TURKEY: Russian gas exchange stalls

05 July 1996

Negotiations for a continuing exchange of Turkish goods and services for imported Siberian gas from the Russian Federation have stalled because Moscow wants to end the back-to-back arrangement, according to senior trade officials. Talks reached a bottleneck in May ahead of Russia's presidential elections, the officials add.

Russia wanted to abolish the exchange because of the cost of transport royalties for gas due to Ukraine and Moldova, Russian gas agency Gazprom's financial troubles and increasing Russian imports from Turkey outside of the gas deal, according to the Anatolian news agency However, Russia has not fulfilled its import quotas annually totalling around $250 million-280 million in the exchange since 1994, the officials said. Agreed on a framework basis in 1984 and operating since 1987, the exchange started to fall apart when individual Russian bodies assumed responsibility for their own imports as the Soviet Union dissolved, said the officials.

According to the 1984 agreement, a total 70 per cent of Turkish payments for about 5,000 million-6,000 million cubic metres of Siberian natural gas valued at around $350 million-400 million should have been recycled into Russian imports of Turkish goods and construction services. Of the 70 per cent, 50 per cent should be goods and 20 per cent construction services.

However, Turkish officials also say the gas exchange now forms a relatively small part of total bilateral trade with Russia.

Observers note that estimates of unrecorded, black-market trade weighted in Turkey's favour range as high as $6,000 million annually.

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