Turkey may have to pay Iran some $2 billion for unused natural gas this year, officials from the Energy Ministry have said. Following an accumulative 75 percent increase in natural gas prices last year, gas consumption in Turkey dropped remarkably.

With the negative impact of the ongoing global economic crisis, the
contraction in natural gas consumption in Turkey in the past few months
has reached 20 percent.

Turkey meets a considerable amount of its natural gas needs from Iran.
As stated in the natural gas purchase contract between the two
countries in July 2003, the state-owned Turkish Pipeline Corporation
(BOTA?) has to buy at least 6.8 billion cubic meters of natural gas
from Iran annually, meaning Turkey has to pay Iran a specified amount
of money whether or not it buys the natural gas.

Turkey paid Iran $704 million for natural gas it failed to buy from the country in 2008.

The amount of natural gas that Turkey failed to purchase from Iran
since the beginning of this year has amounted to 2 billion cubic
meters. Turkey will have to pay Iran around $2 billion for unused gas
unless sales increase by the end of the year.

While the Ministry of Energy and Natural Resources is meeting with
natural gas provider countries to ease a “buy or pay” condition in
agreements, it is also seeking ways to increase natural gas sales.
Initial plans include exempting some sectors from paying the private
consumption tax (ÖTV) and not increasing natural gas prices until the
end of the year even if fuel prices increase.

Natural gas prices increased by close to 73 percent for homes and 75
percent for industries last year, leading subscribers to cut back on
gas consumption. As a response to these developments, the ministry
announced that gas prices would drop as of January. However, despite a
40 percent reduction in natural gas prices since January, sales still
continue to drop.

Searching for ways to increase sales, the Ministry of Energy and
Natural Resources’ first plan is to exempt some sectors from the ÖTV on
natural gas.

According to officials close to the Supreme Planning Board (YPK), BOTA?
recently asked the council to lift the ÖTV on natural gas for the
fertilizer sector. Doing so, the company seeks to sell some 800 million
cubic meters of natural gas to the Turkish fertilizer industry, which
currently consumes no natural gas at all.

An official from the ministry asserted that the ÖTV exemption will
boost activity in the fertilizer industry, which is currently facing a
serious drop in production. The global economic crisis is also
negatively affecting natural gas sales in Europe. European gas
suppliers and buyer countries are holding talks on showing flexibility
in the “buy or pay” condition.

Source: Today’s Zaman

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