Russia’s natural gas giant Gazprom has decided to cancel the discount on natural gas for the Turkish private sector companies Reuters reported yesterday.
The discount on gas for the Turkish private sector has been in place since January 2015, when Turkey and Russia still enjoyed strong diplomatic relations. After the downing of a Russian jet by the Turkish air force however, Russia imposed a number of sanctions on Turkey; excluding the cancellation of the TurkStream however, energy so far was left off the table.
Turkey is highly dependent on Russian gas. The country consumes around 50 billion cubic meters (bcm) of gas annually, and 60 percent of it (30 bcm) is imported from Russia. Turkey’s other sources of gas are Iran and Azerbaijan as, well as imported liquefied natural gas (LNG) from Algeria and Nigeria, however import capacity from these countries is limited leaving the country in a vulnerable situation in the short term.
The companies Enerco Enerji, Bosphorus Gaz, Avrasya Gaz, Shell, Batı Hattı, and Kibar Enerji each import at least 10 billion cubic meters of natural gas from Russia annually, in line with an agreement signed with Gazprom in 2012.
Turkey’s gas grid company Botas and Russia’s Gazprom agreed upon a 10.25 percent discount on gas prices, however this decision has never been fully implemented. Botas appealed to the International Chamber of Commerce (ICC) to resolve this dispute over the price of gas from Russia.