kayhan.ir

News ID: 95346
Publish Date : 12 October 2021 - 21:40
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ANKARA (Reuters) – Turkey’s record demand for natural gas this year is forcing it to step up purchases on a surging spot market as it scrambles to renew long-term contracts expiring this winter.
One of the largest gas importers in Europe, Turkey depends on pipeline gas from Russia, Azerbaijan, and Iran as well as liquefied natural gas (LNG) imports from Nigeria, Algeria, and spot markets. It had four long-term import contracts expiring this year totaling 16 billion cubic meters (bcm) annually.
Turkey has renewed one of them, with Azerbaijan, agreeing on a three-year contract to import up to 6 bcm per year, following the expiry of a 15-year contract for 6.6 bcm, two industry sources told Reuters. The new, shorter contract will be for spot imports of gas with prices indexed to Italy’s PSV hub, as opposed to long-term take-or-pay contracts with oil-indexed pricing that Ankara wants to be phased out.
Turkey’s energy ministry did not respond to Reuter’s questions on the Azerbaijan contract. That still leaves Ankara with three contracts to roll over - two for state and private sector imports via pipeline from Russia’s Gazprom of 4 bcm each, which expire at the end of the year, and 1.3 bcm of Nigerian LNG expiring this month.
With time running short, a meeting between the Russian and Turkish presidents ended without a gas deal two weeks ago. President Vladimir Putin tried to reassure Ankara, saying it was shielded from Europe’s gas crisis by Russian pipeline supply to Turkey. But Turkey has little gas in reserve to fall back on if the talks drag on.
“All contractually available pipeline gas from Russia, Iran, and Azerbaijan has been pulled out and used as of mid-September,” a Turkish industry source said.
In the past, Turkey used LNG to complement more expensive pipeline imports. Hiking the share of LNG in gas imports almost to a third in the last two years, it signaled to its import partners that expensive oil-indexed contracts for pipeline gas needed to become more competitive. Plans to cover up to a quarter of its consumption from a new Black Sea discovery from 2027 were also expected to strengthen its hand in negotiations.
However a drought this year curtailed hydroelectric power, putting idled gas power plants back online and driving Turkey’s consumption up to an expected record of 60 bcm of gas, just as prices spike in Europe. With daily peak consumption expected to hit 300 million cubic meters this winter, Turkey will have to renew all expiring contracts with at least the same volumes, and top up its supply with expensive LNG, said industry consultant Arif Aktürk.

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