Vestnik Kavkaza – The significant drop in Russian gas supplies to Turkey and Qatar’s rise to second place among Ankara’s gas partners is a consequence of the sharp drop in prices for natural gas, in the framework of which the suppliers have chosen different tactics of behavior in the Turkish hydrocarbon market. Energy experts spoke about this in an interview with Vestnik Kavkaza, explaining the reasons behind reduction in gas cooperation between Russia and Turkey.
It should be noted that in comparison to May last year, despite the launch of the Turkish Stream, Russia reduced gas supplies to Turkey this May by 62%, to 340 million cubic meters, and in comparison to April – by 30%. May supplies of liquefied natural gas from Qatar, on the contrary, increased by 300% annualy, to 520 million cubic meters, compared to April – by 100%. As a result, the share of Qatari gas on the Turkish market in May amounted to 19.5%, while the share of Russian – 12.7%.
As the senior analyst of UralSib Aleksey Kokin noted, in May Qatari gas turned out to be much cheaper for Turkey than Russian gas, so Ankara chose to stock up on LNG supplies from Qatar. “This happened because it has become profitable for importers to buy liquefied gas: its surplus on the market is great, it has fallen in price sharply. Turkey, which has the opportunity to receive liquefied gas, tried to take maximum advantage of the situation and store gas reserves for the winter. It is unlikely that this will last forever, but until October-November, LNG may remain more profitable than pipeline gas,” he said.
At the same time, Gazprom may not react to this situation, hoping that in the long term its prices will be lower than Qatari prices even without additional discounts. “Perhaps Gazprom is calmly looking at how it is being squeezed out in this or that market by cheap LNG, as it expects that in the future pipeline gas will still be cheaper. There are pricing formulas that Gazprom apparently does not want to change due to market conditions, because it hopes that after some time the gas balance will return to normal parameters and the excess of LNG will leave the market. Accordingly, it may be profitable for the company now to simply wait out this unfavorable time in order to then restore the volume of supplies to Turkey without lowering the prices,” Alexei Kokin said.
Aleksey Belogoryev, Deputy Director for Energy at the Institute of Energy and Finance, also noted Gazprom’s intention to maintain the classic pricing scheme for Turkish buyers. “The dramatic decline in Russian gas supplies to Turkey has been going on for three years due to the fact that contracts with Turkish companies staye that the price of gas is still tied to the price of oil products in Europe – and they are still higher than prices on the spot gas market,” the expert said.
