Media have reported that the size of discount on Russian gas for Turkey would depend on additional volumes of Russian gas supplies to the country.
Sources told Russian newspaper Kommersant that two billion cubic meters (bcm) per year may be additionally supplied to Turkey through the Trans-Balkan pipeline amid the country`s rising consumption of hydrocarbons.
Earlier, Gazprom CEO Alexei Miller noted that the size of discounts on Russian gas for Turkey would depend on the volume of gas supplied to the country. He, however, said that the current price was ”very competitive.”
Currently, the annual contract volume of gas supplied by Gazprom via the Trans-Balkan pipeline to Turkey amounts to 2 bcm for Botas and 10 bcm for private importers, as well as 16 bcm of gas for Botas via the Blue Stream laid under the Black Sea. In 2015, Russian gas supplies totaled 27 bcm, which corresponded to almost the entire contract volume.
According to sources, Turkey needs additional gas due to rising energy consumption. It is reported that Azerbaijan and Iran are unable to increase supplies above the contracted volume, while the purchase of LNG is currently less profitable than the Russian gas. In addition, the decline in gas output in Azerbaijan and uncertain prospects of commissioning of the new fields puts into question the country`s ability to even supply the contracted volumes.
The negotiation process is complicated by the fact that Turkey`s gas market liberalization policy discourages Botas from entering into new contracts for additional gas supplies. The source, interviewed by the newspaper, reckoned that additional gas supplies may be contracted to the Turkish Bosphorus Gas (owned by Gazprom). It would ensure additional margins on gas sales to the Turkish market for the Russia monopoly.
According to the source`s estimates, Gazprom`s profit from additional supplies of 2 billion cubic meters of gas will partially compensate for its losses stemming from the provision of a 10.25% discount to Turkey.
