Turk-Russian gas deal follows Azeri accord

ISTANBUL- Hürriyet Daily News

Minister Yıldız (L) and Russia’s deputy PM Sechin (R) exchange dossiers as Russian PM Putin attends a signing ceremony in Moscow. AP photo

Just two days after signing a memorandum of understanding with Azerbaijan to build a massive east-west pipeline, Turkey struck another historic gas deal yesterday with Russia, allowing the energy giant to develop its plans for future exports to Europe.

Premier Vladimir Putin, who received written permission for the South Stream project from visiting Turkish Energy Minister Taner Yıldız, described the approval as “a big event in Europe’s energy sphere,” Russian news agencies reported.

“I would like to thank Turkey for its decision to issue final approval to construct the South Stream pipeline through Turkey’s special economic zone,” Putin said during talks with Yıldız, according to AFP. Along with the deal, Turkey and Russia gained extra time to solve a dispute over the Westline, a pipeline that supplies 6 million cubic meters of gas to Istanbul and its environs every year. The South Stream project, which passes through the Black Sea, is scheduled to start operating in 2015.

The line will ship up to 63 billion cubic meters of gas annually to Bulgaria, Serbia, Hungary, Slovenia, Austria and Italy in one leg and Croatia, Macedonia, Greece and Turkey in another.

The permission was the final hurdle to the pipeline’s construction, and Russian energy giant Gazprom’s chief executive Alexei Miller described it as “the most serious proof” that the project would be completed by 2015.

“The South Stream project has entered a new phase: construction,” Reuters quoted him as saying. “The permission is final.”

South Stream, funded by Gazprom, France’s EdF, Italy’s Eni and Germany’s Wintershall, rivals the EU-backed Nabucco pipeline that is slated to ship gas from the Caspian region to Austria. Turkey has said the two projects should complement each other.

However, many analysts believe the recent moves by Turkey cloud the future of Nabucco, nearly two-thirds of which is projected to pass through Turkey.

Turkey and Azerbaijan signed a memorandum of understanding on Dec. 26 to establish a venture that will build the Trans-Anatolia pipeline, which stretches across Turkey from east to west, with a capacity of 16 billion cubic meters a year.

Socar will work with Turkey’s state-owned pipeline operator BOTAŞ Boru to build the 2,000-kilometer conduit. Socar will hold 80 percent of the venture, Yıldız said Dec. 26.

Russia sees the South Stream as the final replacement for the Ukrainian route for Russian gas.
Russia has been anxious to gain control, or at least a substantial share, of the Ukrainian export pipeline.

EU states receive more than a quarter of their gas from Russia.

Westline resolution
Gazprom said it had also resolved a deliveries dispute with Turkey that saw Ankara revoke a contract with Russia earlier this year. Gazprom said delivery terms for both the Westline to Istanbul and the Blue Stream pipeline under the Black Sea had been agreed through the end of 2012.

Terms of the agreement were not disclosed but the Russian media had earlier reported that Turkey was purposely delaying its approval of the South Stream route in order to bargain for lower prices.
The contracts signed with Turkey’s BOTAŞ, the state-run pipeline company, will allow Gazprom to boost exports to Turkey by 2 billion cubic meters next year, Miller said, according to Reuters.

“There is no new agreement with Russia concerning the purchase of natural gas from the Westline,” Anatolia news agency quoted Yıldız as saying.

However, Yıldız said the parties agreed to transfer 3 billion cubic meters of gas that had originally been slated for transport via Blue Stream to Westline until Turkish private companies struck a deal with Russia.

BOTAŞ had withdrawn from Westline due to a price dispute with Russia in September. Since then, Turkish private firms have been bargaining on possible gas exports from Russia.

“We have signed a new addendum until private companies sign an agreement for the Westline,” Yıldız said.