Turkey-Russia natural gas negotiations may stall amid spying allegations

LONDON (ICIS)–Turkey’s natural gas import price and contract negotiations with Russia were plunged into doubt on Wednesday following reports that members of private- and state-owned gas companies were investigated for leaking energy-related information to a foreign company.

Reports of the investigation, widely splashed in the Turkish media, do not mention which entities the accused were alleged to have passed information on to.

Details cannot be officially confirmed but several sources close to the matter told ICIS that suspects were questioned a month ago over allegedly passing information related to Turkey’s latest gas discovery in the Black Sea as well as import prices and flow data to Russia’s Gazprom.

State- and private-owned companies are currently in talks with Gazprom over a critical gas price review as well as the possible extension of four long-term contracts amounting to 7.75 billion cubic metres/year, which are due to expire next year.

However, negotiations have been inconclusive so far and market participants say the latest investigation, centred on six members of major private- and state-owned gas companies, may further hold up progress.

OPPOSING SIDES

Sources noted that Turkish-Russian discussions were already complicated by the fact that the two countries find themselves supporting opposing camps in conflict zones such as Syria, Libya and the Nagorno-Karabakh enclave.

However one Turkish source said the outcome of the investigation by the Turkish Secret Services (MIT) will indicate whether allegations relate only to the identified individuals or extend to the companies themselves.

ICIS understands the investigation involves employees of state company BOTAS as well as Bosphorus Gaz, one of Turkey’s major private importers which was previously majority owned by Russia’s Gazprom.

“It will be interesting to see in the upcoming days whether [Turkish gas regulator] EMRA will decide to withdraw the Bosphorus Gaz licence or not,” the first Turkish source said.

The company holds two import contracts amounting to 2.5billion cubic metres/year. The first contract for 0.75bcm/year concluded with Gazprom in 2007 expires next year while the second for 1.50bcm/year was signed in 2012 and will expire in 2043. BOTAS also holds a 4bcm/year contract which expires next year and another 16bcm/year for imports via the Blue Stream pipeline which expires in 2028.

BOSPHORUS GAZ

Bosphorus Gaz was majority-owned by Gazprom Germany, a Gazprom affiliate, but current owner Adnan Sen bought out the stake and became sole shareholder in 2018.

Sen’s relationship to Russia has previously been under intense scrutiny. Several companies interviewed by ICIS pointed out that the property tycoon had not yet taken a position regarding the investigation centred on members of his company’s staff,

This was seen as unusual with so much at stake. One Turkish source raised questions about the future of the two long-term import contracts held with Russia if Bosphorus Gaz was singled out in the investigation.

However, the first source said there was as yet not enough evidence to support allegations.

“There are many people who have been put in jail without proper evidence in recent years. How do we know that what has happened is not one such instance?”

Neither Bosphorus Gaz nor BOTAS replied to questions from ICIS by publication time.

Gazprom chose not to comment.