Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Turkey and Russia Spar Over Natural Gas Prices

Politics / Natural Gas Oct 04, 2011 - 02:04 PM GMT

By: OilPrice_Com

Politics

While few people in the world have warm feelings for energy companies beyond perhaps their stockholders, Russia’s state-owned natural gas monopoly Gazprom has shown an unrivalled and unique capacity to alienate is customers over the past two decades since the collapse of the USSR.


Nations unhappy with Gazprom’s bludgeoning tactics include virtually all of the new nations composing the post-Soviet space and beyond. Issues range from aggressive low-balling of purchase prices for natural gas exports (Central Asia post-Soviet states) through transit countries getting screwed on both prices and transit fees (Belarus, Ukraine and China) to end consumers from Eastern and Central Europe to Asia.

Gazprom’s customer base is nervously contemplating if the monopoly’s obnoxious buccaneering capitalist tactics will cause further disruptions in continued supplies of natural gas if the energy giant pushes their transit neighbors too far.

One of Russia’s customers has had enough of being regarded as Gazprom’s milch cow, and unlike Ukraine or Belarus, Moscow may suddenly find that Turkey has both the inclination and wherewithal to fight back, and it is a fight that Gazprom would be foolish to pursue.

The storm flags were raised in Ankara on 29 September when Turkish Energy Minister Taner Yildiz told a symposium on the exploitation of mineral resources that Turkey may sever its natural gas contracts with Russia if discounts on fuel supplies cannot be resolved. Taner said, "The operation of our agreements for the supply of gas through the western corridor is expiring later this year. We import much of our oil and gas. In this regard we have requested from the Russian side a discount on the gas being supplied along the western corridor. If Russia does not offer a discount that will satisfy us, we intend to raise the question of terminating the contract" before reminding his audience that over the past 29 months the price of Gazprom natural gas imports had risen by 39 percent.

Yildiz stated that in view of the rising prices the Turkish government intended to seek a partial rebate for the country’s purchase price of Russian oil and natural gas via the Balkans, commenting, "Specifically, we shall analyze every agreement in this area that is expiring.

Among them contracts for supply through the western corridor" before reiterating that without a discount Turkey would not renew the purchase agreements.

Now Ankara has upped the ante, as on 2 October the Turkish state gas pipeline operator Botas informed Gazprom that it will end its contract with them for the delivery of natural gas to Turkey through the Balkans. Sources in the Turkish Energy Ministry, speaking on condition of anonymity said, "Russia has failed to take steps that would satisfy the Turkish side. Proceeding from this, Botas has officially informed Russia that it will not extend the agreement."

Turkey is seeking a 20 percent natural gas price reduction on its Balkan purchases. On 2 October Turkish Energy Minister Taner Yildiz said, "Russia is the most important country in our import of natural gas. Our annual natural gas import from three different channels in Russia is nearly 30 billion cubic meters. The Western Line provided an annual 6 billion cubic meters of natural gas. End of inflow of 6 billion cubic meters of natural gas will not cause any problem. Turkey also imports natural gas from Iran and Azerbaijan. Our annual natural gas consumption is 35-37 billion cubic meters. On the other hand, Turkey is able to import 45 billion cubic meters of natural gas under its agreements,"

The view from Moscow is that it has the whip hand in its negotiations with energy-poor Turkey, which currently imports about 90 percent of its energy needs. In 2010 Gazprom provided bout 60 percent of Turkey's total domestic gas imports for domestic consumption.

That, however, is half the story.

Turkey and Russia are already connected with pipelines not only through the Balkans but also by the Blue Stream 754 mile-long, $3.2 billion, natural gas pipeline, which runs across the bottom of the Black Sea from Russia’s Beregovaia Compressor Station to Turkey’s northeastern Black Sea Durusu Terminal. While gas flows from Russia to Turkey started in February 2003, pricing disputes delayed the official inauguration ceremony at Durusu until November 2005. Turkey took some criticism from the U.S. for the pipeline prior to its opening, as Washington publicly criticized the pipeline, calling upon Europe to avoid becoming any more dependent on Russia for energy. Despite the cost wrangles, relations were running sufficiently well that in March 2009 discussions were held in Ankara between Turkey’s previous Energy Minister Hilmi Guler and Gazprom CEO Alekhsei Miller about a parallel Blue Stream 2 undersea pipeline project.

What Miller and his cohorts seem to fail to understand is that Gazprom is not the sole significant player in the Turkish market that it used to be. Iran, which contains the world's second-largest gas reserves, currently provides nearly one-third of Turkey's domestic demand and is eager to expand sales, while neighboring Azerbaijan, which currently supplies roughly 5 percent of Turkey’s imports, is also seeking to expand its market share, particularly given its recent massive offshore Caspian natural gas discoveries. Last but not least, Turkey also receives liquefied natural gas (LNG) supplies under contract with Algeria and Nigeria.

Earlier this year, Turkey’s natural gas reserves were estimated at roughly 218 billion cubic feet, nearly all of which is undeveloped, as the country currently only produces approximately 25 billion cubic feet per annum. There are 14 gas fields in Turkey, the largest one of which is Marmara Kuzey, an offshore field in the Sea of Marmara in the Thrace-Gallipoli Basin and Turkish and foreign companies have been exploring for oil and natural gas in Turkish territorial waters from the Black Sea to the Mediterranean.

So, Turkey is hardly bereft of longer-term energy options should Moscow continue to put the financial screws to its natural gas prices. While a cessation of Russian natural gas imports would undoubtedly cause some interim dislocation to the Turkish economy, there are the options enumerated above that could in short order begin to take up the slack.

Gazprom accordingly should listen very carefully to Ankara’s pricing concerns.

Source: http://oilprice.com/Geo-Politics/International/Turkey-and-Russia-Spar-Over-Natural-Gas-Prices.html

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2011 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in