Tesla Versus Eastring: A Pipeline Battle Forming for the European Market

On August 18, 2015, an official from the Hungarian gas company, FGSZ, confirmed that the foreign ministers of Greece, Hungary, Macedonia and Serbia will meet in September to discuss their possible signing of a memorandum of understanding (MoU) on the construction of the Tesla pipeline from Turkey to Austria.  The foreign ministers will reportedly decide on the preparation of a feasibility study for the pipeline.  According to the Russian media outlet Vedomosti, a working group met on June 25 for drafting of a project proposal. 

As an extension of the proposed Turk Stream pipeline, the Tesla pipeline would transport Russian gas from Greece to the Baumgarten gas hub near Vienna.  With an annual capacity of 27 billion cubic meters (bcm) and a cost of $4.45 billion, the pipeline could be completed by the end of 2019, if approved by the participating countries.  If the plan receives a ‘‘‘green light‘ in September, a final investment decision is expected to be made in the first quarter of 2016, with construction beginning in 2017.  Officials are also discussing the possibility of a pipeline extension from Greece to Italy.  Tesla would secure Russia‘s ability to transport its natural gas to the European gas grid via Turk Stream, circumventing Ukraine, challenging the viability of alternative projects (such as the Southern Gas Corridor pipeline project that will bring Azeri and Central Asian gas to Europe) and strengthening further Europe‘s dependency on Russia for gas supplies.

Tesla will also, however, face competition from the Eastring pipeline proposed by Slovakia, Bulgaria and Romania.  If completed, this pipeline would transport gas from deposits in Romania‘s offshore rights in the Black Sea, Caspian Sea sources and the Middle East to the European market.  That said, Slovakia‘s Moscow-friendly Prime Minister Robert Fico has proposed that Eastring be connected to Turk Stream, a connection currently being enthusiastically evaluated by Russia.

In short, Eastring has the potential to kill, or greatly diminish, Europe‘s need for the Tesla pipeline.  It offers solid diversification in supply sources and the ability to accelerate Europe‘s exit from undue dependency on Russian gas, particularly countries like Bulgaria, presently laboring under a 95% reliance on gas deliveries from Moscow.  Slipping the Tesla noose would thereby deliver a severe blow to the viability of the Turk Stream line.