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Turkey frets after Putin picks it for major gas role

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газ22Russia’s offer of a centre stage role in its revised gas export plans to Turkey, after President Putin killed off the South Stream pipeline to southeast Europe, has been greeted with more muted applause in Ankara than Moscow might have hoped.

Privately, Turkish energy officials say it important that the planned prestige gas link with Azerbaijan, in which Turkey has a stake, should not be jeopardised. Russian offers of cheaper gas were also treated with some caution.

Visiting Turkey on Monday, Putin said Russia was ditching theUkraine bypass South Stream pipeline, naming Turkey as its preferred partner for an alternative, undersea gas line to a hub on the Greek border.

Keen to become an energy hub and hungry for cheaper gas supplies, Turkey said it had signed a memorandum of understanding (MOU) with Russia for the project, planned to have an annual capacity of 63 billion cubic metres (bcm).

“Turkey has some concerns over the new pipeline project,” a senior Turkish official said. “When we think of purchases of natural gas, oil and the planned nuclear plant (being built by Russia’s Rosatom), this is a step that will further increase Turkey’s dependence on Russia.”

The MOU means details are yet to be decided, but there is little evidence that Turkey would be offered any major stake in any possible deal, unlike its 30 percent equity in the Trans Anatolian Pipeline (TANAP), a project that will carry 16 bcm of Azeri gas to Turkey and on to Europe.

Putin also offered Turkey, Russia’s second-largest gas buyer, a 6 percent price discount for next year, although Turkish officials said bargaining over price continued.

Dependant on imports for almost all of its gas, Turkey bought over 26 bcm of gas from Russia last year through the Blue Stream and Western line pipelines, equivalent to more than half of its total gas imports. Gas demand in Turkey has more than tripled since 2000.

London-based FGE analyst Cuneyt Kazokoglu doubted the new pipeline plan would help secure cheaper gas.

“It puts all its eggs into the same basket,” he said. “That will not be a reason for Russia to provide cheaper gas to Turkey because Russia knows Turkey has no alternative.”

He noted the 6 percent discount reflected lower oil prices rather than a significant gesture to Turkey.

The mooted Russian scheme could help Turkey cut its $60 billion a year energy bill, the main driver of its gaping current account deficit, a second energy official said.

“Despite its controversial aspects, this is a critical project in terms of strengthening Turkey’s strategic position and making it an energy hub,” he said.

 

Reuters

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