Arbitration court - possible option for Turkey-Russia gas price dispute?

Arbitration court - possible option for Turkey-Russia gas price dispute?

Baku, Azerbaijan, Feb. 13

By Rufiz Hafizoglu - Trend:

At a time when Ankara and Moscow are holding talks for the construction of the 'Turkish Stream' gas pipeline, the two countries still have one unsettled problem - the issue of discounts on the gas imported from Russia.

Despite three rounds of talks on this issue, the two countries haven't come to a final agreement on the discounts for the supplied gas.

In one of his recent statements Turkey's energy and natural resources minister, Taner Yildiz said the talks with Russia on the discounts on the gas delivered to Turkey haven't yet given results, as Ankara intends to get a 15 percent discount.

Aside from that, the Turkish media reported that Turkey's Energy and Natural Resources Ministry, after the start of talks with Moscow on the construction of the 'Turkish Stream', demanded from Russia an extra discount on gas.

A discount on gas is extremely important for Turkey, considering the country's needs in gas, and that Russia is a major gas supplier.

Last year, 26.7 billion cubic meters of Russia's gas was delivered to Turkey, while it is planned to increase in 2015 the Russian gas supplies to Turkey up to 30 billion cubic meters.

Despite that the gas prices aren't officially disclosed, according to Turkish media reports, Ankara buys Iran's gas at $490 per 1,000 cubic meters. Aside from that, Turkey pays $335 per 1,000 cubic meters for Azerbaijan's gas, which is delivered via the South Caucasus Pipeline (Baku-Tbilisi-Erzurum).

Private companies in Turkey were licensed to import Russia's gas to Turkey in November 2012.

Akfel, Bosphorusgaz and Kibar Enerji companies received licenses for gas import for 30 years. The fourth company - Batı Hattı received a license for 23 years.

The companies will import six billion cubic meters of Russian gas into Turkey, annually.

According to the agreement, Akfel company will import 2.25 billion cubic meters of gas a year from Russia, Bosphorus company - 1.75 billion cubic meters, Batı Hattı and Kibar Enerji companies - one billion cubic meters annually.

Thus, around 22 percent of Russian gas imported to Turkey will be purchased by the Turkish private sector.

According to the Turkish media, around 1,000 cubic meters of Russian gas have cost the private companies $390 since January 1, 2015. Previously, the Turkish private companies paid $322 for import of 1,000 cubic meters of Russian gas.

Around 1,000 cubic meters of gas imported from Russia by the Turkish state pipeline company Botas costs Ankara $415, and the price doesn't meet the country's intererests currently.

Turkish officials have already said that the price of gas, supplied from Russia, is detrimental to the country's budget.

Given Turkey's dire need of gas, Ankara is trying to get Russia's discount for it gas. However, it is not ruled out that Ankara may apply to the International Court of Arbitration to solve this problem.

Edited by SI


Rufiz Hafizoglu is the head of Trend Agency's Arabic news service, follow him on Twitter: @rhafizoglu

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