Gazprom, Shell to Supply Turkey with Russian Natural Gas

OOO Gazprom export and Shell Enerji A.S. on Wednesday entered into a contract to supply natural gas to Turkey. Under the deal, Gazprom will annually supply 250 MMcm of gas to Turkey via Shell Enerji A.S. until 2021.

The contract was concluded based on the result of a competitive tender for the partial transfer by Petroleum Pipeline Corporation BOTAS of its import contract to other companies. The tender took place as part of the Turkish gas market liberalization process.

As part of the Turkish gas market liberalization, BOTAS announced on November 30, 2005, a competitive tender to partially transfer its import contract (of February 18, 1998) to other companies.

Based on the tender results made public on November 30, 2006, BOTAS transferred a part of the above contract to Shell Enerji A.S.

In accordance with the relevant accord between Gazprom and BOTAS, Shell Enerji A.S. shall assume the rights and obligations of BOTAS under the contract.

Shell Enerji A.S. sets out to launch deliveries to customers in the 2nd quarter of 2007.

Cooperation between Russia and Turkey in the gas industry had begun back in 1984 when the Governments of the Turkish Republic and the USSR entered into the Agreement for the Supply of Natural Gas to Turkey, with a total of some 138.7 bcm of natural gas delivered to Turkey over the entire period through 2005.

Russian gas exports to Turkey were on an annual rise, amounting to 14.5 bcm in 2004, over 18 bcm in 2005 and some 20 bcm in 2006.

On December 6, 2004, Gazprom and BOTAS inked the Memorandum of Cooperation in the Gas Sector. The Memorandum contemplates the possibility for Gazprom to supply gas to Turkish final customers directly or via its subsidiaries as well as to participate in gasification, gas distribution, UGS capacity development and gas-fired power generation projects in Turkey.

Shell Enerji A.S. is a subsidiary of Royal Dutch Shell plc. Shell Enerji A.S. was set up in 2004 in Ankara to oversee gas import, wholesale trade and marketing operations in the Turkish market.


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