US embassy cable - 03ANKARA7274

UNCLAS ANKARA 007274 
 
SIPDIS 
 
 
STATE FOR E, EB/CBED, EB/IFD, AND EUR/SE 
DEPARTMENT PASS OPIC, NSC FOR BRYZA, 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
USDOE FOR CHARLES WASHINGTON 
TREASURY FOR OASIA 
 
 
E.O. 12958: N/A 
TAGS: ENRG, ECON, PREL, TU 
SUBJECT: TURKEY AND RUSSIA REACH COMPROMISE ON GAS 
 
 1.  (U)  GOT officials have confirmed that BOTAS has reached 
a compromise with Gazprom's sales company Gazexport, 
following 11 months of negotiations, but have not made any 
official announcements detailing the new price, except to 
state that it was a competitive price, similar to the one 
applied to other European countries.  Press reports indicate 
that the Russians have agreed to give a single and more 
competitive price to Turkey for natural gas instead of the 
four different prices that Turkey was obligated to pay in the 
past.  One of the provisions of the agreement permits Turkey 
to implement different pricing for different seasons, so that 
Ankara will pay less for gas during the summer than during 
the winter.  To date, the GOT has 
 
 
2.  (U) Under the new deal, Turkey also has minimized its 
contact with Turusgaz, the intermediary company for Turkey's 
gas purchases from Russia through Bulgaria.  The agreement 
allows Turkey to limit gas purchases to 500 million cubic 
meters of natural gas through Turusgaz and to buy the 
remaining 7.5 bcms directly from Gazprom.  Turusgaz's 
involvement is to continue for about two more years to 
compensate for the costs of the invesments made in Bulgaria 
to facilitate the transfer of gas from Russia to Turkey.  The 
GOT also has lowered its take-or-pay obligations in its 
natural gas contracts with Gazprom, which the World Bank's 
estimates would have cost Turkey $15 billion in the next 10 
years. 
 
 
3.  (U) Energy Minister Guler did take some credit for the 
successful negotiations. He said that "we have now learned 
how to negotiatie and improve out conditions in these 
agreements, which is a sign that mistakes made in the past 
can be corrected.  We value our relations with our neighbors 
and are willing to improve these relations."  He stated 
further Turkey is willing to pursue similar talks with Iran 
to lower prices to a reasonable level, and eventually be in a 
position to buy as much gas as Turkey needs.  He stressed 
that lesser reliance on gas will enable Turkey to utilize 
idle resources, such as hydroelectric or thermal energy power 
plants, which would contribute to lower electricity prices. 
Guler noted that Russian and Iranian companies were welcome 
to bid for the distribution networks in Turkey. 
EDELMAN