Russia not ready to suspend gas supply to Turkey

Russia not ready to suspend gas supply to Turkey

Baku, Azerbaijan, Dec.2

By Rufiz Hafizoglu - Trend:

The upcoming visit of Turkey's Prime Minister Ahmet Davutoglu to Azerbaijan amid the crisis in Moscow-Ankara relations shouldn't be regarded as ordinary, despite the fact that traditionally, newly-elected Turkish officials pay their first visits to the Northern Cyprus and Azerbaijan.

Davutoglu will visit Azerbaijan on Dec. 3-4 and discuss the prospects for developing the relations, as well as the projects in the sphere of economy and energy.

By the way, earlier, he said that in the case if as a result of the growing crisis, Russia suspends the gas supply to Turkey, the country has three alternative sources - Iraqi, Iranian and Azerbaijani gas.

A number of political experts in Ankara drew a conclusion from this statement that Russia can suspend the gas supply to Turkey in the onset of winter.

Experts don't rule out that the Dec.1 visit of Turkey's President Recep Tayyip Erdogan to Qatar, where the sides discussed the supply of liquefied natural gas to Turkey proves that Russia can really suspend the gas supply to the country.

Turkey is importing 6.6 billion cubic meters of gas per year from Azerbaijan on the basis of a 'take or pay' contract. Turkey also buys gas from Iran.

Ankara also has agreements with Algeria and Nigeria for the supply of 4.4 billion cubic meters and 1.2 billion cubic meters of liquefied gas per year, respectively.

However, when experts are talking about a possible termination of Russian gas supply to Turkey they don't pay attention to a number of important points.

Firstly, despite that the Russian gas supply to Turkey isn't carried out on the 'take or pay' basis, there are contracts under which Russia is committed to annually supply gas amounting to 20 billion cubic meters.

The first contract to supply Turkey with 16 billion cubic meters of Russian gas was signed in 1997, and it expires in late 2025.

The second contract, for the supply of four billion cubic meters of gas, was signed in 1998 and expires in 2021.

In 2014, Turkey was the second largest importer of Russian gas after Germany - Ankara purchased 27.3 billion cubic meters of gas from Gazprom.

Thus, in accordance with the contract, Russia is obliged to supply gas to Turkey, and in case of non-compliance with terms of the agreement, Moscow will have to pay a penalty.

For Russia, Turkey is the second largest market for natural gas sale after Germany, and it is not in Moscow's interests to stop deliveries of gas to Turkey.

Ankara and Moscow are well aware of this fact.

In addition, it is necessary to take into account that Turkish private companies also buy gas in the country.

In 2012, Akfel, Bosphorusgaz and Kibar Enerji companies received licenses to import gas for 30 years.

The fourth company - Batı Hattı received a license for 23 years. The companies are to import six billion cubic meters of Russian gas into Turkey, annually.

According to the agreement, Akfel will import 2.25 billion cubic meters of gas a year from Russia, Bosphorus - 1.75 billion cubic meters, Batı Hattı and Kibar Enerji - one billion cubic meters annually, so around 22 percent of Russian gas imported to Turkey will be purchased by the Turkish private sector.

Taking this into account, one can conclude that the suspension of the Russian gas supplies does not threaten to Turkey.

Davutoglu said that Turkey has found an alternative to the Russian gas.

What does his statement mean?

Davutoglu's statement can be considered as another action to get rid of energy dependence through further diversification of supply sources.

There is no doubt that Azerbaijan can increase gas supplies to Turkey.

However, the Azerbaijani gas will be unable to replace the Russian gas on the Turkish market.

The gas from the Kurdish autonomy in northern Iraq can be the only alternative to the Russian gas if Erbil begins supplying to Turkey in 2016.

Ankara and Erbil (capital of the Kurdish autonomy in Northern Iraq) have a contract for the gas supply. In accordance with the agreement, it is expected that Iraq will begin exporting gas to Turkey in early 2016. Initial gas supply volumes will amount to 30 billion cubic meters a year.

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

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