Turkey and Gazprom fail to agree on price

Russia’s state-run gas monopoly, Gazprom the offices of which were searched last week in Europe, has received unpleasant news. Turkey rejected to extend an agreement on natural gas supply via the western route. This concerns the supply of almost 6 billion cubic meters of gas. Officially, the step was taken for economic reasons. The two sides failed to agree on a new price for the next year. However, analysts say that Turkey is trying to put pressure on Gazprom in order to please its bid to join the European Union.

The Turkish authorities have stuck to their ultimatum issued in the middle of last week. Ankara said that the state-run company Botas would not extend one of the contracts with Gazprom for 2012. This concerns an agreement signed in 1986 under which Gazprom supplied gas to Turkey via the Tran-Balkan route that passes through Ukraine, Moldova, Romania and Bulgaria. Last year, Ankara bought 6 billion cubic meters of gas under this agreement. The two sides signed three contracts to supply 18 billion cubic meters of gas to Turkey, more than 40 percent of gas consumption in the country. The major share of gas was supplied through the Blue Stream pipeline laid on the Black Sea floor.

As the time approached for extending the contract, Turkey demanded additional discounts. Interestingly, it has received gas at a price about 30 percent cheaper than that in European countries. In these circumstances, it’s logical that Gazprom dismissed the demand, says a senior expert at the Institute of Energy and Finance, Sergei Agibalov.

“What is happening in Turkey is quite similar to anti-Gazprom background in gas consuming European countries. All are interested in reviewing prices which are very high now. They have joined to make this demand together,” Sergei Agibalov said.

Formally, Turkey has left space for retreating. Turkey’s Energy and Natural Resources Minister Taner Yildiz said that individual companies could conclude agreements with Gazprom independently without the involvement of the government. On Monday, Gazprom said it was ready to sell the given 6 billion cubic meters of gas to new partners.

This means that Ankara is simply changing the scheme of receiving gas. However, the question is whether this reshuffling is sensible or not. General-director of the National Energy Security Fund, Konstantin Simonov believes that the real reasons are hiding in politics.

“Turkey is playing a serious political game and exerts pressure on Russia. It wants to get money from Russia to build the Samsun-Ceyhan oil pipeline and sell highly its approval for the construction of the South Stream pipeline through its territorial waters. Frankly speaking, Turkey has always tried to reap benefits and blackmail its partners. Russia’s European partners are also facing a similar situation because Turkey is well aware that all potential pipelines should pass through its territory, including South Stream, Nabucco, TIP and TGI,” Konstantin Simonov said. 

The supply of gas to Turkey has been discussed more than once at the level of the government and the Russian President. The two sides will have to reach an agreement at the highest level by taking into account that the future of the South Stream project depends on Ankara.

The Voice of Russia, October 3, 2011