Putin Signs Energy Deal with Turkey

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ANKARA (Today’s Zaman)—Turkey and Russia signed a deal on Thursday promising Turkish support for a major Russian natural gas pipeline project that Moscow wants to build ahead of the rival Nabucco pipeline backed by the West.

Prime Minister Recep Tayyip Erdoğan and Russian Prime Minister Vladimir Putin signed the deal in Ankara for the construction of part of the South Stream pipeline through Turkish territorial waters in the Black Sea, weeks after Turkey signed a preliminary deal with European Union countries to launch construction of the US-backed Nabucco pipeline on July 13, which is expected to deliver gas supplies from the Caucasus and Central Asia to Europe in an effort to reduce European dependence on Russia for energy. Italian Prime Minister Silvio Berlusconi also joined the talks.

Analysts say progress in one of the two rival projects would push back the other. But Ankara, which seeks to boost its role as an energy conduit, says the Nabucco and South Stream projects are complementary, not rivals. Analysts say the agreement points to Turkey’s greater regional political ambitions, expanding beyond its traditional Western allies.

Turkish support for the South Stream project, which aims at protecting Russia’s 25 percent share in the European gas market, would ensure both delivery and supply of Russian gas. That is a promise the rival EU-backed Nabucco project, which is still searching for gas supplies, has yet to deliver. Azerbaijan, which both South Stream and Nabucco look to for gas supplies, has said it would give Russia the priority in buying gas.

Italian Prime Minister Berlusconi has joined the talks to emphasize Italy’s support for the South Stream project, which is to be built by a joint venture between Russia’s Gazprom and Italian oil group ENI.

The 900-kilometer South Stream pipeline is set to eventually run from Russia to Bulgaria under the Black Sea before delivering gas to consumers in Europe. The pipeline, with an annual capacity of 63 billion cubic meters, is planned to be operational in 2016, costing $11.6 billion.

The deal with Turkey would give Russia a clear path to reach Bulgaria while avoiding Ukrainian waters. Some South Stream supporters had worried that Ukraine might not allow Russia to route the pipeline through its waters, as many European countries have sought to diminish Russian dominance in energy markets. Ukraine was also at the center of a January price dispute that led to Russia shutting off gas supplies through Ukraine, affecting EU countries further to the west.

The United States and Turkey do not object to Russia’s participation in Nabucco as a business partner, though Moscow would likely be reluctant to ship gas through a pipeline that competes with its own projects. Washington says Iran should be excluded from Nabucco until it improves its ties with the West.

Other deals
In exchange for Ankara’s participation in the project, Moscow gave its support to several Turkish energy projects, including an oil pipeline planned to run from the Black Sea town of Samsun to the Mediterranean oil hub of Ceyhan. The Samsun-Ceyhan pipeline is expected to be built by Turkey’s Çalık Holding A.Ş. and Italy’s ENI. The pipeline would carry Russian oil and provide an alternative route to the congested Bosporus strait.

Putin and Erdoğan also agreed to expand the capacity of another Russian gas pipeline link crossing the Black Sea to Turkey, Blue Stream. Blue Stream’s current capacity is 16 billion cubic meters a year. Ankara also won Moscow’s consent to extend contracts on natural gas imports for 20 years. The current contracts expire next year. Turkey itself is a major importer of natural gas from Russia; nearly 70 percent of Turkey’s gas imports are from Russia.

On Thursday, Turkey and Russia signed 15 agreements, including two deals envisaging cooperation on nuclear energy.

Turkey is considering a bid by Russia’s Atomstroiexport to build Turkey’s first nuclear power plant. Ankara has said it expects further Russian cooperation to help Turkey build its first nuclear power station. A consortium of Russian Inter RAO, Atomstroiexport and Turkish Park Teknik submitted the only bid in last year’s tender for the construction of the power plant.

Turkey’s energy minister said on Wednesday he expected the Russian firms to lower the price they wish to charge for electricity from the power station.

Turkey has delayed final approval of the Inter RAO-Atomstroiexport bid, pending revision of the price the consortium would charge for electricity from the plant, which is expected to go into operation in July 2016.

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