OBG talks to Alexander Medvedev, Director-General, Gazprom Export

Interview: Alexander Medvedev

What is the current status of purchasing agreements and negotiations between Gazprom and private sector gas importers in Turkey?

ALEXANDER MEDVEDEV: When the contract with BOTAŞ to supply some 6bn cu metres of gas expired, we signed new contracts with four private companies for the same volume. These agreements, which were successfully implemented at the beginning of 2013, are regular, long-term, oil-linked contracts with a take-or-pay commitment. We always welcome market liberalisation. By entering the consumer market we are able to encourage competition. We do not fear competition provided the rules are clear, predictable and equal for all participants, and provided we do not face political or ideological discrimination. In general, we advocate that business rules should apply in the business sphere.

How do you assess the likelihood of Turkey securing greater imports of Russian natural gas in the coming years to meet rising domestic demand?

MEDVEDEV: Given our resource base and capabilities, we can meet Turkey’s growing demand. Security of demand is crucial for us. If there is security of demand, we will have time to secure the relevant production and transport capacities. In the gas industry “blue fuel” must first be sold and only then extracted. This is the rule dictated by the long-term investment cycle and physical characteristics of natural gas.

Turkish customers can attest to the security of natural gas supplies from Russia based on their experience over the past few years. Every time there was a problem with gas supplies, whether because of cold weather or surges in demand, we were able to increase export volumes to meet the needs of our Turkish partners.

What do you make of efforts to reduce dependence on natural gas in Turkey through nuclear power and renewable energy projects?

MEDVEDEV: The question of reducing natural gas dependence is artificial in my opinion. There is no such thing as one-sided dependence, although there certainly is interdependence. Turkey is dependent on natural gas supplies from Russia, and Russia, in the form of Gazprom Group, is dependent on Turkey for payment for this gas. Turkish consumers need Russian gas, and we need the income from the sale of this gas to cover the costs of exploration, production and transportation. This is how the balance of interests is formed.

With regards to nuclear energy and renewables, we do not regard them as competitors. The market needs all of these energy sources. The real issue is that any competition must be fair. In the EU renewables receive subsidies amounting to billions of euros annually, which places renewables in a privileged market position and puts gas-fired power generation at a disadvantage.

The official objective is to lower carbon emissions, yet the end result is that in Europe there is actually a substantial increase in the use of coal, which is highly polluting and emits even more carbon dioxide than gas. This leads me to believe that these regulations have nothing to do with fair competition.

In your view, to what extent do Russia and Turkey share the same long-term energy goals?

MEDVEDEV: Geography and political realities make Russia and Turkey complimentary players destined for very close interaction. The Turkish economy is undergoing a period of dynamic growth and can serve as a model not only for the countries in the region but also worldwide. Cooperation with Russia in the area of energy is logical and has vast potential for both sides. In terms of Russian natural gas exports, Turkey is our second-largest customer after Germany. In 2012, approximately one-fifth of all our gas volumes earmarked for the countries outside the former Soviet Union nations was delivered to Turkey. Since 2010, export volumes between Russia and Turkey have gone up by 50%. This is noteworthy. The growth of the Turkish market and energy demand is good news for us, and we are truly optimistic about future cooperation with our Turkish partners.