ECONOMY

Iranian gas for Turkey

ANKARA (Combined reports) – Deliveries of Iranian natural gas to Turkey have finally begun after a two-year delay and bilateral wrangling over technical matters regarding the pipeline, the Turkish Energy Ministry announced yesterday. Deliveries began at 18.30 GMT on Monday, a ministry statement said. By the end of 2001, Turkey will purchase 165 million cubic meters of gas, the corresponding portion of the 3 billion cubic meters it was supposed to import in the first year, the statement said. The amount is to rise to 4 billion cubic meters in 2002 and reach 10 billion in 2007, with gradual increases each year. The flow of gas from the northwestern Iranian city of Tabriz to Ankara was to start on July 30. But the inauguration was put off – for the second time after an initial postponement in 2000 – as Turkey said that a metering station in Iran was not ready for operation. Teheran at first denied any obstacle on its side but later agreed to make the necessary corrections. Turkish Energy Minister Zeki Cakan said that in the western city of Izmir, Iran had failed to correct all snags. But the international firm charged with certifying the station gave the go-ahead as it decided that the remaining hitches would not affect deliveries, the Anatolia news agency reported. Iran and Turkey signed a 22-year contract, worth $20 billion, in August 1996. Under the deal, Turkey was supposed to start importing the gas in 1999, but failed to finish its part of the pipeline in time. In January 2000, the sides agreed on a postponement, while extending the contract term from 22 to 25 years. The accord, sealed during the term of the now-banned former Islamist prime minister, Necmettin Erbakan, has faced objections from the USA on the grounds that it rivaled a major project to carry natural gas from Turkmenistan to Western markets via Turkey. To appease Washington, Ankara has said that the trans-Caspian pipeline is a priority, maintaining that it needs both projects to meet a rapidly growing energy demand. Turkey is building another natural gas pipeline – with Russia – that is expected to become operational in the first half of 2002. The conduit will run from the Izobilnoy gas plant in southern Russia across the Black Sea bed to the Turkish port of Samsun and then to Ankara. It will initially carry 8 billion cubic meters of gas a year. The annual volume will be increased to 16 billion cubic meters in 2003. Turkey already buys about 15 billion cubic meters of gas from Russia, Algeria and Nigeria and is expected to consume 14.6 billion cubic meters this year. The country’s natural gas consumption is expected to rise to 40 billion cubic meters in 2005, and 58 billion cubic meters in 2010, according to energy ministry estimates. Turkey also plans to receive more gas from Russia from a second line, named Blue Stream, next year and from Azerbaijan beginning in 2005. The natural gas law passed in April aims to encourage domestic gas consumption, to scrap the monopoly of state pipeline company Botas and open up the market to private entities in a bid to liberalize the mostly state-run sector. Botas recently said it would hold tenders next year to sell off domestic gas distribution grids to the private sector for the first time.