Turkey and Russia to discuss gas prices, energy projects
European Spot Gas Markets, 15.03.2011
Turkish Prime Minister Recep Tayyip Erdogan will meet Russian counterpart Vladimir Putin this week to discuss gas prices and a number of energy projects, including the future of the Russian-built Akkuyu nuclear plant in Turkey.
ICIS Heren understands that Turkey will be looking to renegotiate the terms of its long-term contracts with Russia’s Gazprom to potentially reduce or move away from the oil index.
Last year, Gazprom gave Turkey a minimum discount of 10% on its gas, reducing its maximum uptake under the take-or-pay clause to no less than 75% penalty-free (see ESGM 11 May 2010).
“The oil index represents 85% of the formula negotiated under the terms of the take-or-pay contracts,” an Istanbul-based analyst told ICIS Heren.
“This creates a lot of volatility. Turkey understandably wants to move away from the index and would ask the Russians to give weight to future contracts.”
A source at Turkish gas incumbent BOTAS could not confirm whether the company would seek the renegotiation of the existing price formula.
However, he said that Turkey’s interest in discussing energy projects with Russia also related to the possibility of building underground gas storage facilities.
“There are a number of companies which have submitted applications for the construction of the Tuz Gölü underground storage project. Stroytransgaz one of the bidders,” he said.
Turkey wants to build a new underground facility at Tuz Gölü near Ankara. The facility would consist of 12 caverns which would initially provide a total of 1 billion cubic metres (Gm³), but its potential could increase to 5Gm³. Applications for the project also have been submitted by, among others, Italy’s ABB, China Tianchen Engineering, Turkey’s Alsim Alarko-Dogus Ins. Joint Venture, Özaltin Insaat, Çalik Enerji and India’s Punj Lloyd-Atilla Dogan Insaat Joint Venture.
Gareth Winrow, a Turkey analyst, pointed out that the talks held this week also will include Russia’s proposal to build an LNG terminal within the framework of the South Stream project.
“I guess the Russians are trying to pressure the Turks into completing their feasibility study for the construction of South Stream in the exclusive economic Turkish zone,” Winrow said. “So far, they [Turkey] have been dragging their feet on completing the study.”
He added that another item on the agenda was the construction of the 5GW nuclear power plant at Akkuyu in central Turkey, particularly in light of the earthquake and tsunami-triggered blasts at Japan’s Fukushima nuclear power plant.
