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Cablegate: Turkey and Russia Reach Compromise On Gas

This record is a partial extract of the original cable. The full text of the original cable is not available.

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

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