Gazprom agreed on the second line of the gas pipeline "Turkish flow"

To this end, the gas corporation agreed to pay Turkish Botas $ 1 billion on lost arbitration. It is possible that this is not the last payment of the Russian company.
Gazprom will nevertheless pay the Turkish Botas $ 1 billion in the form of a discount on the gas supplied in 2015-2016, which will be provided retroactively and thereby settle the dispute of the companies in arbitration. This amount will actually become a payment for Ankara's consent to the second line of the Turkish Stream gas pipeline - the agreement on the project was signed by the parties on May 26. But, according to Kommersant, the discount will not affect the current price of Gazprom for Botas, which in the third quarter should exceed $ 260 per thousand cubic meters and may continue to grow - this situation creates a basis for resumption of disputes over the price.

Gazprom has settled the key dispute in relations with Turkey, having agreed to complete the arbitration with the main client, the state company Botas and signing an agreement on the construction of the second thread of the Turkish Stream gas pipeline. As reported by the Turkish leader Recep Erdogan on May 26, Botas has achieved a 10.25% discount on gas delivered in 2015-2016, and will receive $ 1 billion retroactive payment. The agreement on the "Turkish flow" will allow Gazprom to build both the underwater part of the pipeline through the Black Sea in the economic zone and waters of Turkey, and the ground part towards Bulgaria and Greece. Regarding the dispute with Botas, which runs from the fall of 2015, the monopoly only confirmed the settlement without informing the conditions.

To assess who won is difficult: for three and a half years, which lasts the dispute, external circumstances have changed many times. When on December 1, 2014, Vladimir Putin announced at the press conference with Recep Erdogan about the replacement of the South Stream project with the Turkish Stream, he promised a 15% cut in gas prices. According to Kommersant, this idea caught Gazprom unawares. Within six months he tried to reduce losses, reducing the discount rate to 10.25%. But even this discount was never finally approved: Moscow expected that Ankara would fulfill its part of the deal and sign an intergovernmental agreement on the "Turkish flow".

At first the question was postponed until the parliamentary elections in Turkey, then before the formation of the government, and after the Turkish fighter shot down the Russian Su-24 bomber over Syria, the fate of the whole project became extremely uncertain. At the same time, Botas filed an arbitration with Gazprom.

A year later, in the fall of 2016, on the background of the warming of Russian-Turkish relations, the project began to develop, and, in the opinion of the Russian interlocutors of "Kommersant", it was Ankara who was more interested in this. According to Kommersant, Gazprom categorically did not want to pay anything to the Turks and resume discussion of the discount, pointing out that in 2016-2017 the price of gas for Botas (completely tied to oil) and so sharply fell due to a drop in oil prices. It seemed that in a new political and economic reality, Gazprom would not be able to pay anything to Turkey (although in the past various concessions, including gas discounts, were provided or promised to South Stream partners - Bulgaria, Serbia, Hungary). So, in October 2016 an intergovernmental agreement on the "Turkish flow" was signed, but the issue on the second line of the gas pipeline (15.75 billion cubic meters) intended for the transit of gas to the EU remained unresolved: Ankara tied it with a dispute over the price of gas, and up to most recently, Gazprom was not going to compromise.

Now this decision is made. In the opinion of Kommersant's interlocutors, Gazprom decided to hurry, given that the deep-water part of the first line is already built and it is necessary to actively pave the second one if the company wants to have time to do so by the end of the contract for transit through Ukraine in late 2019.

Postponement, among other things, meant costly downtime for the pipe-laying vessel.

At the same time, the terms for settling the dispute are rather beneficial for Gazprom, if we assess the situation based on the situation as of mid-2015. Thus, according to Kommersant's estimates, the use of a 10.25% discount for Botas shipments in 2015-2016 was to result in a retroactive payment of at least $ 1.5 billion (Ankara estimated losses for only $ 1 billion in 2015). But, most importantly, according to Kommersant, the discount that has been approved now applies only to the volumes of 2015-2016 and does not affect the current price.

This factor can cause new problems in the current year. The price for Botas, which in the first quarter was, according to ICIS, about $ 205 per thousand cubic meters, due to rising oil prices, should exceed $ 260 per thousand cubic meters in the third quarter and is likely to be higher than the prices for hubs in Europe. Under contract, Botas has the right to review prices every three years. Last time the company used it in 2015, that is, it can start new negotiations with Gazprom, using the "Turkish flow" as a lever, the second thread must be built by the joint company of Botas and Gazprom, TurkAkim Gaz Tasima. "Turkish flow" strengthens Turkey's dependence on Russian gas, which already provides more than half of the consumption, notes Oul Gulmira Rzaeva. But, she emphasizes, Russia also becomes dependent on Turkey for the transit of gas to South-Eastern Europe.