Turkey cancels natural gas contract with Russia

Turkey has decided that it will not renew for another five years a 25-year-old natural gas deal with Russia on the grounds that the energy-rich country’s supplier Gazprom has declined to discount the natural gas it sells to Turkey via the Russia-Turkey Western Pipeline.

Energy and Natural Resources Minister Taner Yıldız (Photo: Today's Zaman)

Energy and Natural Resources Minister Taner Yıldız (Photo: Today's Zaman)

According to an announcement made by the state-owned Turkish Pipeline Corporation (BOTAŞ) on Saturday, Turkey has decided to discontinue buying natural gas from Russia next year via the western pipeline due to Gazprom´s refusal to reduce the price of natural gas to what Turkey considers a reasonable level.

Speaking to reporters in Ankara on Saturday, Energy and Natural Resources Minister Taner Yıldız said, “Our cooperation with Russia will move forward and grow stronger,” emphasizing that cooperation with Russia would continue by means of the Blue Stream pipeline on the Black Sea bed Russia supplies 6 billion cubic meters of natural gas to Turkey annually via Ukraine, Bulgaria and Romania through the Russia-Turkey Western Pipeline agreement, which has been in effect since 1986 and is set to expire at the end of December.

Turkey has been persistent in its demands since Gazprom, Russia’s biggest natural gas company, which meets 67 percent of Turkey’s requirements, reduced the price of the natural gas it was selling to the Italian Edison company, which filed a lawsuit last November at the Court of Arbitration in Stockholm against Promgaz, a company jointly owned by Gazprom and Italy’s Eni. The suit called for a reduction in the price of Russian gas in a long-term contract, and Gazprom agreed to cut its gas prices for Italy’s Edison in July.

Russia has overtaken Germany as Turkey’s primary trade partner as bilateral trade is expected to surpass $40 billion by the end of 2011. As well as a total of more than two-thirds of its natural gas, 20 percent of Turkey’s imported oil is provided by Russia. Nearly 3 million Russian tourists visit Turkey every year, and the two countries reciprocally removed visa requirements in mid-April. Moreover, Turkey has also removed Russia from its list of external threats. Turkish contractors have already completed some 1,200 projects around Russia, representing a total value of $32 billion.

Russia and Turkey also clinched a deal for the construction of Turkey’s first nuclear power plant in the coastal town of Akkuyu, in the southern province of Mersin. According to the agreement, the two countries will cooperate in the construction and operation of the power plant. A consortium led by state-controlled Russian builder AtomStroyExport will construct the plant in Akkuyu, paying all of the construction costs for the plant, which is estimated to be some $20 billion.

 

 

02 October 2011, Sunday / TODAY’S ZAMAN, İSTANBUL