Energy Diplomacy
Gazprom's gas cut risk endanger mkt. position in Turkey
- Gazprom’s gas cuts to Turkey could lead to risks of losing market position in Turkey, similar to Ukraine


Russian Gazprom’s gas supply cuts to Turkey could lead it to risk losing its market share in Turkey, according to the head of the Institute for Energy Markets and Policies.

Gazprom reduced daily natural gas supplies to Turkey by around 50 percent from Feb.10 along the western line, according to Russian news agency Interfax.

“Gazprom can make such 'warnings' by making short term gas cuts, however this can create some risk for the company’s market position in Turkey,” Volkan Ozdemir, the head of the Institute for Energy Markets and Policies, EPPEN, told Anadolu Agency.

Turkey's Energy Ministry sources said Gazprom issued an invoice to Turkish private companies showing costs 10.25 percent more than the agreed deal indicating a cancellation of the 10.25 percent discount that was to be applied.

“Gazprom is not happy with its prices for Turkey’s private importers and they are also not happy with the partnership structure of these companies,” Ozdemir said.

Turkey, which is the second biggest consumer of Russian gas after Germany, imports around 30 billion cubic meters of gas from Russia annually via two pipelines; the Blue Stream and the western line.

The private sector in Turkey imports 10 billion cubic meters (bcm) of natural gas per year, representing over 30 percent of Russia's gas imports to Turkey. Turkish private gas importers include Bosphorus Gaz, Enerco Enerji, Bati Hatti, Kibar Enerji, Avrasya Gaz and Shell Enerji.

Noting that Gazprom is sending 15 percent less gas to Turkey then the agreed amount on the contracts, Ozdemir said this also affects BOTAS; Turkey’s state-owned crude oil and natural gas pipeline and trading company, which could suggest that the supply cuts is politically motivated.

Relations between Turkey and Russia have been damaged severely when two Turkish F-16 fighter jets on an aerial patrol shot down a Russian warplane which intruded into Turkish airspace late November. The intruding jet had been warned about the violation 10 times within five minutes before it was shot down.

Expert Mikhail Korchemkin, founder and managing director of East European Gas Analysis, stressed that in the normal course of business, price negotiations do not affect the gas flow, and payments or discounts are applied retroactively.

However, Korchemkin said that Gazprom uses gas flow as an important motivation in negotiations with its partners. He cited the example of Gazprom last winter significantly reducing daily exports to Europe with the aim of undermining reverse flows from the EU to Ukraine.

Ukraine has stepped up its efforts to decrease its reliance on Russian gas after the crisis between two countries erupted in late 2013.

Ukraine imported twice as much gas from European suppliers in 2015 than the previous year with 10.3 bcm of natural gas, while the country aims to stop its gas imports from Russia completely this year.

“It looks like Gazprom is managed by a double-headed executive - with one head talking about the reliability of supplies of Russian gas and the other head giving orders to reduce gas exports to certain partners,” Korchemkin said, adding that the tactic is “similar to the double-headed eagle which is Russia's coat of arms.”

Turkey is trying to reduce gas usage in its energy mix. Turkey's natural gas consumption for 2016 is expected to be around 49.5 bcm, Turkey's energy watchdog, EMRA announced on Saturday.

Turkey consumed 48 bcm gas in 2014 and 47.5 bcm in 2015, according to EMRA.

Korchemkin put the lower gas demand in Turkey down to increasing temperatures. In the Istanbul area alone in the second half of February this year, temperatures were 8 degrees higher compared to those in the same period last year.

By Emre Gurkan Abay in Moscow

Anadolu Agency




29 Feb,2016