes the medium-term facilities in the sum of Euro 250 million from the consortium of international banks led by Hipovereints Bank AG.

Gazprom managed to attract these funds under sharp decrease in investment rating of the Russian companies. In 2000, the Project Finance Magazine recognized Gazprom’s potential to attract financial facilities as the Project of the Year .

Technical features

Taking into account that more than 60 km of gas pipeline going through the Russian territory pass mountains and water depths of pipe laying via the Sea reaches 2,150 m in aggressive hydrosulphuric environment, technical innovations were applied to increase reliability of the gas pipeline.

They involve:

Current situation

At present, the Blue stream gas pipeline complex with annual capacity of 4 bcm was launched.

This complex consists of the gas pipeline in Russia, the first line of a marine section of the gas pipeline, Krasnodarskaya compressor station, gas treatment and dehydration station, and derrick platform at Beregovaya compressor station put in operation.

Construction works are continued at Stavropolskaya and Beregovaya compressor stations. Commissioning the Beregovaya compressor station is planned in the third quarter of 2003. Putting into operation of the Stavropolskaya compressor station is set for the first quarter of 2004.

Russia-Turkey gas

Gazprom Russia

November 17, 2005