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Turkey: Ankara Delays Gas Pipeline Projects With Iran, Russia

Turkey has announced delays in two gas pipeline projects with Russia and Iran. While Ankara has cited technical problems, it may be seeking to slow the pace of gas imports until its economy improves. Our correspondent Michael Lelyveld reports.

Boston, 17 May 2001 (RFE/RL) -- Turkey appears to be seeking more time to begin gas imports from Russia and Iran as it struggles to recover from its economic slump.

Gokhan Yardim, the general director of Turkey's state pipeline company Botas, told the Reuters news agency last week that delays are expected on two major projects that were supposed to bring gas to the country later this year.

Yardim blamed a series of technical and legal hitches on the pipelines from Russia and Iran. As recently as February, the same official said that the projects were proceeding smoothly and would be finished on time.

But last week, Yardim said that gas from Russia's Blue Stream pipeline would start flowing into Turkey next January instead of in October as previously planned. He cited a "delay in the delivery of pipes to be laid under the Black Sea."

Yardim said he had been informed by Russia's Gazprom that there would be a problem in obtaining some of the pipes. But he acknowledged that Gazprom blamed the Turkish government for failing to complete legal work for the 1,200-kilometer pipeline on time.

Yardim vowed that Ankara's far-reaching corruption probe of the energy sector would not stop Blue Stream. But he did not address a charge made by Deputy Prime Minister Mesut Yilmaz that the investigation had already stopped work on energy projects in the country since last November.

Turkey is also facing trouble with a gas pipeline from Iran, which has been in the works since 1996.

Last week, Yardim announced that the timing of the Iranian supplies would slip, saying "The original gas delivery date was August. Now, we expect it in September or October." He added that "such delays must be regarded as normal in big projects."

In March, an unnamed energy official told the Anatolia news agency that the delay would result from Iran's failure to build a metering station on the border to measure the gas. Turkey has previously sought extensions in the project, which was first scheduled to start pumping in January 2000.

In February of last year, Yardim blamed world economic woes for Turkey's slow work on its part of the pipeline. The government promised to take delivery of the gas at the end of July 2001 after Iran threatened $200 million in penalties under a take-or-pay contract.

But this week, Yardim faulted Iran for even starting its work on the metering station without a separate operating agreement.

In animated words quoted by NTV television, Yardim said, "They ordered materials without asking us. You don't order materials without an operating agreement. That's no solution. An operating agreement has to be signed and the metering station has to be completed and accepted. The materials have to conform to the operating agreement. They have brought materials to the site without signing."

Yardim said, "Under these conditions we cannot receive gas."

So far, Iran's reaction has been restrained. In a statement last week, the National Iranian Gas Company said that "All operations related to this scheme are progressing finely, according to the contract time plan." The company said that it "has commissioned all related equipment for the gas delivery."

Yardim's comments suggest that Turkey is avoiding the most obvious explanation for the delays. Since the country's latest economic crisis in February, Ankara has lost its huge appetite for imported gas.

Turkey received some good news on 15 May as the International Monetary Fund approved $8 billion in new loans, making $3.8 billion available immediately. But the effects of a 40 percent devaluation of the Turkish lira since February have been deep. While the IMF has predicted that the economy will shrink by 2.6 percent this year, the investment bank Morgan Stanley Dean Witter recently forecast a much steeper drop of 7.2 percent.

Even before the current crisis, Turkey had fallen far short of its ambitious gas consumption goals. While Botas forecast that the country would need 19 billion cubic meters of gas last year, it used only 14.5 billion cubic meters, 24 percent less than planned. This year, the company expects consumption of 16 billion cubic meters, still 16 percent less than the prediction for last year.

There has been no sign in Yardim's comments that Turkey will feel any pinch if the imported gas does not arrive on time. It is more likely that Ankara will look for more reasons to delay deliveries until the economy picks up again.

But it is not clear that Russia and Iran will accept more excuses. Both countries could seek costly penalties under contracts that Turkey has signed.

Despite its new loans, Ankara may have run out of time to deal with its gas problem after failing to face it for years.