What will Turkey's refusal from importing Russian gas bring?

The refusal of Turkish Botas State Pipeline Company to extend the contract with "Gazprom" on supply of six billion cubic meters of gas per year will create conditions for fulfillment of contractual obligations on imports of gas, undertaken before Azerbaijan.

Last week Botas informed Gazprom that it will end its contract with the Russian energy giant for the delivery of natural gas to Turkey via the western route. The Turkish company's letter says that Russia has failed to take steps that would satisfy the Turkish side. Proceeding from this, Botas has officially informed Russia that it will not extend the agreement. Turkey had insisted on a 20 percent gas price reduction.

Turkey is the second largest importer of Russian supplies of hydrocarbon resources. Along with the western route, it gets gas via Blue Stream pipeline.

Turkey has three contracts on gas supplies with Russia. The contract signed with Russia in 1986 to supply six billion cubic meters gas expires in December. Turkey also has two contracts with Russia to supply 16 and 8 billion cubic meters of gas annually, signed in 1997 and 1998. At the same time, Turkey has an obligation under a contract signed with Azerbaijan in 2001 for the supply of gas within the first phase of development of Shah Deniz gas-condensate field.

Despite that the contract envisages supply of 6.6 billion cubic meters of gas from Azerbaijan to Turkey per annum, the Turkish side is not getting these volumes. In particular, last year Turkey received about 4.36 billion cubic meters of Azerbaijani gas under the contract.

An important factor is that Azerbaijan and Turkey are now on the verge of concluding a package of gas contracts. The package includes contracts for the supply of gas within the first and second stages of Shah Deniz field development, and the achievement of the transit agreement, which will allow Azerbaijan to transport its gas to Europe via Turkey.

Other six billion cubic meters of gas can be delivered from Azerbaijan to Turkey within the second stage of Shah Deniz development. The first gas in the second stage is expected in 2017. Accordingly, Turkey's refusal from the Russian gas will enable the country to fulfill contractual obligations to Azerbaijan for gas within the first stage of Shah Deniz and in the future to ensure reception of six billion in the second stage.

In total, Turkey and Russia have contracts to supply 30 billion cubic meters of gas per year. Turkey also has contracts with Azerbaijan, Algeria, Nigeria, Iran and Turkmenistan. With all these, last year, Turkey imported a total of about 32.5 billion cubic meters of gas compared to 33.62 billion in 2009. In this regard, Turkey's refusal from receiving part of the volume of Russian gas will not lead to gas deficit in the country and will clarify the situation for gas of Azerbaijan.


/Trend/