Page 7 - MEOG Week 45 2021

MEOG PIPELINES & TRANSPORT MEOG

Turkey may renew Russia

gas deal before year-end

TURKEY TURKEY may renew its natural gas deal with contracts by pointing to the rising availability
Russia with an increased volume from the start of LNG from the US and other sources. How-
of 2022, Turkish Energy Minister Fatih Donmez ever, when the gas supply crunch started causing
said on November 4. major difficulties for Europe and other big gas
Speaking at a summit via videolink in Istan- buyers amid the economic rebound from the
bul, Donmez said an agreement on the deal coronavirus crisis, Turkey somewhat changed
had largely been reached with Russia, Reuters its approach and stepped up efforts to seal new
reported. pipeline deliveries.
Turkey is experiencing record demand for Turkey was also coming to rely on a steady
natural gas this year. Such demand has forced increase in hydroelectric power, but prolonged
the country to move for more purchases on a drought conditions have undermined that sec-
surging spot market, with long-term contracts tor’s contribution to the grid.
expiring this winter. Turkey consumes between 45 bcm to 50 bcm
However, in October, Turkey was able to of gas per year, paying between $12bn and $15bn,
renew one of those contracts when it concluded but with idled gas plants brought back online to
a three-year, 11bn cubic metres (bcm) natural compensate for the mothballing of hydroelectric
gas agreement with Azerbaijan. The gas will be facilities, consumption could surge to a record
shipped via the Baku-Tbilisi-Erzurum pipeline 60 bcm this year, according to pro-government
by the end of 2024. publication Daily Sabah. Turkey imported 48.1
With winter fast approaching, time is run- bcm of gas last year, up 6% y/y. One-third came
ning short for Turkey’s energy officials when it from Russia. Iran (pipeline) and Algeria (LNG)
comes to rolling over three long-term gas import are other suppliers.
contracts in all that expire before the end of the Turkey may have to renew all the expiring
year. long-term gas contracts with at least the same
Two contracts relate to Russian pipeline gas volumes to meet demand. It may also have to top
shipments of 4bcm/year each, while a third con- up its supply with expensive LNG, importing a
tract, which expires this month, concerns 1.3 little shy of 13 bcm of LNG from spot markets
bcm/year of Nigerian liquefied gas (LNG). now seeing sky-high prices, the newspaper also
As 2021 progressed, Turkey attempted to gain noted. Spot LNG imports by October this year
more leverage in renegotiating long-term gas stood at 2 bcm, official data showed.™

Week 45 10•November•2021 www. NEWSBASE .com P7