Gazprom withdrawal from Turkish market not to hurt Turkish Stream project

Gazprom withdrawal from Turkish market not to hurt Turkish Stream project

Gazprom may withdraw from the Turkish internal market. The company will adapt the specific operating model on the Turkish gas market for a long-term to changing situation on the energy market of the country, official spokesperson of the Russian gas holding Sergey Kupriyanov said.

"We are keeping a close eye on development trends of the Turkish energy market and considering various options of cooperation with Turkish consumers. The specific operating model for the long term will be adapted to the changing situation on the energy market of this country," TASS cited the spokesperson as saying.

Kupriyanov said that the Turkish gas market is highly important for Gazprom as the second one in terms of export volume.

"We assume that the role of Turkey as the largest energy player in the region will continue growing. We are developing a new major infrastructural project Turkish Stream in this regard, which will bring large gas volumes directly to the country," he added.

Gazprom Group is withdrawing from Turkish gas business by selling its share in Akfel Holding trader nationalized late in 2016, Kommersant newspaper said earlier. Gazprom may completely withdraw from the Turkish market, considering its earlier announced plans to sell another asset in the country - Bosphorus Gaz.

A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to a correspondent of Vestnik Kavkaza, suggested that the company's decision to withdraw from the domestic market of the second largest exporter of Russian gas was affected by the events related to the coup attempt.

"An important role was played by the fact that there was a nationalization of one of the companies in which Gazprom had a stake. In fact, there can be property redistribution for political reasons in Turkey, and Gazprom may suffer from it, because its partners can be accused of having ties with Gulen and lose the company," the analyst said.

The second point is a certain regulation of gas prices by the authorities, which reduces the profitability of Gazprom. "I think that Gazprom has decided that it is much easier for it to remain simply a gas supplier. And the last point - perhaps, Gazprom simply decided to switch to a certain restructuring of its business in Turkey. That is, it may plan to build more gas stations there together with the Turks, so that gas generation would quietly squeeze out coal generation," Igor Yushkov suggested.

According to the leading analyst of the National Energy Security Fund, business restructuring will allow the company to expand its sales market: "The more generation is, the greater the demand will be and the greater the supply of Gazprom to Turkey will be. Therefore, I think that for a variety of reasons, Gazprom decided to withdraw from the specific, individual household sector. But the company is building the Turkish Stream, increasing gas supplies. Russia as a country does not lose anything from this," Yushkov assured.

As for the question, whether the withdrawal from the Turkish market will strengthen the negotiating position of Gazprom in the disputes over the price of gas, the expert suggested that Gazprom is simply evading charges that it is trying to provide different prices to different companies. "When Gazprom will withdraw from domestic assets, it will be able to say that the rules are the same for everyone," Igor Yushkov concluded.

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