Energy Tops Agenda for Russia-Turkey Meetings
Energy will top the discussion items in this weeks visit by Turkish Prime Minister Tayyip Ergodan to Moscow this week.
Erdogan accompanied by his Foreign and Energy Ministers, is due to meet both Prime Minister Vladimir Putin and President Dmitry Medvedev
Straddling a Eurasian landbridge, Turkey wants to maximise strategic benefits by binding itself with neighbours through a series of trans-border gas and oil pipelines that will earn transit fees and guarantee fuel supplies for its rapidly growing economy.
Turkey is a major player in the $10.8 billion Nabucco project, backed by the European Union, to pipe gas from Turkmenistan to Europe, while Russia has proposed the rival South Stream pipeline, under the Black Sea and through Turkish and Bulgarian territorial waters.
Russia last week said it may drop plans to lay the underwater section and build a liquefied natural gas plant instead because of risks posed by new European energy rules.
"The South Stream project will be discussed," Putin's spokesman Dmitry Peskov said. "Energy dialogue is a very important part of our bilateral relations. All aspects of our energy dialogue will be discussed."
Turkey buys 64 percent of its gas from Russia, 40 percent of oil and a large amount of coal.
While Russia's Gazprom has already offered discounts to some Western customers, discounts for Turkish state pipeline operator Botas have not been settled, with discussions focused on the "take-or-pay" element in the contract.
Competing against other states to secure supply, Turkey had contracted to buy more gas than it actually uses and now wants to move to more flexible terms. It also wants a new formula to determine prices and move off the oil index.
Botas will sell its contracts to import 6 billion cubic metres of Russian gas to private-sector firms, and a Gazprom unit is among the companies interested. Gazprom also wants to build underground gas storage units in central Turkey.
On crude oil, Russia may supply 25 million tonnes per year, or about half of the capacity of a planned pipeline from the Black Sea to the Mediterranean that is strongly backed by the government. No deal has been signed. Energy analysts say Turkey must weigh the benefits of interdependence against the risks of overdependence.
"There is a danger that Turkey could become too overly dependent on Russia for energy," Gareth Winrow, director of research at Sidar Global Advisers, said.
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