Turkish Contract for Azeri Gas Expires

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Azerbaijan has stopped deliveries of Azeri gas to Turkey under Phase 1 of the BP-operated Shah Deniz project, following the expiry of the 20-year supply agreement between the two countries (NC Apr.8'21). Turkey’s state importer Botas had been buying up to 6.6 Bcm of Phase 1 gas since 2007, when the field came on stream, via the South Caucasus pipeline that runs across Georgia and hooks up to the hub of Erzerum in eastern Turkey. Much smaller volumes of gas were being supplied to Georgia, at partially discounted prices. The Azerbaijan Gas Supply Co., a marketing vehicle led by Azeri state company Socar and representing the shareholders of the Shah Deniz consortium, is likely to renew the contract later this year, according to Caspian industry sources. But they say the duration will be shorter, possibly for five years, and the volumes smaller -- reflecting both the other alternatives open to Turkey, such as importing more LNG, and a steady decline in Phase 1 output. There is also the possibility that a new contract will be awarded to a private Turkish importer, rather than Botas. One company looking to step in, according to Turkish industry sources, is Demioren, a family-owned conglomerate that has a gas trading subsidiary. Turkey is still importing plenty of Azeri gas, however, under Shah Deniz 2, which kicked off in June 2018, and is due to reach its 16 Bcm/yr plateau within two years, with 6 Bcm going to Turkey, under a long-term contract with Botas, and 10 Bcm/yr to Europe. Azerbaijan exported 3 Bcm of gas to Turkey during the first quarter, a year-on-year rise of around 16%. Exports to Europe stood at 1.1 Bcm, with a small amount going to Georgia. Total gas output over the three-month period was 10.4 Bcm, of which 5.1 Bcm came from Shah Deniz and 3.4 Bcm from the BP-led Azeri-Chirag-Guneshli oil project.

Gas Demand, Gas Supply, Security Risk , Offshore Oil and Gas
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