"Brothers shouldn't..."

Türkiye does not want to buy Azerbaijani gas at world prices

Ankara rejected Baku's gas ultimatum and continues to rely on fuel purchases at preferential prices. Turkish Energy Minister Taner Yildiz called on Azerbaijan to continue selling gas to it at lower prices. “Our Azerbaijani brothers should not sell us gas at international prices,” Bloomberg quotes the minister’s speech to a parliamentary committee. “We always supported them in difficult times.”

The contradictions between Azerbaijan and Turkey play into the hands of Moscow, since they further slow down the progress of the Nabucco gas pipeline, through which Europe plans to receive gas from the Caspian region, bypassing Russia. Yesterday, the German concern RWE, participating in the Nabucco project, reported that this particular route guarantees Baku the best profit from gas sales, as it offers the cheapest tariff for transporting fuel from the Shah Deniz field. According to RWE, for transit via Nabucco to the Austrian Baumgarten, the Azerbaijani SOCAR will pay only 77 euros per thousand cubic meters, excluding costs for fuel gas and fees for carbon dioxide emissions, and if it sends gas through the Russian-promoted South Stream , it will pay 106 euros ( 3.8 euros per 100 km). Thus, “producers in the Caspian region will receive the highest price per well (net back) when delivering via Nabucco to Europe,” notes RWE, thereby trying to push Baku to more active negotiations.

As you know, at the end of October, Azerbaijani President Ilham Aliyev said that Turkey had brought gas negotiations to a dead end, refused to pay the market price for gas and was making inflated demands on the transit tariff. And thus Ankara, according to Baku, is preventing the conclusion of agreements with European buyers for the supply of gas from the second phase of development of Shah Deniz. He even threatened to sell gas to Russia and Iran. Türkiye, as is known, pays SOCAR $120 per thousand cubic meters of Azerbaijani gas, compared to $250 for gas coming from Russia and Iran.

Shortly before this, Gazprom and SOCAR signed an agreement on the supply of 1.5 million cubic meters of gas per day to Russia from January 1, 2010. According to Vremya Novostei, the base price in the first quarter of next year will be about $190 per thousand cubic meters. It will be adjusted depending on fluctuations in prices for a basket of petroleum products in Europe (standard peg in Gazprom’s long-term contracts).

Nabucco, apparently, will not be able to withstand such a price on the border of Azerbaijan (net back).

Europeans must be prepared to buy gas at the end point at a price of at least $300 per thousand cubic meters in current conditions, which corresponds to the cost of Russian gas in Europe. Under these conditions, the economic meaning of investing in Nabucco is lost, at least in relation to the purchase of Azerbaijani gas.

Alexey GRIVACHS