Turkey imports more gas from Azeris than Russians, signals policy shift

Pipe-laying vessel Akademik Cherskiy owned by Gazprom, which Russia may use to complete construction of the Nord Stream 2 gas pipeline, is seen in a bay near the Baltic Sea port of Baltiysk, Kaliningrad region, Russia May 3, 2020. (REUTERS)
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Updated 02 June 2020

Turkey imports more gas from Azeris than Russians, signals policy shift

  • 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

ANKARA: 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.

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.

John Roberts, Energy security specialist

“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.


Iran dismisses US efforts at UN sanctions as currency drops

Updated 37 min 50 sec ago

Iran dismisses US efforts at UN sanctions as currency drops

  • Iran’s currency dropped to 272,500 to the US dollar at money exchange shops across Tehran

TEHRAN, Iran: Iran dismissed US efforts to restore all UN sanctions on the country as mounting economic pressure from Washington pushed the local currency down to its lowest level ever on Sunday.
Iran’s currency dropped to 272,500 to the US dollar at money exchange shops across Tehran.
The rial has lost more than 30 percent of its value to the dollar since June as sweeping US sanctions on Iran continue to crush its ability to sell oil globally. Iran’s currency was at 32,000 rials to the dollar at the time of Tehran’s 2015 nuclear deal with world powers, which was signed by the Obama administration but which the Trump administration pulled the US from.
As the currency plummeted, Iran’s foreign ministry spokesman Saeed Khatibzadeh slammed the Trump administration’s declaration Saturday that all UN sanctions against Iran have been reimposed because Tehran is not complying with the nuclear deal.
The US move has been rejected as illegal by most of the rest of the world and sets the stage for an ugly showdown at the world body ahead of its annual General Assembly this week.
Even before the US declaration, other Security Council members had vowed to ignore it. They say the US lost legal standing to invoke snapback sanctions when President Donald Trump withdrew from the nuclear deal in 2018 and began reimposing US sanctions on Iran.
The Iranian government spokesman said the snapback sanctions have only happened in “the fantastical world” of the Trump administration. He said the US stands on the wrong side of history.
“They are attempting to make everyone believe it, but nobody is buying it except for themselves,” Khatibzadeh said during his weekly press briefing on Sunday.
“It is a television show whose sole presenter, viewers and those cheering it on are Mr. Pompeo himself and a handful of others,” the spokesman said, referring to the US secretary of state.
“Tehran’s message to Washington is clear: return to the international community, return to your commitments and stop bullying so the international community will accept you,” he added.
The White House plans to issue an executive order on Monday spelling out how the US will enforce the restored sanctions, and the State and Treasury departments are expected to outline how foreign individuals and businesses will be penalized for violations.
Tensions are running high between Iran and the US, particularly since a US strike in January killed Iranian Revolutionary Guard Gen. Qassem Soleimani in Baghdad, prompting Tehran to retaliate with a ballistic missile strike on Iraqi bases housing American troops.