Minister: Turkey, Russia agree on boosting gas pipeline

Turkey and Russia have agreed to raise the capacity of the Blue Stream pipeline, which brings in Russian gas via the Black Sea, to 19 billion cubic metres (bcm) annually from 16 bcm, Energy Minister Taner Yildiz said on Monday.

Turkey is due to start discussions later on Monday with Russia’s state-controlled Gazprom on a series of energy issues including gas price revisions, gas supply and nuclear power cooperation.

Officials said Russia’s recent annexation of Crimea had created a risk for Turkey, noting that 12.5 percent of its gas supplies pass through Ukraine via the Western pipeline.

Steps to prevent a potential supply problem will also be discussed with Alexander Medvedev, Gazprom's director general of exports, who is in Ankara for the talks.

“We have understood that with little tweaks the gas flow in Blue Stream could be increased to 19 billion cubic meters from 16 billion cubic meters,” Yildiz told reporters ahead of the meeting. “In principle, we have agreed on this with Russia.”

Turkish gas demand has more than tripled since 2000 to almost 47 billion cubic meters, with further rises expected as both its economy and population grows. The country’s total energy bill is around $60 billion annually.

The issue of gas prices will be another priority for Turkey, which is dependent on imports for almost all its energy needs.

“Following (today’s) cabinet meeting, we will get together with Medvedev and discuss our request for a discount in person. The contracts we have so far provides a right to Turkey for a price revision,” he said.

Yildiz said Turkey will seek a new gas purchasing contract for Turkey’s private sector at ‘a reasonable price’.

A potential re-routing of Russia’s South Stream pipeline will also be discussed after Turkey said it was open to the possibility of letting the controversial conduit pass through its territory if Moscow made such a request.

Oil to world markets

Yildiz said the oil stored in tanks at Turkey’s Mediterranean port of Ceyhan coming from Iraqi Kurdistan had reached 1.5 million barrels and that once the storage tanks were completely full, exports should start.

“We would be in a position to send this oil to the world markets once the tanks are full. We can't keep this in tanks,” Yildiz said.

Turkey has allocated three storage tanks at the Ceyhan export outlet with a total capacity of 2.5 million barrels for oil coming from the Kurdistan Regional Government's (KRG) pipeline, where oil started to flow last December.

Baghdad and Arbil remain at loggerheads over the sharing and payment method for oil revenues, leaving the future of exports in limbo for now. A breakthrough before the Iraqi elections due on April 30 looks extremely unlikely, Turkish officials say.

Separately, the Baghdad-controlled Iraq-Turkey pipeline, which has been pumping way below its 1.5 million barrels per day (bpd) of capacity, is in very bad shape due to persistent militant attacks, Yildiz said.

“The pipeline on the Iraqi side is in unusable shape. This is a loss for Iraq,” he said.