• Natural Gas News

    SOCAR’s gas export price plunges by cutting deliveries to Russia

Summary

Azerbaijan releases new statistics showing SOCAR exported gas to be down 28% as Russia takes Azeri gas at a higher price than Georgia, while deliveries to Russia decreased by 6.2 fold in 2014.

by: lham Shaban via Dalga Khatinoglu

Posted in:

Featured Articles, Pipelines, News By Country, Azerbaijan, Caspian Focus

SOCAR’s gas export price plunges by cutting deliveries to Russia

Official statistics indicate that the price of the State Oil Company of Azerbaijan Republic’s exported gas decreased by 28 percent in 2014.

Two entities in Azerbaijan are responsible for gas export: BP-Azerbaijan and the State Oil Company of Azerbaijan Republic (SOCAR).

Though the price of the exported gas by SOCAR is announced officially, the price of the remainder of exported volumes are kept confidential.  

The State Customs Committee of the Republic of Azerbaijan released a report about the country’s trade turnover during 2014, which stated that Azerbaijan exported more than 8.565 billion cubic meters (bcm) of natural gas during 2014, about 17.4 percent more than the previous year, of which 1.825 bcm, worth $304.684 million, was exported by SOCAR.

In 2014, the price of 1000 cubic meters (cm) of exported gas by SOCAR was $166.89, while this figure in 2013 was $231.29, which marks an 28 percent increase.

SOCAR’s total gas exports during 2013 was 3.035 bcm, worth a total of $701.980 million.

Not only does this show a decrease in the price of the SOCAR exported gas, but also the value and volume of gas exports decreased significantly.

What is behind the decrease?

Alongside swapping natural gas with Iran, SOCAR also sells gas to Russia and Georgia. Official statistics indicate that SOCAR swapped 400 mcm of gas with Iran, which has remained unchanged year-to-year.

Iran takes 15 percent of delivered gas from Azerbaijan as transit costs and then supplies the leftover volume to the Nakhchivan Autonomous Republic.

Deliveries to Georgia are also (almost) unchanged though SOCAR’s gas exports to Russia has decreased 6.62 fold in 2014 compared to the previous year due to temporary interruptions caused by road construction projects in northern regions.

SOCAR delivered only 207 mcm of gas to Russia during last year, while this figure was 1.37 bcm in 2013.

According to an intergovernmental agreement, Azerbaijan sells 1000 cm of gas to Georgia at $160, while Russia takes SOCAR’s gas at $250 per 1000 cubic meters.

As such, the reason for a drop in SOCAR’s exported gas price is a significant reduction in deliveries to Russia.

BP-Azerbaijan's share in Azerbaijan’s gas production is 65 percent. It produces associated gas from Azeri–Chirag–Guneshli oil fields and delivers to Azerbaijan. It also produces gas from the first phase of Shah Deniz gas field.

There are not any official statistics on the total produced associated gas in 2014, but the latest statistics indicate that BP-Azerbaijan delivered 2.6 bcm of associated gas to Azerbaijan from January-October. It also produced a total of 9.7 bcm of gas from the first stage of Shah Deniz gas field in 2014.

lham Shaban is Director of the Azerbaijan Centre for Oil Studies, in Baku.