Greece and Russia strike €2bn Turkish Stream pipeline deal

Russia and Greece have officially agreed to build the so called 'Turkish Stream' in Greece, with Moscow lending Athens the money to cover some of the project's costs.

The pipeline was announced earlier this year and will carry Russian gas to Europe by circumventing transit states such as Ukraine. It replaced the originally planned South Stream pipeline after Russian president Vladimir Putin publicly declared the project had reached a stumbling block due to Bulgaria's indecision on whether constructing the pipeline was in violation of EU regulation.

The deal for the new pipeline struck in St Petersburg today between Russian energy minister Alexander Novak and his Greek counterpart Panagiotis Lafazanis will see the Turkish Stream cross the Black Sea, arriving in Turkey and then passing westwards through Greece. Construction is due to begin in 2016 and be completed in 2019.

According to Novak the total construction cost of the pipeline in Greece will be around €2bn and he noted that Russia will lend Greece money which Athens will have to repay at a later date.

This comes as ahead of Monday's crunch meeting of Eurozone finance ministers which will aim to prevent Greece from defaulting on their repayment to the International Monetary Fund in less than two weeks. The Greek government and its creditors must reach an agreement to provide Greece with cash to make the repayment, but Greece's refusal to implement austerity measures is proving a major stumbling block in negotiations.

In response to EU concern over the budding relationship between Russia and Greece, Lafazanis dismissed suggestions that the project's purposes were to cause political dissent, insisting that the pipeline would play "a stabilising role" in the region.

"The realisation of the project is not directed against anyone and it will unite all regions through which it passes," Lafazanis said.

Russia and Greece will have shared ownership over the pipeline's Greek segment and according to Novak, the project's cost will be initially covered by Russian banks such as VEB Capital which will take over responsibility of managing Russia's end of the project.