Ankara confirms request for more Russian gas amid Iran sanctions

Energy Minister Taner Yıldız (Photo: Cihan, Mevlüt Karabulut)

December 04, 2012, Tuesday/ 11:32:00

Energy Minister Taner Yıldız confirmed on Tuesday that Ankara is in talks with Moscow to increase its gas supply to Turkey as US-led sanctions on Iran over its suspected nuclear program have forced Turkey to cut imports of Iranian gas.

Speaking to reporters in İstanbul, Yıldız said he had talked with Russian officials about possible additional natural gas for Turkey and mentioned that the “Russian side is very positive about this.” Noting that his ministry has set up a working group to determine the possible demand for an increase in Russian gas, Yıldız said it could be as much as 3 billion cubic meters. That is half of the amount of gas that Turkey is getting via one of its major supply lines from Russia, the Western Pipeline.

“I have discussed a possible increase in Turkish demand for Russian gas with Energy Minister Alexander Novak. … We may not be able to renew contracts early enough, but both sides are willing to increase the gas supply without signing a new purchase contract.” As part of an agreement with Moscow, Turkey could receive a limited amount of Russian gas per year, but steep growth in demand during a harsh winter may push Ankara to ask for an increase.

Since it produces the majority of its electricity via natural gas and is largely dependent on the fuel, Turkey is struggling to diversify its gas suppliers. Add to this the increased US scrutiny of Turkey's “gold for Iranian gas” deal, and the energy-poor country could feel compelled to shift away from Iranian gas -- so long as the pipeline infrastructure allows.

Yıldız recalled that in past winters when there was increased demand, Turkey received larger quantities of gas from Russia than stipulated in contracts.

Amid this heated gas trade agenda, Turkey hosted Russian President Vladimir Putin on Monday. Prime Minister Recep Tayyip Erdoğan, in a press conference with Putin, said Turkey will continue to buy natural gas from Iran despite the prospect of tighter US sanctions. He said the US measures are “not likely to have much impact on the countries' ‘gold for gas' trade. We have always told officials that the issue is of strategic importance to us and that we couldn't comply with the sanctions," he explained.

Putin told journalists at Monday's meeting that his country is considering increasing the capacity of the Blue Stream pipeline on the bed of the Black Sea that supplies 8 billion cubic meters of natural gas to Turkey annually.

Russian Energy Minister Novak said earlier that Russia is willing to increase gas supplies to Turkey this winter if Ankara requests it. Turkey, which ranks as Gazprom's second-largest natural gas consumer after Germany, is forecast to see daily demand rise to near 220 million cubic meters this winter from a current level of 125 million, according to Ministry of Energy officials. Turkey's limited underground storage capacity means it faces difficulties meeting the high demand from its 75 million people as winter temperatures plunge.

Gazprom clinched a long-term deal to export natural gas to private companies in Turkey last week, securing a growing market for the Russian gas export monopoly as it faces declines from its core consumers in the European Union. The move followed a one-year impasse in gas trade between Gazprom and Turkish firms after state pipeline company Botaş did not renew an expiring 25-year contract at the end of 2011 due to a pricing dispute. Business has continued in the meantime only on a short-term basis.

In a move that would force Turkey to reduce its gas imports from Iran, US senators and aides told Reuters last week the US Senate may soon consider widening trade sanctions against Iran, including the Turkish-Iranian "gold for gas" trade.

Turkey, which receives more than 90 percent of Iran's gas exports, currently circumvents existing US and European banking sanctions by paying its neighbor, Iran, in Turkish lira, which Iran then uses to buy gold in Turkey. The US government has so far exempted Turkey from Iranian sanctions in return for significant cuts in the level of its gas purchases from Tehran.