Turkey OKs raise in price of imported Azeri gas
Turkey has agreed to an increase in the price of gas
it buys from Azerbaijan. The Azerbaijani minister of industry and
energy and the president of the state energy firm SOCAR have been
invited to visit Ankara this week to finalize talks on the price
increase, Turkish media quoted Taner Yildiz, the country`s Minister
of Energy and Natural Resources as saying.
Yildiz said Turkey considered as normal the neighboring country`s intention to raise the price of gas. The 2001 contract on gas deliveries stipulates that, if world energy prices rise, Azerbaijan reserves the right to raise the sales price indicated in the agreement.
The Turkish minister noted, however, that the increase would not be significant. He did not spell out the expected price increase, but said figures acceptable for both Turkey and Azerbaijan had been discussed during the latest talks and that the mentioned price does not exceed world market levels.
Yildiz said talks on the price for the transit of Azerbaijani gas through Turkish territory were underway as well. He added that discussions between Baku and Ankara continue in an atmosphere of mutual understanding.
Azerbaijan exports gas to Turkey from its largest field, Shahdaniz, in the Caspian Sea, which holds an estimated 2 trillion cubic meters. Under the production sharing agreement signed with the Shahdaniz consortium in 2001, Turkey was buying Azerbaijani gas for $120 per 1,000 cubic meters. However, the price may be revised every year, according to the contract on gas deliveries, and talks on the matter are underway.
Turkey was buying gas from Russia for $400, and at times for $500, as well as for $300 and more from Algeria. When gas was being purchased from Azerbaijan for $120 last year, prices in world markets were at the level of $400-500.
Nizamaddin Guliyev, the spokesman for Azerbaijan`s state oil company SOCAR, has said it is impossible, at this point, to specify the export price as the ongoing talks are underway behind closed doors. "Since these are commercial talks, they are being held confidentially."
But independent industry experts have cited certain figures. Economist Natig Jafarli says the price for Azerbaijani gas might be raised to $200, while a higher figure is rather unlikely.
"Most likely, a price ranging between $180 and $200 will be agreed. If you remember, these figures were also cited during talks held with Georgia five to six months ago. An agreement setting about the same price will be reached with Turkey," Jafarli said.
According to him, Azerbaijan`s move to raise the gas price could be linked with the country`s falling oil revenues.
Jafarli opined that discussions on gas supplies between Turkey and Azerbaijan were more of a political issue than a commercial one, adding that politics might ultimately play a deciding role in the determination of the gas price.
Turkish Prime Minister Recep Tayyip Erdogan has said Ankara intends to increase the volume of gas it buys from Azerbaijan to 8 billion cubic meters. As for 2009 imports, Turkey plans to purchase 6.7bn cu. m., he told CNN Turk TV channel.
Meanwhile, President Ilham Aliyev dismissed a link between revisiting the gas exporting price and the situation that has emerged in the turbulent region in recent months. The statement followed earlier reports alleging that the South Caucasus republic plans to raise the price in response to Turkey`s efforts to normalize its relations with Armenia, Azerbaijan`s long-time foe.
"It would be wrong to link the reconsideration of the price of gas we sell to Turkey with the situation in the region," Aliyev told a press conference after hosting Prime Minister Erdogan last week. "Simply, the provisions of the respective agreement require revisiting the price issue, because the price of gas depends on the frequently-changing price of oil in exchanges. Considering this, prices are reconsidered from time to time. Connecting this issue with any new situation that may emerge or has emerged in the region is out of place."
Yildiz said Turkey considered as normal the neighboring country`s intention to raise the price of gas. The 2001 contract on gas deliveries stipulates that, if world energy prices rise, Azerbaijan reserves the right to raise the sales price indicated in the agreement.
The Turkish minister noted, however, that the increase would not be significant. He did not spell out the expected price increase, but said figures acceptable for both Turkey and Azerbaijan had been discussed during the latest talks and that the mentioned price does not exceed world market levels.
Yildiz said talks on the price for the transit of Azerbaijani gas through Turkish territory were underway as well. He added that discussions between Baku and Ankara continue in an atmosphere of mutual understanding.
Azerbaijan exports gas to Turkey from its largest field, Shahdaniz, in the Caspian Sea, which holds an estimated 2 trillion cubic meters. Under the production sharing agreement signed with the Shahdaniz consortium in 2001, Turkey was buying Azerbaijani gas for $120 per 1,000 cubic meters. However, the price may be revised every year, according to the contract on gas deliveries, and talks on the matter are underway.
Turkey was buying gas from Russia for $400, and at times for $500, as well as for $300 and more from Algeria. When gas was being purchased from Azerbaijan for $120 last year, prices in world markets were at the level of $400-500.
Nizamaddin Guliyev, the spokesman for Azerbaijan`s state oil company SOCAR, has said it is impossible, at this point, to specify the export price as the ongoing talks are underway behind closed doors. "Since these are commercial talks, they are being held confidentially."
But independent industry experts have cited certain figures. Economist Natig Jafarli says the price for Azerbaijani gas might be raised to $200, while a higher figure is rather unlikely.
"Most likely, a price ranging between $180 and $200 will be agreed. If you remember, these figures were also cited during talks held with Georgia five to six months ago. An agreement setting about the same price will be reached with Turkey," Jafarli said.
According to him, Azerbaijan`s move to raise the gas price could be linked with the country`s falling oil revenues.
Jafarli opined that discussions on gas supplies between Turkey and Azerbaijan were more of a political issue than a commercial one, adding that politics might ultimately play a deciding role in the determination of the gas price.
Turkish Prime Minister Recep Tayyip Erdogan has said Ankara intends to increase the volume of gas it buys from Azerbaijan to 8 billion cubic meters. As for 2009 imports, Turkey plans to purchase 6.7bn cu. m., he told CNN Turk TV channel.
Meanwhile, President Ilham Aliyev dismissed a link between revisiting the gas exporting price and the situation that has emerged in the turbulent region in recent months. The statement followed earlier reports alleging that the South Caucasus republic plans to raise the price in response to Turkey`s efforts to normalize its relations with Armenia, Azerbaijan`s long-time foe.
"It would be wrong to link the reconsideration of the price of gas we sell to Turkey with the situation in the region," Aliyev told a press conference after hosting Prime Minister Erdogan last week. "Simply, the provisions of the respective agreement require revisiting the price issue, because the price of gas depends on the frequently-changing price of oil in exchanges. Considering this, prices are reconsidered from time to time. Connecting this issue with any new situation that may emerge or has emerged in the region is out of place."
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