September 4, 2008

Natural Gas Crisis Looms As Relations With Russia Worsen

Natural gas crisis looms as relations with Russia worsen

ANKARA, Sept. 3 (Xinhua) -- Turkey has grown increasingly concerned that a crisis over customs procedures between itself and Russia may spread to gas and petroleum commerce, local Today's Zaman reported on Wednesday.

At the moment, 60 percent of Turkey's natural gas and about half of its crude oil demand are supplied by Russia.

The report said that any possible disturbance in crude oil needs to be supplied from other countries and the international spot market, however, a similar solution for a natural gas crisis is not available.

Turkey has threatened to retaliate against new Russian import controls that are seen as an attempt to punish Turkey for allowing U.S. warships carrying aid to Georgia to pass through the Turkish straits, which connect the Mediterranean to the Black Sea.

Experts do not think Russia would cut gas imports completely, but they worry that Russia may not provide more gas than already promised. In such a case, Turkey would likely be faced by a serious energy crisis.

Turkey has signed two deals with Russia over natural gas. The first deal was signed in 1986 for a 25-year period. The deal, which will expire in 2011, let Turkey buy 6 billion square meters of natural gas per year.

The second deal was the Blue Stream, again for 25 years. With this deal, Turkey buys 16 billion square meters of natural gas per year directly.

Last year the Turkish Pipeline Corporation (BOTAS) bought 36.4 billion square meters of natural gas from Russia, 23.1 billion square meters of which were a result of the contracts.

Apart from the natural gas, crude oil imports from Russia are increasing exponentially. In the given period, 9.3 of 23.4 million tons of crude oil Turkey exports are purchased from Russia.

The increase in the natural gas and crude oil trade has changed the commerce balance between the countries rapidly, to the disadvantage of Turkey.

In 2007 the total amount of Turkey's exports to Russia amounted to 4.7 billion U.S. dollars whereas imports came out to 23.5 billion U.S. dollars.

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