Deadlock between Gazprom and Botas casts shadow on Turkish Stream project

A Saipem pipelaying vessel

Turkish Stream: After several months of negotiations, Gazprom has agreed to offer discounts to a number of privately-owned Turkish gas importers – but its failure to reach an agreement with Turkey’s state-run Botas  Petroleum Pipeline Corporation could at best end up delaying the construction of the Turkish Stream pipeline and at worst jeopardise the project altogether. After Germany, Turkey is currently the largest importer of Russian gas and under the terms of the discount, companies including Enerco Enerji and Bosphorus Gas will pay $260 per 1,000 m³.
According to an agreement signed in 2013, the price of a cubic meter was set at $340 for 2014 and $374 for 2015, but the Russian producer later reduced the 2014 price to $306. This led Turkey’s private-sector distributors to expect an additional discount on the price for 2015 in line with  falling oil prices, but Gazprom pushed the price up to $374 instead.
Gazprom and Botas now appear to be playing a high-stakes game of bluff. While Gazprom  needs Botas’ s distribution to maintain its market share, Turkey’s ability to re-sell Russian gas on the European markets is being restricted by a combination of the low price of oil and the depreciation of the lira. Gazprom, in the meantime, has a number of costly pipelaying vessels under contract from Saipem idling off Bulgaria’s Black Sea coast waiting to be redeployed to the Turkish Steam pipeline, a project that would be mutually beneficial to both countries.
Negotiations became further complicated last month when President  Putin attended a ceremony in Yerevan to commemorate victims of the Turkish ‘genocide’ of Armenians in 1915, a move not at all appreciated in Ankara.

Source: Kommersant