Turkish Energy Firms to Race for Russian Natural Gas from Gazprom

Turkish energy firms prepare to race to replace state-run BOTAŞ in importing Russian gas via West Line. Aksa, a company close to Russian provider Gazprom, and Bosphorus Gaz, a Gazprom investment, are strong bidders, a source says

Turkish state-run pipeline company BOTAŞ’s recent decision not to renew a natural gas deal with Russian provider Gazprom is whetting the appetite of Turkish private firms, according to Oğuz Türkyılmaz, head of the energy council at Turkish Union of Engineers’ and Architects’ Chambers, or TMMOB.

Big electricity buyers may be among possible buyers of gas from the West Line as the contract for 6 billion cubic meters of gas between the parties fizzled last weekend over the Russian company’s refusal to decrease prices, Türkyılmaz said.

Aksa, an energy firm that has contracts with Gazprom, and Boshporus Gaz, a Gazprom partnership active in Turkey, will be strong bidders, a source close to the issue said.

Aksa and Gazprom signed a memorandum in August 2009 for joint participation in gas distribution tenders in Turkey, the source recalled.

Boshporus Gaz confirmed that it would be interested in west line gas. “BOTAŞ decided not to extend the deal but considering Turkey’s demand, someone has to buy that gas,” Hümeyra Erdoğan, a vice manager at Boshporus, said in a phone interview on Tuesday. “Turkish private companies will take distribution of the [West Line] gas and of course so will Bosphorus,” she said.

Aksa executives did not immediately respond to calls for comment.

Mehmet Şen, chief executive of Bosphorus Gaz, told Reuters on Monday that BOTAŞ’s move was “a very positive step regarding the privatization of Turkey’s natural gas market.” Şen’s father, Ali Sen, is the president of Bosphorus Gaz, where his family has the minority shares.

The move will not spoil Turkey-Russia relations in the natural gas sector, said Mehmet Kazancı, chairman of Turkey’s Natural Gas Distributors Union Association, or GAZBİR. “This will not affect bilateral relations in a negative way. In the end, Russia will sell its natural gas to Turkey anyways, but this time through private sector representatives. On the other hand, Turkey needs Russian gas to meet its domestic demand.”

Replacing the West Line resource is not an easy task, TMMOB’s Türkyılmaz said on Tuesday, citing problems of buying gas from Iran.
“Iran hardly meets its domestic demand and there are some restrictions on trading with the country,” he said.

Turkey’s deal with Algeria, another gas supplier, expires in 2014, Türkyılmaz recalled.

Russia supplies some 60 percent of Turkish natural gas demand.

Turkey buys nearly 16 billion cubic meters of gas from Russia every year via the Blue Stream pipeline, a contract for which was set to expire 23 years later. A smaller contract is for 8 billion cubic meters.

New deals not easy

TMMOB reacted against the cancelation, saying that maintaining new contracts with Russia in a very short period of time would not be easy. The contract that was not renewed expires on Dec. 31.

“May some companies, who have correctly guessed that BOTAŞ will not renew contracts with Russia, have already started talks with the Russian side?” TMOBB chairman Ali Ekber Çakar asked in a written statement on its website on Tuesday.”

The organization said it saw no reasons for Gazprom to sell cheaper gas to private companies compared with the state-run BOTAŞ.

October 4, 2011
SOURCE: Hürriyet Daily News