Turkey imports more gas from Azeris than Russians
Ankara has been importing more Azeri gas in the past couple
of months in a move to reduce its dependence on Russian and Iranian gas.
Experts say that recent political conflict between Ankara
and Kremlin, first in Syria and then in Libya, might have played a political
role in a change that also suggests political calculations.
In the first quarter of this year, Azerbaijan exported 2.7
billion cubic meters of gas to Turkey from the Shah Deniz field — 20 percent
more than the same period last year, according to official data from the Energy
Market Regulatory Authority of Turkey.
Although Ankara and the Kremlin this January launched the
$7.8 billion, 930 km TurkStream pipeline to bypass the Ukraine, Azerbaijan, as
a major gas supply competitor, is gradually establishing a foothold in the
Turkish market and for the first time overtaking Russia as the largest gas
supplier.
In March, Turkey received 924,28 million cubic meters of
Azeri gas, comprising 23.45 percent of the total volume of gas supplies to
Turkey and pushing Iran and Russia to second and third place respectively as
gas providers.
Gazprom’s share in Turkish gas imports fell below 10 percent
from 33 percent compared to March 2019, with its exports declining by 72
percent; liquefied natural gas (LNG) imports from the US tripled in the same
period at nearly 1 million tons. John Roberts, an energy security specialist and
a member of the UN Economic Commission for Europe Group of Experts on Gas, said
that both Russian gas giant Gazprom and Azerbaijan’s state energy company SOCAR
— acting as salesman for the Shah Deniz consortium — have delivery contracts
that they both have to honor.
“As these contracts contain pricing formulas, the price of
the gas cannot be changed unless the prices are renegotiated,” he said.
According to Roberts, at a time of generally low
international gas prices, this means in practice that Turkish buyers have to
convince Gazprom and SOCAR to lower their rates.
“It appears that SOCAR may be more flexible than Gazprom in
this regard. Meanwhile, Gazprom customers in Turkey remain very unhappy at the
cost of Russian deliveries. So Turkish customers, including Turkish state
energy company BOTAS, seem to be opting to purchase Azeri gas whenever
possible,” he said.
Azerbaijan’s SOCAR also plans to list its Turkish subsidiary
on the London, Hong Kong and Istanbul stock exchanges next year.
However, although the dispute with Gazprom is primarily
commercial and has been running for several years, Roberts thinks that an
inclination toward Azeri gas has a political dimension as well.
“If a supplier is not flexible about prices when the price
of gas is generally so low, it leaves the consumer to worry whether it is
sensible to rely so much on such a dominant supplier,” he said.
“Since BOTAS, which is responsible for handling the import of
most of Turkey’s gas, is a state company, this means that political
calculations concerning Russia’s share of the Turkish market are bound to play
a role, particularly as Turkey negotiates replacement contracts for existing
supplies of Russian and Azeri gas.”
Shaky political relations between Turkey and Russia due to
their different political priorities also play a role in changing energy
preferences, especially at a time when both Russian and Azeri gas are waiting
for a renewal of contracts.
“Other political factors, notably Turkey’s sometimes
strained relations with Russia due to the conflicts in Syria and Libya, as well
as its traditional friendship with Azerbaijan, will play a role in determining
the shape of future contracts,” Roberts said.
“From a Turkish perspective, the real issue is getting
Russia and Azerbaijan — and also Iran and various suppliers of LNG — into a
competitive situation so that they compete on price for a very substantial
market,” he said.
Meanwhile, the National Iranian Gas Company officially
notified Turkey’s Botas on Monday about a lack of cooperation on the resumption
of natural gas imports from Iran. The flow of Iranian gas to Turkey was
disrupted two months ago due to a pipeline explosion.
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