Tag: Gazprom

Turkey takes a big leap forward over energy security

Robin Mills

Last month I wrote how Turkey needed to rebuild constructive relations with its energy-rich neighbours. Two dramatic announcements later, and it seems to have done just that.

Topic Turkey

But big obstacles still lie in the way of improving Turkish energy security: Baghdad, a Mediterranean island, and the Kremlin.

On Thursday, Abdullah Öcalan, the leader of the PKK Kurdish separatist organisation, called a ceasefire. This capped years of cautious negotiations between Mr Öcalan, in jail since 1999, and the Turkish government.

On Friday, the Israeli prime minister Benjamin Netanyahu apologised on the phone to his Turkish counterpart, Recep Tayyip Erdogan, for the death of nine Turks in the 2010 storming of a ship that was taking aid to Gaza.

And a week ago, dramatic happenings on the island of Cyprus: the terms of the European Union-led bank bailout required depositors to pay a 10 per cent levy, triggering anger and frantic last-minute negotiations.

What is the energy significance of these events? They may open routes for two of the most exciting current oil and gas discoveries to reach markets, enhancing Turkey’s economy and energy security on the way. The Turks need gas in particular to fuel their growing economy, that has become too dependent on Russia and on supplies from Iran threatened by sanctions and winter disruptions.

The 29-year insurgency waged by the PKK in south-east Turkey may be nearing its end. The Kurds of Syria have largely thrown off central government control. The Syrian Kurds have balanced ambiguously between the president Bashar Al Assad’s government and the Syrian opposition, and gaining leverage over them has become urgent for Ankara.

Under Mr Erdogan, Turkey has developed increasingly close economic links with the autonomous Kurdish region of Iraq, where international companies have found major oil and gasfields.

But independent Kurdish oil and gas sales are blocked by Iraqi government policy, and relations between Baghdad and the Kurdish regional authorities in Erbil have deteriorated sharply.

Permitting direct large-scale exports would require the Turks to take the dramatic step of breaking with the Iraq central government. For now, this is a pipeline too far – but a solution to the Kurdish dispute surely brings an Ankara-Baghdad showdown closer.

Meanwhile, in the eastern Mediterranean, Israel has found some 30 trillion cubic feet of gas, enough to supply it for the next 80 years. Cyprus has also discovered a major field, and Lebanon is launching exploration this year.

Mr Netanyahu’s apology to Mr Erdogan adds to recent rumours of discussions over a pipeline. This is probably the cheapest way for Israeli gas to get to Turkey and Europe – and would help to rebuild a key regional alliance for Tel Aviv.

But Israel’s route to Turkey is blocked by Lebanon – with whom it is technically at war – and Cyprus, divided between Greek and Turkish Cypriots.

Turkey disputes the right of the internationally recognised Republic of Cyprus to explore for gas, in the absence of a political settlement.

When the deposit haircut was announced, the Cypriot government offered to compensate savers with “gas bonds” backed by future revenue from its hoped-for offshore gas fields.

The idea then emerged for Russia’s Gazprombank, loosely linked to its state gas giant Gazprom, to offer its own bailout, in return for stakes in those fields. This would allow the Kremlin to defeat, divert or delay a threat to its market dominance.

Turkey has opposed the use of Cypriot gas to pay such compensation. But to make use of the thaw with Israel, and access Mediterranean gas, Mr Erdogan will have to replicate his Kurdish rapprochement with Cyprus. Foreign governments may be lesser obstacles to Turkish energy security than domestic nationalists.

Robin Mills is the head of consulting at Manaar Energy, and the author of The Myth of the Oil Crisis and Capturing Carbon

via Turkey takes a big leap forward over energy security – The National.

March 27, 2013
Turkey Turning to Coal to Reduce Gazprom Dependence

LONDON — Worried about dependence on pricier gas from Iran and Russia, Turkey is turning to its own coal.

The country signed a deal with a United Arab Emirates company that will boost its coal-fired power capacity 67 percent.

Turkey’s biggest gas supplier is Gazprom, which accounts for about half of imports, but it is long-term supply from Iran that could pose the biggest concerns.

Turkey might not be able to continue to ignore further tightening of international sanctions aimed at curtailing the Iran’s nuclear program.

Ankara signed a $12 billion deal with TAQA to mine lignite coal and by 2020 build new power plants capable of generating up to 8,000 megawatts.

“The TAQA deal is first and foremost motivated by the need to refurbish and build new coal-fired power plants, but the move to develop coal stems from a general concern that Turkey is hugely dependent on others for its energy needs,” said Andrew Neff, a senior analyst for IHS Energy.

The European Association for Coal and Lignite, or Euracoal, said Turkey imports more than 70 percent of its primary energy needs. Most of the 30 million tons of hard coal it annually uses is supplied by Russia, Colombia, the United States and South Africa, according to Euracoal.

Natural gas imports, mainly from Russia, Iran, and Azerbaijan, meet about 45 percent of Turkey’s demand for heat and power, according to the IEA, a dependency that comes with frequent price disputes with suppliers.

In another sign that Turkey’s policymakers are keen to reduce dependence on gas imports, the government said in December that it would not take part in Russia’s South Stream gas pipeline project.

The pipeline was designed to pump more than 60 billion cubic meters, almost twice Turkey’s annual gas demand, via the Black Sea into southern Europe. High gas prices, which make gas-fired power generation less attractive than coal, as well as concerns over gas-import dependence, have been shared by several European countries.

Consuming countries complain that Gazprom charges too much for its gas and that its long-term supply contracts are too inflexible. The European Union opened an antitrust case against Gazprom last year, sparking a political feud with Moscow.

In Germany, cheap coal prices have led to strong growth in coal-fired power generation.

In Poland, which relies heavily on Russian gas supplies but is also a big user of the more-polluting lignite that Turkey mines, the government is eying potentially large domestic supplies of unconventional natural gas sources, such as shale gas.

Ukraine said last month that it had secured a $3.6 billion loan from China that will switch power plants from imported natural gas to gasified coal.

Despite Turkey’s long-term aim of becoming less reliant on imports, its demand for Russian gas in the short term will likely rise to meet booming demand, Neff said.

via Turkey Turning to Coal to Reduce Gazprom Dependence | Business | The Moscow Times.

January 14, 2013
Turkey Has to Develop Large Firms in Order to Become an Active Player in Energy Sector

Turkey Has to Develop Large Firms in Order to Become an Active Player in Energy Sector

Tuesday, 24 January 2012

Journal of Turkish Weekly (JTW) conducted an exclusive interview with Saban Kardas. Saban Kardas is assistant professor at TOBB University of Economics and Tecnology in Ankara. He is also assistant editor of Insight Turkey, a quarterly journal in circulation since 1999, which is published by SETA Foundation.

Q: Would Turkey not be successful if it pursued its energy policy through TPAO, equipped with specific power and well-designed by the state, rather than extending state aid? In this context, is the Azerbaijan SOCAR (State Oil Company of Azerbaijan Republic) a successful model? Is it possible for Turkey’s energy policy to be changed substantially?

A: To start with, Turkey and Azerbaijan’s energy policies are different, and will be misleading to start analysis of Turkey’s energy policies with a comparison between them. While as an energy rich producing country Azerbaijan envisions a different set of priorities in its energy policies, Turkey’s energy policy is driven by first and foremost a concern to meet its own needs. Beyond that, Turkey works to assume a role in energy policies as a transit country. The shaping of energy policies in the countries of origin on the one hand and transit countries, i.e., countries that host the transportation routes, on the other, as well as specific institutional structures they devise take place in different settings.

Going back to the core issue raised in your question: whether Turkey should develop its energy policies by moving to a private-sector driven model or a model based on some form of state control or intervention in the market. Alongside TPAO, BOTAS needs to be mentioned in the context of transit projects. There are market pressures on BOTAS to reduce its market share. There is also a similar expectation from external players, especially the EU. Turkey is responding to these expectations and reducing state involvement but it is difficult to say that it has progressed to an extent that it can satisfy the demands coming from outside. There are different arguments made in support of the opposing models, referring back to your question. As it is sometimes underlined in the ongoing discussions in Turkey, it makes sense to reduce the element of state intervention to the extent possible. From a liberal logic, one can make the argument that a more effective and efficient system can be developed by this approach.

However, as a counter line of thought argues, in markets regulating strategic commodities, energy being one of them, there are some reasons to adopt some degree of state-control. The key concern in Turkey is that if such a strategic commodity is left to market forces alone, it is hard to develop competitive national players. Such concerns on Turkey’s part have been underlined in the debate taking place in the energy markets. It is widely believed that as it seeks to assert its importance in energy geopolitics, Turkey has to develop large firms in order to become an active player in this field. Firms with big capital need to emerge for global competition. It is not unlikely to occur in free market conditions, but it will be difficult. The best way to do so would be to develop an energy giant with state support. For this reason, Turkey, as in the case of BOTAS, was for some time resisting the pressures to move to a free market-oriented model and retain it as a major player, despite the pressures coming from outside. Recently, as it has been brought to the public’s attention in the context of gas purchase contracts from Russia, Turkey in fact has started to reduce the monopoly over natural gas imports. Similarly, the domestic distribution grid has been privatized to a large extent. Granted, overall, Turkey is heading to a more market-oriented model. Yet, as stated by Energy Minister Taner Yıldız on several occasions, despite a market-oriented model, Turkey wants to retain a decisive capacity for the state to make critical interventions in the operation of market. This appears to be the official prognosis for the future of the state in energy market.

Going back to the question on the SOCAR (State Oil Company of Azerbaijan Republic) model, it is early to answer this question, in the sense that the process of SOCAR’s consolidation in the market has yet to be finalized. In this context, what SOCAR is trying to do is in essence to replicate GAZPROM model of Russia, i.e., using its position as a major producer to develop projects aiming to penetrate into downstream markets and gain control over transportation and distribution networks, so that it can maximize profits. The Trans-Anatolia agreement is the most obvious example for SOCAR’s quest to play such a prominent role. Seen from that perspective, this model is not applicable to Turkey, given that Turkey does not stand a chance to become a player in the chain running from the source or producing nations to the distribution networks. So, it is hard to compare Turkey’s energy sector to SOCAR model, given the structural differences.

Since the SOCAR model is still in the making, one has to wait and see how it will come into full fruition and whether it will accomplish its objectives. It is early to make a realistic assessment. But so far, Azerbaijan is exporting oil and gas and in addition to that it has undertaken major investments in Turkey’s energy sector. So, one can safely say that it has accomplished some progress in downstream markets as well. To sum up, in Azerbaijan, one might expect the emergence of a structure similar to the one in Russia and it has recorded some progress in that regards.

At this point, one has to note some problems with the GAZPROM model, assuming that SOCAR also pursues a similar approach. In this model, there are debates as to the fusion of the state and business interests; i.e., political authorities shaping the economic decisions or economics dominating political decisions, all the while GAZPROM and other energy giants being at the center of these intermingling relations. If SOCAR follows a similar route to the Russian model, in the mid- to long-term, how the relationship between politics and economics will be forged and whether interest groups formed around energy industry may eventually hinder democratization and good governance are issues that beg closer inspection. If Azerbaijan might be opting for this model, such questions also need to be discussed more candidly.

Finally, Turkey will unlikely to follow these models. As underlined, while moving toward a market-oriented model, Turkey will develop a structure that enables effective state interventions into the market, through the control of a critical share by the state.

Q: The signing of the agreement regarding the Trans-Anatolian pipeline, which included Azerbaijan and Turkey, can be considered a blow to Nabucco on the one hand, and giving permission to South Stream might make Europe more dependent on Russia on the other. Was it a reaction against France because of the political air in recent months?

A: Personally, I do not think the recent developments regarding pipeline projects are directly related to the Armenian allegations. For instance, France has not been particularly supportive of Nabucco. On the contrary, the French are somehow involved in South Stream, having overtaken some of the shares in the project. So, it is difficult to argue that Turkey wanted to hurt France by thwarting Nabucco. There is no such direct connection, and Turkey’s decision(s) are not intended to convey a message to Europe. Both the Trans-Anatolian and the South Stream pipelines should be assessed based on their particular conditions, as well as from Turkey’s own perspective, and how Turkey sees them in line with its priorities in energy policies.

I don’t think Trans-Anatolia is a blow to Nabucco. Turkey is a country that has always supported the Nabucco as a strategic project and clearly has expressed its commitment. Nabucco continues to play a key role in Turkey’s objectives to become an energy hub. But there are certain structural problems in the Nabucco project itself, and unfortunately, they have not been clearly resolved so far. As is well known, uncertainty over dedicated supplies, lack of financing and lack of unequivocal purchase commitments are other major hurdles. Previously, there used to be uncertainty over the transit regime which occasionally led to crises between Turkey and the EU. Through an understanding Turkey reached with the Europeans earlier, it eliminated those problems.

One of the drivers of the Trans-Anatolian pipeline is Azerbaijan’s quest for an independent role in energy markets, which I underlined earlier. Turkey has taken a step in support of Azerbaijan’s role. But while providing this support, Turkey also reiterated the fundamental rationale of the Nabucco, i.e., giving approval to a direct corridor from the Caspian basin to European markets traversing Turkey. Turkey hereby sent a signal and reiterated its earlier position that it will not be an obstacle to the so-called Southern corridor. There were some uncertainties regarding the future of the Nabucco project as originally envisaged, which obviously delayed its realization. There had been concerns that the original design might be overambitious and aim at unrealistically high capacity. The joint Azerbaijani-Turkish initiative now enables a reconfiguration of Nabucco in more manageable scales. It is difficult to say that this route is altogether dead, as the rationale underpinning it also is at the core of the Trans-Anatolia.

Turkey’s support for South Stream is a separate debate, because there is a direct competition with Nabucco there. Turkey has taken similar complementary steps in the past as well. After supporting Nabucco, Turkey demonstrated that it would not be the country that prevents South Stream. In that regards, we can say Turkey has not adopted a new position. The recent moves towards Trans-Anatolia and South Stream is a continuation of the previous position in the recent context.

Q: The energy agreement signed by Turkey in recent weeks further brought Azerbaijan and Turkey together. In the coming years, will Ankara develop an Azerbaijan-oriented policy despite Yerevan, or create its own policy regarding energy?

A: Based on the previous discussions, it is worth emphasizing a few points. Firstly, it is difficult for Turkey to develop independent energy policies under the current conditions. If we are talking about supply security in this context, it has different implications. If we are discussing this question in the context of Turkey’s goal of becoming an energy transit corridor, it needs to be handled differently.

If we try to answer your question in this second dimension, i.e., energy transportation, it is difficult for Turkey to develop energy policies independent of Azerbaijan in the short to medium term. For Turkey to emerge a transit corridor and develop major transit routes, the producers of oil and gas have to give their approval. Azerbaijan is the first and only viable option at this point. In this sense, the Trans-Anatolian agreement signed with Azerbaijan, and the earlier agreements signed at the High Level Strategic Cooperation Council summit between Prime Minister Recep Tayyip Erdogan and President Ilham Aliyev, finalized Turkey’s first real transit agreement in natural gas markets. Although we have been proud of becoming a hub country, so far it remained at the rhetorical level and has yet to be realized. The compromise reached subsequent to the treaty signed with Azerbaijan allows Turkey to become a natural gas transit route for the first time. In this context, it is difficult for Turkey to develop a policy completely independent of Azerbaijan.

Apart from this, which alternative players are there? Exporting natural gas reserves in northern Iraq through Turkey has been on the agenda of the northern Iraqi leaders. However, there are problems between Baghdad and provinces as to how to use the natural resources of Iraq. The other option is obviously Iran. Tehran’s strained relations with America, among other factors, limit the ability of Iran to emerge as a major alternative for Turkey’s ambitious to become a transit hub. On the other hand, Russia does not want to market its natural gas through Turkey.

However, it can be said that Turkey has a growing role at present regarding the oil transportation. The Yumurtalik–Kirkuk pipeline, the Baku–Tbilisi–Ceyhan pipelines or tankers through the sea lanes play an important role in the transportation corridors controlled by Turkey. Beyond these developments, Turkey also has achieved limited progress in terms of reaching its ambitions. Especially, concerning the transport of Kazakh and Russian oil through Turkey, major issues remain. In short, as of now, talking about a role independent of Azerbaijan is difficult.

Going back to the other issues raised in the question, yes, there has been a rapprochement between Turkey and Azerbaijan. Particularly, the current government’s policy is in favor of close relations with Azerbaijan and we might expect the continuation of this policy. There is no reason for Turkey to give up its Azerbaijan-oriented policy in the upcoming years, especially if the economic partnership continues to deepen between them, as is the case currently. These ties between Turkey and Azerbaijan, in a sense, create disincentives for a possible rapprochement between Armenia and Turkey. For Turkey to be drawn into normalization process, the Armenian side, in its approach towards Turkey, has to understand that there is not only an emotional dimension in the Turkish-Azerbaijani relationship, or a strategic dimension, but there is also a very strong economic dimension. It would be advisable for Armenia to consider its position on Turkey by taking into account these various angles.

Tuesday, 24 January 2012

Journal of Turkish Weekly

February 6, 2012
Turkey to gain in Europe gas pipeline race

Turkey to gain in Europe gas pipeline race

By REUTERS

Published: Jan 13, 2012 01:44 Updated: Jan 13, 2012 01:44

LONDON: Turkey stands to gain most from major movements in Europe’s gas supply infrastructure expected in 2012 as both Russia and Azerbaijan negotiate pipeline contracts to ship gas to the European Union through the Bosporus.

BP and Statoil lead Azerbaijan’s Shah Deniz II gas project which is expected to declare a winner in April to transport its 10 billion cubic meters (bcm) of gas per year to Europe.

The three projects competing for the contract are Nabucco, TAP, and ITGI.

At the same time, Russia’s Gazprom is pushing ahead with its huge South Stream gas pipeline project that aims to pump over 60 bcm of gas a year to Italy.

Whatever the outcome of these developments, Turkey stands to gain as all projects would pass through it, offering prospects of healthy transit fees and new gas supply sources.

Analysts say that Turkey has positioned itself well at the negotiating table with Russia, Europe and Azerbaijan, and that its decisions would likely make or break projects.

“Turkey is probably playing its gas hand very well. It picks the winners and knows when to decide whether they’re going to go forward with something. I would think they have decided South Stream is going to be more viable,” said Steven Wardlaw, a partner at law firm Baker Botts, which advises the gas marketing entity for participants in the Shah Deniz project.

“We always thought that Nabucco was going to be a fairly marginal project. It’s a pipeline designed by people who want the gas, rather than South Stream, which is designed by people who have the gas,” he added.

Turkey gave Russia permission last December to build the South Stream pipeline through its territory, supplying the missing piece needed by Moscow to secure markets for its gas in Europe, possibly at the expense of the Brussels-backed Nabucco project. The South Stream pipeline plans to transport 63 bcm of Russian gas a year into Europe by crossing the Black Sea and Turkey.

This is equivalent to about 15 percent of the European Union’s annual gas consumption.

While South Stream’s prospects improve, support for Nabucco is waning.

The pipeline project, led by Austria’s OMV and Germany’s RWE, plans to ship gas from Central Asia through Turkey and southeastern Europe into Austria.

Its critics say that its costs of over $12 billion have risen too high and that there is not enough gas available to fill such a big pipeline with non-Russian supplies.

As a result, the tone in Brussels and with some of the project’s major partners is changing.

Asked in an interview in late 2011 whether he was confident Nabucco would go ahead, EU Energy Commissioner Guenther Oettinger would say only that he was confident the Southern Corridor would open.

“I’m confident of opening the Southern Corridor, but it’s primarily up to the Shah Deniz Consortium to decide to whom they want to sell their gas,” he said.

Sources at RWE and OMV have also suggested that their impression was now that Nabucco would not be built in its original form.

“We’re looking for easier and cheaper alternatives to secure our future gas needs than from the ever more expensive Nabucco,” one source at RWE said. “Given that we haven’t spent much money on Nabucco yet, it would be easy to get out of it.”

Instead of one of the three single pipeline projects getting the heads-up from Azerbaijan, it seems more likely that a system of regional existing and future pipeline infrastructure could ship the gas to Europe.

“The Shah Deniz project team are evaluating a fourth potential export option which would transport gas to markets in South-Eastern Europe through a system of regional existing and future interconnector infrastructure,” the consortium said.

The pros and cons of each project mean that analysts think a merger is the only viable solution.

“We might see a consolidation of projects before any single route is decided upon,” energy consultants JBC Energy said.

TAP said it would be open to such consolidation talks.

This could also mean that Nabucco is downsized and merged with other projects in order to create a complex Southern Gas Corridor system of pipelines, with Turkey at its centre.

Sources in Brussels said this was the European Commission’s preferred option as it would mean it could save face by not having to officially kill off Nabucco, but instead present a coherent Southern Gas Corridor that would offer Europe diversification of supplies.

These pipeline projects running through Turkey add to plans in Ankara to exploit recent gas discoveries in the eastern Mediterranean Sea.

Although most discoveries have so far been made in Greek Cypriot or Israeli waters, Cyprus has said it is willing to share the revenues from any gas find with Turkish Cypriots.

But whichever pipelines get built, and even if Turkey gets some proceeds from Cypriot gas, non-Russian gas supplies to Europe will still be dwarfed by Russia’s gas flows.

Russian exports currently around 150 bcm a year could reach a maximum of 230 bcm by 2017, a report from the Oxford Institute for Energy Studies said in January. In its lowest scenario, Russian exports to Europe would still be around 100 bcm a year.

This compares with a maximum of less than 30 bcm a year which Europe is likely to receive from Azerbaijan and the Caspian region, according to the Oxford Institute.

via Turkey to gain in Europe gas pipeline race – Arab News.

January 13, 2012
Turkey Approves Russian Gas Plan

By JACOB GRONHOLT-PEDERSEN

MOSCOW—Russia secured approval from Turkey on Wednesday to build the South Stream gas pipeline across the Black Sea, removing the last major obstacle to proceed with a project that could increase Europe’s dependence on Russian natural-gas supplies.

The move heats up the battle between Russia and the European Union over competing pipelines, especially the European Union-backed Nabucco project, and increases pressure on Ukraine to give Moscow control of its pipeline system.

[SOUTHSTREAM]

Turkey’s approval, given by Energy Minister Taner Tildiz during talks with Russian Prime Minister Vladimir Putin in Moscow on Wednesday, had been a stumbling point for Russia to proceed with the offshore part of the South Stream project.

Russian state gas giant OAO Gazprom ships most of its gas exports to Europe via Ukraine, but supply disruptions in recent years due to pricing disagreements between the two countries have led Russia to seek to bypass Ukraine and promote new pipelines such as South Stream.

Analysts say progress on South Stream increases pressure on Ukraine. Kiev is pushing for cheaper gas in order to balance its budget.

But in exchange for cheaper gas, Moscow is aiming to gain control of Ukraine’s pipeline system.

South Stream is envisioned to carry as much as 63 billion cubic meters of Russian gas under the Black Sea to Bulgaria, Serbia and Hungary before branching out to Western Europe.

Gazprom, the main shareholder in the project and a major supplier of gas to Europe, said Turkey’s approval means South Stream will start operating according to plan by the end of 2015. ENI SpA of Italy, BASF SE of Germany and Électricité de France SA are minority partners in the project.

“This is a very good and positive signal for all of us, which undoubtedly will provide stability in energy supplies to the European market,” said Mr. Putin.

A European Commission spokesman played down the impact of the South Stream agreement, which he said “would not affect the existing framework and commitments.”

European officials say that, unlike Nabucco, South Stream hasn’t reached the project stage yet.

Nabucco is the most ambitious and expensive of four competing proposals to take gas from Azerbaijan, and possibly eventually from other countries, into the European Union. But Nabucco’s estimated cost is a potential deterrent for developers of the giant gas field, which lies under the Caspian Sea. A decision on the winning project is expected to be announced in the first half of 2012.

Gazprom has insisted South Stream will be built regardless of talks with Ukraine, but Gazprom Chief Executive Alexei Miller said earlier this week that realization of South Stream depends on the continuing talks with Kiev.

“This all looks like negotiating tactics, as Russia prepares for a new round of talks with Ukraine,” said Johannes Benigni, managing director at Vienna-based research consultant JBC Energy. “I don’t think they need to build South Stream at all.”

Last month, another transit country, Belarus, sold its gas-pipeline operator Beltransgaz to Gazprom in exchange for a major discount on gas supplies. Ukraine is likely to face a similar situation, Mr. Benigni said, adding that with a $15.5 billion price tag on South Stream it would make more sense for Gazprom to invest its money in Ukraine.

The news on Russian progress on South Stream also comes as the Nabucco project, which seeks to carry gas from Azerbaijan and other Central Asian countries to Europe, has faced hurdles. The EU has promoted Nabucco to reduce the bloc’s dependence on Russia but suffered a setback as Azerbaijan recently said it plans to build its own pipeline through Turkey that would run parallel to Nabucco’s planned route.

South Stream has failed to gain backing in Brussels and has still to get exemptions from new EU rules known as the Third Energy Package. The legislation is pushing for more competition in Europe’s energy market and has sparked tensions with Russia as Moscow believes they undermine its own investments in the 27-nation EU, including South Stream.

—Laurence Norman and Alessandro Torello

via Turkey Approves Russian Gas Plan – WSJ.com.

December 31, 2011
Turkey urges more natural gas imports from Iran

Iranian Deputy Oil Minister Javad Oji said that Turkey has asked Iran to increase its natural gas exports to its northwestern neighbor, the state IRIB TV website reported.

Oji said that Iran’s current gas exports to Turkey stands at 24 million cubic meters per day on average and expressed Tehran’s readiness to provide Ankara with more natural gas, said the report.

The two countries have held negotiations in the past over an increase in the gas exports to Turkey, he said, adding that Iran has a capacity to export an average of 36-40 million cubic meters of natural gas per day to Turkey.

According to the report, Turkey currently has natural gas purchase deals with countries such as Russia, Iran and Azerbaijan, as well as liquefied natural gas (LNG) deals with Nigeria and Algeria.

In 2009, Iran and Turkey signed an agreement to transfer up to 35 billion cubic meters of Iran’s natural gas to Europe via Turkey.

Earlier this year, Iran’s First Vice-President Mohammad-Reza Rahimi said exporting Iran’s natural gas to Europe through Turkey would be beneficial for both Tehran and Ankara.

In a meeting with Turkish Energy and Natural Resources Minister Taner Yildiz in Tehran, Rahimi stressed the need for implementation of all agreements reached between Tehran and Ankara on energy cooperation.

Yildiz said that his country was ready to increase its cooperation with Iran in the energy field and pointed out that Ankara was determined to help Tehran transit its natural gas to Europe.

According to Iranian media, the gas pipeline to transfer Iran’s natural gas to Europe is scheduled to become operational in 2014.

According to Iran’s Petroleum Ministry, Iran’s proved natural gas reserves are about 29,610 cubic kilometers or about 15.8 percent of world’s total reserves. It has the world’s second largest reserves after Russia.

Iran can step in after Turkey break with Gazprom

Iran said that it was ready to boost its gas exports to neighboring Turkey, after Turkish Botas ended its deal with Russia’s Gazprom, a senior official told the Mehr news agency.

“Turkey has previously had talks with Iran in regard to increase the volume of our natural gas export … Iran is ready to boost its export upon the Turkey’s request,” Javad Oji, managing director of the National Iranian Gas Company (NIGC) told Mehr.

Oji said: “Iran’s gas export to Turkey has increased by 12 percent from March and NIGC has averagely delivered more than 24 million cubic meters of natural gas to Turkish Botas per day.”

He also said Iran had the capacity to produces 600 million cubic meters of gas.

In early October, Turkish Botas ended its contract with Russia’s producer Gazprom for buying annually 6 billion cubic meters (bcm) of gas due to pricing disagreement.

When Oji asked about the possibility of any modification of the price of Iran’s exporting gas, he said the deal had “open conditions”.

“Both sides have authority to hold talks over the price change based on the conditions and gas global market price … But so far no talks in this regards have been held,” Oji said.

Iran has also excluded Gazprom from development of one of its major oil fields project.

Source: agencies

via Turkey urges more natural gas imports from Iran – Tehran Times.

October 15, 2011