Izvestia: "Turkey could not resist the vigor of South Stream"
Ankara allows Russia to lay a gas pipeline through its territory.
Turkish Minister of Energy and Natural Resources, Taner Yıldız, handed a permit to Prime Minister Vladimir Putin allowing the construction of the South Stream pipeline in Turkey's territorial waters and signed two long-term contracts with Gazprom for Russian gas purchases up to 2021 and 2025.
"I would like to convey my special gratitude to the Turkish government for its decision to give Gazprom the final permit for the construction of the South Stream gas pipeline along the Black Sea floor in Turkish territory. Without a doubt, this is a pan-European project. We are also grateful to the European Commission for supporting it," Putin said.
It took Turkey a long time to issue this permit. Initially, Russia expected the required terms and permits for construction to be provided before November 1, 2010. In August 2010 Gazprom sent the application for the permit, including the engineering survey report, to the Turkish Foreign Ministry. The Turkish side replied that they needed more technical documents. Gazprom began a follow-up revision of its report, noting that it would be able to provide some of the requested data only after completing all the planning and surveying. It made a second request to receive the permit in November 2010 but in December Ankara turned it down for lack of information on the precise route.
The process deteriorated in 2011 when the price of Russian gas to be delivered to Turkey came up. Its state-owned Petroleum Pipeline Corporation (BOTAS) warned Gazprom it would not extend its Russian gas contract via its western route (Ukraine, Romania and Bulgaria) because of Moscow's unwillingness to discount the cost of gas.
However, the permit for the South Stream project was issued on December 28. Gazprom Export and BOTAS signed addendums to the contracts, defining the volume and terms of Russian gas exports to Turkey in 2012. The parametres have changed, but Gazprom Export refused to specify any details referring to trade confidence laws. A source familiar with the details told Izvestia that the addendums increased the volume of contracted gas that Turkey will purchase and provided a discounted price.
The South Stream pipeline will become an alternative gas distribution route to Europe that bypasses Ukraine. Previous discords with Kiev have compelled Gazprom to temporarily shut off gas distribution to the European Union more than once. Gazprom CEO Alexei Miller told Izvestia that now that Turkish Prime Minister Recep Erdogan has okayed the permit, the South Stream project is even more important in gas talks with Ukraine.
"This project is tied up with Ukraine. We have always said this. Now that we have received the permit for construction, we can say that it is linked to Ukraine even stronger," Miller said to Izvestia.
When asked whether the construction permit would influence talks with Kiev on gas prices, Miller said Ukraine had already programmed the average prices on Russian gas into its budget -- $416 for a thousand cubic metres.
Gazprom will continue its cooperation with Ankara. Apart from South Stream, it is planning to invest in the construction of gas storage reservoirs in Turkey and in the local energy industry.
Gazprom may also invest in Turkey's power generating stations. "In the future we are planning to sign direct contracts for Russian gas distribution to gas electric power stations, whereby Gazprom could act both as an investor and a shareholder," Miller told Izvestia.
Gazprom is planning to specify and formalise these plans in 2012. Gas will be supplied through South Stream's first section in late 2015. When all of its four sections are built, the pipeline will have a capacity of 63.3 billion cubic metres of gas per year. Kiev is particularly worried about these developments since there will be no need to transit gas through Ukraine.
By Anastasia Novikova and Pavel Arabov
