Gas from Iran missing: Turkish production on the back burner

Status: 01/28/2022 3:18 p.m

Because there are no natural gas deliveries from Iran, companies in Turkey have had to at least partially stop production. This exacerbates the economic and currency crisis – and increases the pressure on President Erdogan.

By Karin Senz, ARD Studio Istanbul

Last year things went really well for the automotive supply industry in Turkey. It has benefited from the fact that car manufacturers are relying on short delivery routes instead of imports from Asia because of the corona pandemic, reports Albert Saydam, President of the Association of Automotive Suppliers in Turkey. “Turkey was an alternative – or even the first choice for this new model. We could see the result in exports last year,” he says. “And we were just about to celebrate those good results.”

Karen Senz
ARD-Studio Istanbul

At the end of last week, however, many Turkish entrepreneurs lost their party mood. Iran announced that it would not be able to deliver gas to Turkey for ten days due to technical problems. The government in Ankara reacted by limiting gas and electricity consumption in the country’s industrial zones.

Energy Minister Fatih Dönmez said on Turkish television earlier this week that they had spoken to the companies. “Some of them said that they would take a break for a few days so that they could then resume full production. There were a lot of them,” says Dönmez. “We have guaranteed a minimum supply of natural gas and electricity to the others who, for example, work with ovens that need a lot of energy to heat up.”

Minimum supply in data centers

And Minister of Industry Mustafa Varank explained: “Our basic approach is to minimize the negative effects of the restrictions on manufacturers by minimizing possible damage to machines and plants and the loss of raw materials.” Alarm systems and data centers can also continue to run with the minimum supply. In Turkey, part of the electricity is generated with gas. However, those who consume more energy than permitted must expect penalties.

German companies are also affected, such as Siemens in an industrial area south of Istanbul. They assure you there ARD-Studio Istanbul, the production continues with own energy sources.

There is a risk of long-term image damage

Meanwhile, Albert Saydam estimates for his industry that with three days of production downtime, around a billion dollars would be missing from the till. In addition, he fears damage to Turkey’s image among foreign customers. “That will be included in the risk assessment when choosing suppliers. But I have to say that it’s a general problem,” he says. “It happened to Turkey this time, but it can also happen to other countries that don’t have their own energy resources. It probably just hit Turkey first.”

Critics accuse the government of not having filled its gas storage facilities because of a lack of foreign exchange. Others suspect bills have not been paid. President Recep Tayyip Erdogan disagrees. “We have absolutely no debts to Iran. These accusations are lies,” Erdogan said.

Some entrepreneurs wonder why the government is cutting gas supplies by 40 percent when only 16 percent of Iran’s needs are covered. The rest comes mainly from Russia and Azerbaijan. Turkey has experienced a cold spell in the past few days. The gas consumption is record-breaking.

Erdogan dampens expectations

According to its own announcement, Iran wants to deliver again from February. But Erdogan dampened expectations in the middle of this week. “I guess if nothing comes up, natural gas will come back in 10-15 days,” he said.

This is not good news for Albert Saydam. He wants to work extra shifts in his rubber factory near Istanbul at the weekend in order to be able to process open orders. Generators, for example, should be used for this. Siemens also uses some. How long can you make ends meet? Nobody wants to commit to that. “Resilience and flexibility are strengths of Turkish industry. But personally I have to say that we are all a bit tired,” says Saydam.

Gas shortage in Turkey: Production on the back burner

Karin Senz, ARD Istanbul, 27.1.2022 2:23 p.m

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