Azernews.Az

ANKARA – The state-owned Turkish Pipeline Corporation (BOTAS) is expected to sue the Greek government for debts of around $300 million arising from natural gas purchases from Turkey in a Swiss court of arbitration, officials from the corporation said on Wednesday, Todays Zaman reported.

The decision comes on the heels of recent statements from Energy Minister Taner Yıldız, who stated that Turkey was "not going to exercise its right to arbitration and will postpone recovery of the Greek debt until Greece gains financial stability." The minister also ruled out the suggestion by international institutions that Greece could pay off its debt in the form of real estate, meaning the sale of Greek islands in the Aegean. Yıldız said such a move "would be taking advantage of a neighbor at a very difficult time."

As part of a deal with the Greek natural gas company DEPA, inked in 2007, BOTAS has been selling the natural gas it purchases from Azerbaijan to Greece since early 2008.

Unable to repay the $300 million debt to Turkey whilst under heavy financial strain, Greece was expected to outline a plan for payment of the debt, which has been outstanding for 11 months now. BOTAS officials said they have taken the issue to the Swiss arbitration court -- which was stipulated as the responsible court for possible disagreements in a gas sale contract between BOTAS and DEPA -- and are expecting a response shortly. Sources said BOTAS's move was "necessary at a time when the debts are under the threat of not being paid."

Greece received 443 million cubic meters of natural gas from Turkey in 2008 while this number increased to 721 million cubic meters in 2009. The total amount of natural gas sold to the western neighbor amounted to 660 million cubic meters last year. Following an earlier increase in price of gas imported from Azerbaijan, Turkey had to pay Azerbaijan $300 instead of the earlier estimated $120 for each cubic meter of Azerbaijani gas. Turkey considered the price increase on the natural gas it sold to Greece, too. Greece accepted the increase in prices; however, it failed to pay the $300 million extra debt incurred from the price hike in the past year. Turkey, in the meantime, paid $1.1 billion extra to Azerbaijan.

Greece expects to privatize DEPA before the end of this year. The country had earlier said it may sell its stake in the country's biggest refinery, Hellenic Petroleum (HEPr.AT). Following Yıldız's remarks, a number of Greek papers speculated that Turkey had "a hidden agenda" to eventually purchase DEPA, a claim that has surprised Turkish officials. There was also speculation aired by Turkish papers, which claimed Turkey would permanently stop selling natural gas to Greece and start using it for domestic purposes.

If the Swiss court rules in favor of BOTAS, Turkey will have the right to confiscate Greek belongings. According to international rules in this regard, Turkey can, for instance, seize Greek ships and airplanes at its ports in return for the unpaid debts.