A Gazprom deal to export natural gas to private companies in Turkey for 30 years indicates a change of strategy for the Russian gas monopoly, Gokhan Yardim, gas expert and former CEO of Turkey's state gas company Botas, told New Europe on 29 November. He highlighted that this is not a deal between Gazprom and the Turkish government or state companies but it is completely between the Russia state giant and private Turkish companies.
“Gazprom knows that they cannot do a long-term agreement with the state company so they prefer to make a deal with the private companies for 30 years,” Yardim said.
At the end of 2011, Turkey's state giant Botas did not renew an expiring 25-year contract due to a pricing dispute. “The Botas contract was extended for one year to take the ‘make up’ gas and after that there is no contract. The government, considering the shortage of the gas in the coming years in Turkey, said that the companies can make a deal with Gazprom,” Yardim said.
On 26 November 2012, Turkey's energy market regulatory authority gave private energy companies Akfel, Bosphorus and Kibar 30-year licences to import 6bn cubic metres of gas per year from Russia's Western Line pipeline. The fourth private company - Bati Hatti – will import Russian gas over 23 years. The four companies had previously agreed with Gazprom to import 6bn cubic metres of gas a year on the Western Line, which runs through Ukraine, Romania and Bulgaria to Turkey, with an annual capacity of 14bn cubic metres.
The agreement is very important for Gazprom. Turkey has always been a significant partner for Gazprom and it’s the Russian company’s second-largest gas consumer. Turkey is also likely to become an energy trading hub, capitalising on its increasing gas needs and proximity to cheap natural gas resources and European markets.
It’s no coincidence that Russian President Vladimir Putin chose Turkey as his first journey abroad in nearly two months following a mysterious back injury that forced him to postpone numerous foreign trips. On 3 December, Putin will travel to Istanbul where he will meet Turkish President Recep Tayyip Erdogan.
Turkey is a growing market for Gazprom as it faces declines from its core consumers in the EU. The Russian gas giant is also facing a European Commission antitrust probe, which is seeking to determine whether Gazprom abused its dominance in central and eastern European markets.
Yardim said Gazprom’s new strategy is to strengthen its position in Turkey. “It’s against the European Union but Turkey is not a member. It’s underway to become a member so Gazprom uses the advantage of Turkey’s position,” he said.
Meanwhile, Akfel, Bosphorus, Kibar and Bati Hatti will pay a lower price than the Turkish state company Botas paid for Russian gas. “For Botas the price is high but for the private companies the price is low,” Yardim said, adding that the Turkish private companies will benefit from reduced gas prices up to 40%. “This is a win-win situation for Turkey and the Russian Federation,” the former Botas CEO said, adding that Russia gets a guarantee that Turkey will buy its gas for 30 years and Turkish private companies get a lower price.
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