Moscow hopes Ankara will agree to the building of the South Stream gas pipeline on its territory while promising to support Turkey's bid to become the largest energy transit country between Europe and Asia. The two countries yesterday also agreed to swap energy assets.
Energy was the main topic of discussion. Russia provides 70% of Turkey's gas needs, Prime Minister Vladimir Putin pointed out and proposed swapping assets to deepen cooperation. The assets in question are gas distribution networks, gas storage facilities, and oil refineries, a government official said without disclosing any further details.
The government press service said that Stroytransgaz was negotiating the building of an underground gas storage facility in Turkey and the privatization of the Istanbul gas distribution company. Asset swap is a common cooperation model that leads to new joint ventures, a Gazprom official said. It has been employed with Italy, Germany, and Vietnam.
In Turkey, Gazprom is interested in joint extraction projects with the national gas corporation TRAO as well as the building of an underground gas storage facility, gas-burning power plants, and fertilizer plants. Consultations are ongoing, the Gazprom spokesman says.
Russian companies, such as Lukoil and Tatneft have long eyed Turkish assets. Troika Dialog analyst Valery Nesterov says that cooperation can be wide-ranging and include, for example, the building of an oil refinery at the end point of Samsun-Ceyhan. Gas transportation systems are particularly interesting, according to Denis Borisov of the Bank of Moscow.
During his visit, Recep Erdogan confirmed Turkey's support for the building of South Stream. In August 2009, Putin and Erdogan signed a protocol on gas cooperation whereby Ankara allowed Gazprom to explore its territorial waters. "The environmental tests have been completed, and geological and technical exploration is 90-95% complete," said Mr Putin, promising that the full results of the feasibility study will be provided shortly. Turkey may issue a permit for the building of South Stream on its territory before November 10, Mr Putin said.
In exchange for participation in South Stream, Turkey has secured Russia's participation in the building of the Samsun-Ceyhan oil pipeline, Mr Nesterov says. Via Turkey, the pipeline will deliver Russian oil to the Mediterranean and Southern Europe bypassing Ukraine. In the autumn, Rosneft and Transneft signed an agreement of understanding with the Turkish Calik Group and Italy's ENI. Deputy Prime Minister Igor Sechin confirmed yesterday that Russia would take an "active" part in the construction and Russia's share is currently being discussed.
In addition to oil and gas, Prime Minister Erdogan discussed building a nuclear plant in Turkey under a Russian-Turkish consortium (Inter RAO UES and Atomstroiexport from the Russian side and Park Teknik on the Turkish side). The bid for construction of the plant, which the consortium had practically won, was cancelled because of objections voiced by the Higher Arbitration Court of Turkey. Now, work will proceed on the basis of intergovernmental agreements, Mr Erdogan explained. An agreement on cooperation in building the power plant was signed yesterday by Mr Sechin and the Turkish Energy Minister Taner Yildiz. A source in the Russian delegation told Interfax that the terms of the project will be stipulated by April: Turkey will get an almost 25% stake, which would optimize the costs for the Russian companies.
Russia is pleased with the results, the Prime Minister's press spokesman Dmitry Peskov says. Turkey has become one of Russia's major energy partners, says Mr Borisov. Cooperation is mutually beneficial, Mr Nesterov notes: "Ankara seeks to become a major energy transit country, which would boost its chances of being admitted to the EU, and Moscow is taking advantage of this to promote its projects, including South Stream."
Maxim Tovkailo