"Let's continue the conversation"

Türkiye responded to Azerbaijan's gas ultimatum

Ankara responded to Baku's gas ultimatum in a conciliatory tone. Turkish Energy Minister Taner Yildiz called on Baku not to mix energy cooperation with politics and said that Ankara has already offered a higher price for Azerbaijani gas. Let us recall that at the end of last week, Azerbaijani President Ilham Aliyev accused his Turkish partners of bringing negotiations on prices for Azerbaijani gas to a dead end, offering inflated rates for fuel transit to Europe (70% higher than market prices) and actually disrupting the start of the implementation of the planned for supplies to the EU of the Shah Deniz-2 project, within the framework of which foreign investors are ready to invest $20 billion (see yesterday’s issue of Vremya Novostei) .

“The negotiations were blocked for a short time. But we are already continuing the conversation,” Mr. Yildiz said in Milan on the sidelines of the signing of framework documents on the accession of Russian companies to the Samsun-Ceyhan oil pipeline project. He did not disclose the details of the new offer, but emphasized that “Turkey has always taken into account the interests of its ally and brother Azerbaijan” and will not enter into agreements with Armenia that could harm it.

As is known, since the end of 2006, the Turkish Botas has been buying gas from the Azerbaijani SOCAR at $120 per thousand cubic meters. Baku has been insisting on revising the contract in accordance with market practice for more than a year and a half, but has not found understanding. Gazprom sells gas to Turkey at 50-70% more expensive. The country's president said that this situation is unacceptable and promised to find alternative buyers and other gas supply routes. Fortunately, last week SOCAR signed the first small contract for the supply of gas to Gazprom, about 500 million cubic meters with the possibility of increasing if Azerbaijan increases its production capabilities. The price is determined by a formula tied to quotations of petroleum products in Europe (that is, similar to the mechanism in Gazprom’s contracts with European consumers).

Yesterday, the head of SOCAR Rovnag Abdullayev said that Azerbaijan is preparing new proposals for Turkey for the transit of gas from Shah Deniz-2 and, if they are rejected, will consider in detail the possibility of supplying gas to Europe in liquefied form through the Black Sea (from the territory Georgia), as well as in other directions. It is obvious that the increased Turkish offer has not yet reached Baku.

Under the contract, Botas must receive up to 6.6 billion cubic meters of Azerbaijani gas per year. So far the volumes are much smaller. Last year, SOCAR exported a little less than 3 billion cubic meters to Turkey and approximately 3.5 billion cubic meters in the nine months of this year. If we take as a basis Gazprom’s data on average prices for long-term contracts in non-CIS countries (including Turkey), then last year Azerbaijan received a shortfall of about $900 million, and this year – more than $550 million.

However, this did not stop Mr. Yildiz from declaring that Ankara “never wanted Azerbaijan to lose money.” Moreover, according to him, “it is widely known that Türkiye charges SOCAR less for gas transit compared to other countries.” And it turned out that either the President of Azerbaijan or the Minister of Energy of Turkey, to put it mildly, was telling a lie.

Alexey GRIVACHS