Turkey Curtails Q1 Pipeline Imports
Turkey's gas imports over the first quarter of 2019 fell by 12.0% as Ankara continued to exert pressure to reduce the country's gas demand. It is trying to reduce the balance of payments deficit as the economy worsens. Russia pipeline gas was the worst hit.
Seven private companies hold contracts with Gazprom to import a total 10bn m³/yr. Private sector imports over Q1 fell by 89.5% to only 0.31bn m³. By contrast, imports by state gas importer Botas were reported as 14.10bn m³, down only 5.2% over the same period in 2018.
Overall, Russian imports fell by 42.9% to 4.45bn m³. Imports from Azerbaijan rose by 31.65 to 2.264bn m³ over the quarter, thanks to the continuing ramp up of imports. Turkey is scheduled to take 2bn m³ from the TransAnatolian pipeline during its first year of operation, rising to 4bn m³ by the end of the second year. Turkey already buys 6bn m³/yr from Azerbaijan.
Iran imports were up 3.6% over the quarter, at 2.342bn m³, a rise likely to be due to continuing increasing gas demand in east Turkey which is the main market for the gas.
While overall imports fell as a result of the drop in imports of Russian gas by Turkey's seven private importers, Turkey's LNG imports rose by 16.6% overall, accounting for 37% of imports over the quarter, up from 28% over the same period in 2018.
The sharp rise is believed to be due to Botas increasing its imports of cheap spot LNG cargoes, in order to offset losses incurred from subsidising retail gas prices over the past 15 months.
The past year has seen Turkey in an extended election cycle, beginning with general and presidential elections in June last year, and continuing with countrywide local elections in March this year, and the forced re-run of the Istanbul mayoral election next month. Ankara has used Botas as a means to hold down retail gas prices, and the state-run company has boosted LNG imports.
Imports from solely spot LNG suppliers such as Qatar – with which Botas has a long term contract, the details of which have not been released – the US, Trinidad, Norway and Egypt actually fell by 6% over the quarter to 2.239bn m³.
However imports from Turkey's two contracted suppliers Algeria and Nigeria both rose sharply by 41.8% and 40.4% respectively suggesting that Botas was sourcing spot cargoes from those two suppliers in addition to contracted volumes.
The problem of Turkey's seven private gas importers continues to loom large over the Turkish energy sector.
The seven are believed to all be effectively bankrupt, owingGazprom more than $1bn. With Gazprom reported to be pressing for Botas to take over responsibility for the 10bn m³/yr once more, Ankara is believed to be trying to negotiate a substantial discount on the outstanding take-or-pay volumes.
Ankara has some leverage with construction of the overland export section to Bulgaria of Gazprom's TurkStream pipeline still at an early stage, while at the same time contracts held by four of the seven importers for 4bn m³/yr together with 4bn m³/yr contracted to Botas come up for renewal in 2021.
Neither side has commented publicly on the problem, however sector officials are warning that the transfer of private sector contracts to Botas will effectively end liberalisation of the Turkish gas market, and leave Turkey's EPIAS gas trading platform launched in September last year with only minimal locally produced volumes to trade.