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With the new discovery, will Turkey succeed in reducing the prices of importing Russian gas?

Ankara is seeking to review gas supply contracts and reduce its cost after its new discovery in the Black Sea, and experts believe that it has several papers to pressure in order to achieve its goals.

In a report published by the Russian “News Re” website, Russian journalist Mikhail Kalmatsky surveyed the views of a number of experts on Turkey’s ability to pressure Russia to review gas prices and obtain more cuts in the coming period.

Experts believe that the newly discovered reserves in the Black Sea are not sufficient to turn the equation and impose new cuts on the Russian side, but Ankara has other cards in return to get what it wants.

It is noteworthy that Turkish President Recep Tayyip Erdogan announced last August that his country had discovered the largest gas field in its history in the Black Sea, and the exploration vessel “Fateh” discovered 320 billion cubic meters of natural gas reserves in the “Tuna” well.

Turkish statements

The statements of Turkish officials reflect – according to the writer’s opinion – a strong desire of Ankara to review contracts, although the process of developing the field that was announced recently discovered is still in its infancy, but it has begun to exploit this paper and has hinted to gas suppliers the need to reduce prices.

Turkish Minister of Energy and Natural Resources Fatih Donmaz said in this context that the supply agreements include clauses that allow for consultations and negotiations on reviewing prices.

Donmaz indicated that the recent discovery of gas in the Black Sea will enable Turkey to reduce customs duties and reduce the current import cost.

In turn, Turkish Minister of Treasury and Finance Barat Albayrak stated that the discovered field will allow his country to buy gas from abroad at a 30% cheaper price compared to its previous price.

But Igor Yushkov, an analyst at the Russian National Energy Security Fund, believes that Turkey overestimates the possibilities of benefiting from the discovered field in the Black Sea. In this context, he says that “the reserves that have been found and announced by the Turkish leadership are not very large, even with the start of the field’s development. Gas supplies can only be expected after 5 to 7 years, and with low energy prices, Ankara is unlikely to do so at all.

And Alexander Frolov, Deputy Director General of the Russian National Energy Institute, believes that Turkey does not yet have a comprehensive study of the project to extract gas from the Black Sea, and has no idea about the feasibility of developing this field.

Pressure papers

On the other hand, Joshkov stresses that Turkey has other papers that enable it to conclude new contracts on better terms for the supply of Russian gas, the most important of which is the start of gas supply operations from Azerbaijan since last year through the “Trans-Anatolian Gas Pipeline”, as well as developments in the natural gas market. Liquefied globally.

And Turkey has already succeeded in recent years in reducing the value of gas contracts, and has won more than one price dispute with Russia, as the writer says.

Economic expert Maria Belova stated that over the past ten years, the Russian contracts for the supply of gas to Turkey have been amended several times, for example Turkey in 2010 got a 10% reduction, and in 2014 after a significant drop in global oil prices, Turkish private companies got On cuts under its contracts with Russian Gazprom.

Belova added that in light of the current decline in oil and gas prices, Turkey is likely to get new cuts.

For his part, Alexander Frolov believes that there are no preconditions currently calling for Russia to reduce the prices of gas exported to Turkey, especially since Ankara previously obtained a discount on gas supplies that pass through the Turkish Torrent pipeline.

The author notes that the Russian gas supply to Turkey has decreased significantly this year, and according to the Turkish Energy Market Regulatory Authority, 4.68 billion cubic meters were imported from Russia in the first half of this year, 41.5% less than the same period last year.

Joshkov believes that the main reason for the decrease in Russian gas supplies to Turkey is the high price compared to other suppliers.

Belova asserts that in light of the decrease in the volume of Russian gas supplies to Turkey, the termination of Gazprom’s contract with the Turkish state-owned Potas company, and a number of private Turkish companies to supply 8 billion cubic meters by the end of 2021, the need to review contracts and extend at least part of them appears.

Turkey imports more than 90% of its oil needs from abroad, which puts it at the top of the list of countries that consume the most expensive types of fuel in the world, as the Turkish energy import bill is about 40 to 45 billion dollars annually.

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