Turkey Warms To Russia

Reuters

Published: July 25, 2008 (Issue # 1393)

ISTANBUL — Turkey wants to boost cooperation with Russia, its top gas supplier, ending a frosty period marked by differences over the Nabucco pipeline to Europe, an official and analysts said.

Turkey gets most of its gas — 68 percent of 2008 demand of 38 billion cubic meters — from Gazprom under three long-term deals.

NATO-member Turkey and Russia had a decade-long lull in economic relations after Ankara blamed Moscow for selling gas to them at more expensive rates than to other buyers.

They were also at loggerheads after Turkey backed four European countries on the 7.9 billion euro ($12.6 billion) Nabucco pipeline project planned to carry gas from the Caspian and Iran to Europe from 2013 to lessen Europe’s dependence on Russia.

But a senior Turkish Energy Ministry source said the two countries were now talking again.

“A path has now been opened to doing business on several critical projects,” said the source, who asked for anonymity.

Russia had said any pipeline project without its gas was doomed to fail and challenged Nabucco by broaching the South Stream project, which plans a pipeline to Bulgaria and Italy from Russia via the Black Sea. The source said the two countries agreed during Gazprom deputy CEO Alexander Medvedev’s visit to Ankara last week to set up a joint company to run Turkey’s urban gas grids.

They also agreed to build an underground gas storage facility in central Turkey and have talks to renew a gas contract expiring in 2011.

“Gazprom’s offer also includes the extension of the Blue Stream pipeline to Israel,” he said, referring to the 1,200-kilometer line that pumps 16 bcm of gas to Ankara through the Black Sea.

Sinan Ogan, of the Ankara-based think tank Turksam, said Turkey and Russia were now in a “new period of cooperation.

“The rivalry between South Stream and Nabucco has been to the detriment of both countries. But now Russia may be invited to take part in the Nabucco project during the planned visit by the Russian president to Turkey,” he said.

Yurdakul Yigitguden, a Turkey-based energy adviser, said the “warmer period in bilateral relations” could end with Russia supplying “10 to 20 percent of the Nabucco’s gas capacity,” which is planned at 30 bcm annually. “Gazprom may apply the same model it has in several European countries. It wants to participate in [Turkey’s] downstream business,” he said.

The Turkish Energy Ministry source said that apart from extending Blue Stream gas to Israel, Gazprom will also consider its oil arm, Gazprom Neft, supplying oil to the Samsun-Ceyhan pipeline, proposed by Turkey’s Calik and Italy’s Eni, between Turkey’s Black Sea and the Mediterranean.

Also on the table is a project, described by some analysts as “fantasy,” which envisions carrying fiber optic cables, water, electricity and Russian gas and oil through a multipurpose pipeline from Turkey to Israel.

Turkey’s energy minister, Hilmi Guler, said last week that Russia, Turkey and Israel would work on this “Mediterranean Line” project, which could later be extended as far as India.