Turkey pays most for Russian gas, confidential document reveals

Today's Zaman acquired a report produced by the Higher Inspection Board (YDK) that studied Turkey's natural gas bills, which the state keeps confidential as these numbers are considered “commercial secrets.” The Ministry of Energy and relevant institutions responded to questions pertaining to the prices Turkey pays for natural gas, saying the cost is determined by formulas established through mutual agreements, without giving further details.

The numbers show BOTAŞ paid Kr 36.2 per cubic meter of natural gas on average last year. A cubic meter of Russian gas cost Turkey Kr 37.3, while Iranians put a price tag of Kr 37 per cubic meter on their gas to Turkey. The price of gas from Algeria and Nigeria, on the other hand, was Kr 29.3, although Turkey bought gas from these countries in liquefied natural gas (LNG) form, which normally costs more as it requires a longer production process. The bedrock price was seen in Azeri gas in 2007. BOTAŞ bought nearly 1.2 billion cubic meters of gas from this country and paid TL 176.3 million in return, which sets the price at close to Kr 14.7 per cubic meter.

YDK investigations usually follow one year after accounts for a fiscal year are closed. It therefore handled 2007 numbers, which probably changed for 2008. BOTAŞ imported 35.8 billion cubic meters of gas in 2007. It gets more than half of its gas purchases from Russia.

Thanks to a series of special deals and price revisions with Algerian Sonatrach and Nigeria LNG Ltd., BOTAŞ was able to negotiate advantageous terms in its purchase of natural gas from these countries at very competitive prices. Russian and Iranian natural gas flows into Turkey through pipelines, while Algerian and Nigerian LNG is transported by cargo ship.

According to the YDK report, BOTAŞ and Sonatrach had agreed upon changing their formula to calculate gas prices. Accordingly, the unit price for LNG was to be lowered by 0.66 percent if a barrel of oil fell below $50 per barrel. If the price is equal to or higher than $50 per barrel, the price was to be lowered by between 0.89 and 4.2 percent. A similar agreement was signed with Nigeria, as well.

With shares of BOTAŞ and distribution companies and taxes included, natural gas prices reflected as much as 76 percent on bills of Turkish consumers. For example, a cubic meter of gas sold for Kr 63.7 in İzmit and Kr 64 in İstanbul and Ankara.