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. Last Updated: 07/27/2016

Turkey Avoids Penalties After

ANKARA, Turkey -- Turkish state gas and oil company Botas will not face penalty payments to Russia and Iran because its first-quarter gas purchases from the two suppliers were below contract volumes, its general manager said Friday.

Turkey, which buys all of its gas from Russia, Algeria, Iran and Nigeria, received three-quarters of the 14.6 billion cubic meters of gas it used from Russia last year.

Botas general manager Gokhan Bildaci said the take-or-pay clause in the contracts, aimed at protecting the supplier against buyer failure to get the contracted amount, was based on annual amounts.

"We did receive less than contract volumes in the first three months. But for the clause to take effect you have to look at the annual purchases," he said in an interview. "We will not pay any compensation money to Russia or Iran because of the first-quarter purchases."

Gas analysts have criticized Botas' gas purchase agreements, saying its deals could take Turkey to a position where it will get more gas than it needs.

A Botas statement said Turkey bought 2.9 billion cubic meters from Russia and 285 million cubic meters from Iran, a supplier since December, in the first quarter of this year.

"We bought 96 percent of the contract volume with Russia and 50 to 60 percent of that with Iran in the first quarter," Bildaci said.

Botas had estimated a consumption of 20 bcm for this year in January, but Bildaci said the gas use would not be more than 18 bcm to 19 bcm. "Of that, 14 bcm will come from Russia and 3.4 from Iran," he said.

Bildaci said a team of Botas officials had returned from Iran on Thursday and hinted they might have renegotiated a lower amount for this year with Iran to avoid the take-or-pay clause, but declined to comment further.

More than 60 percent of gas is used in power plants in Turkey. Bildaci said three new plants in western Turkey with a total power production capacity of 3,860 megawatts would be partly commissioned in the summer.