Turkey’s Botaş facing financial pressure over ‘take-or-pay’ deals with Russia

Turkey’s national gas company Botaş has been facing problems in payments for “take-or-pay” contracts made with Russia, as natural gas consumption in the country has declined significantly due to an economic downturn, Habertürk reported Friday.

Estimates showed private companies in Turkey currently owed Russia for 6.5 billion cubic meters of gas under the “take-or-pay” principle with Botaş also facing problems in making payments to Russia for contracted amounts, Habertürk said

The data compiled by Habertürk shows that natural gas imports of Turkey fell by 11 percent in 2019 compared to the previous year. 

Russia’s gas giant Gazprom announced on Friday that gas supplies to Turkey declined by 35.3 percent to 15.51 billion cubic metres last year

Turkey’s 275 natural gas power plants that can supply 57 percent of the total domestic electricity consumption have either significantly cut or totally ended production due to decreases in electricity consumption. 

Meanwhile, natural gas consumption in residences has also dropped as Turkish people try to stay afloat in a period of economic hardship. 

The gas contracts between Russia and Turkey are based on the "'take or pay” formula, which forces Botaş to either take the contracted amount or pay the fee for that amount anyway.