Turkey, against the background of the commissioning of the Turkish Stream gas pipeline, has reduced the import of natural gas from Russia by one third, the EADaily website reports. The volumes delivered during nine months would be enough for pumping through the already existing Blue Stream gas pipeline.
For 9 months of this year, the export of Russian gas to the Balkans and Turkey decreased by 7 billion cubic meters compared same period last year. At the same time, Turkey showed the largest decline in import by 34%. According to Gazprom quarter report, in January-September of 2019, gas deliveries on the other side of the Black Sea amounted to 11.79 billion cubic meters, while last year the import was a little less than 18 billion cubic meters.
The strongest drop in supplies recorded in Turkey is of first importance on the eve of the launch of the Turkish Stream gas pipeline. With such consumption in Turkey and the Balkans, next year there will be enough Russian gas to pump the current Blue Stream gas pipeline with capacity of 16 billion cubic meters of gas per year and fill only half of one line of the Turkish Stream gas pipeline with capacity of 15.75 billion cubic meters of gas per year.
The decline in purchases of Russian gas by Turkey is explained by the fact that under a long-term Gas Purchase-Sale Agreement signed between BOTAŞ, Turkey, and Gazexport, its price is related with the price of oil under a time lag, and, this year, it was less competitive than the cost of liquefied natural gas (LNG).
The South Gas Corridor also played a certain role in reducing purchases of natural gas from Russia by Turkey. The Trans-Anatolian gas pipeline (TANAP) expects to reach its full capacity this year and additional deliveries of 1.79 billion cubic meters of gas from Azerbaijan also displaced part of Russian gas, which was more expensive than LNG.
Now it is clear why Russian actively opposes the construction of the Trans-Caspian gas pipeline. If Turkmen gas reach the EU gas market via the Southern Gas Corridor, the situation would be changed significantly, especially in terms of pipeline gas supplies.
According to experts, last year, oil prices have reached its peak that made pipeline gas deliveries to Turkey under long-term contracts more expensive. for Turkey, LNG prices would be a little cheaper than Russian gas until October, but at the end of 2019, Russian gas will become more competitive. In this situation, Turkish buyers will choose the mandatory minimum for Russian contracts and buy LNG. Moreover, the Turkish side will discuss the LNG import issue during negotiations on the price of natural gas from Russia.
Earlier, in April, after meeting with Turkish President Recep Erdogan, Russian President Vladimir Putin said that against the background of the commissioning of the Turkish Stream gas pipeline, Ankara and Moscow were still in disagreement about how the gas price should be determined. “There is a problem: our Turkish friends insist on one set of formulas; on commercial grounds Gazprom proposes other solutions. But they will still be found, these solutions, we will find them,” the president commented.
So far, it seems, the solutions are not yet found, and Turkey has reduced purchases from Gazprom to a contract minimum of 80%. By the end of the year, Russian gas supplies can hardly exceed 16 billion cubic meters. It is the capacities of the already existing Blue Stream gas pipeline. If the situation does not change, it is quite possible that a significant part of the capacities of Turkish Stream gas pipeline will stand idle.