Expert: Turkey not to lose anything from lifting of privileges for Blue Stream

Oil&Gas Materials 20 July 2011 17:16 (UTC +04:00)

Azerbaijan, Baku, July 20 /Trend, A.Badalova/

Russia will not cancel the privileges for the Blue Stream gas pipeline, while raising the price of gas for Turkey, said an analyst at the International Research Center of Turkey (USAK) Hasan Selim Ozertem.

"Russia will not cancel the privileges for Turkey, while raising gas prices," Ozertem wrote in e-mail to Trend.

According to the inter-governmental agreement between Russia and Turkey, signed in 1986, the gas flowing to Turkey through the Blue Stream pipeline is not taxed. Today, Russia is considering the abolition of these privileges. The country's Ministry of Finance proposed a lower rate of minerals extraction tax for the Gazprom Company for 2012-2014 under the condition of the cancellation of privileges for the Blue Stream.

The standard export tax on gas is 30 percent of its value. Today, the price of Russian gas for Turkey is $328 per thousand cubic meters.

Ozertem said the period of the inter-governmental agreement expires in 2011, which means that there will be a new negotiation process between the countries. According to him, Turkey will not lose anything in case of cancellation of privileges for the Blue Stream.
"Turkey has become a country that buys more gas than it consumes. Each year, the country pays Iran and Russia several billions of dollars for unused gas [under the contract "take or pay"]," said Ozertem.

Turkey has an alternative to Russian gas supplies, said Ozertem.

He said currently Turkey pays special attention to the Iraqi gas - Turkish companies are conducting exploratory activities in the north of the country. Great importance is also attached to the Azerbaijani gas.

Today, Azerbaijan and Turkey are negotiating on the purchase of Azerbaijani gas. Contracts for the purchase-sale of Azerbaijani gas envisage to purchase gas upon new prices within the first stage of Shah Deniz field development in the Azerbaijani sector of the Caspian Sea, as well as the purchase of gas within the second stage of the field development. According to the existing contract between Azerbaijan and Turkey, Turkey has to buy 6.6 billion cubic meters of gas from Shah Deniz per year. As part of the second stage of field development, additional six billion cubic meters are planned to be supplied to Turkey.

Blue Stream pipeline project envisages deliveries of Russian gas to Turkey via the Black Sea, bypassing third countries. The capacity of the pipeline is 16 billion cubic meters of gas per year.

In 2010, Gazprom supplied 8.07 billion cubic meters of gas to Turkey via the Blue Stream.
The gas supplies to Turkey via this pipeline are expected to total 13 billion cubic meters this year.

A.Tagiyeva contributed to article