TURKEY TO PAY 150 PERCENT MORE, $300 FOR AZERBAIJANI NATURAL GAS
Today’s Zaman
Feb 8 2010
Turkey
Lengthy negotiations between Turkish and Azerbaijani officials on
gas prices have finally come to an end as Turkey has agreed to buy
Azerbaijani gas at $300 per thousand cubic meters, Energy Minister
Taner Yildiz informed reporters following his meeting with the Iranian
Foreign Minister Manouchehr Mottaki last week.
Although no official deal has yet been inked on a gas price agreement
between the two countries, the Turkish side says the new price is
satisfactory. According to the informal agreement, Turkey will pay
$1.8 billion to Azerbaijan in exchange for 6 billion cubic meters of
gas in 2010. Previously, Turkey was paying $720 million annually for
gas imported from Azerbaijan, when the price was $120 per thousand
cubic meters. Azerbaijan had said several times that a price hike
was inevitable considering world gas prices, which are hovering at
around $400.
When Azerbaijan announced it was going to increase gas prices,
Turkey didn’t lose time in seeking to negotiate. Turkey appreciated
Azerbaijan’s wish to adjust its natural gas prices to a more plausible
level compared to global prices but still hoped to continue purchasing
gas at a better price than it gets from Russia and Iran. As a result
of the negotiations, Turkey also agreed to pay an additional $1.7
billion for amounts outstanding that arose from price differences
since the previous agreement ended last year. Turkey was continuing
to purchase a thousand cubic meters of Azerbaijani natural gas at $120.
Evaluating the gas dispute between Turkey and Azerbaijan with Today’s
Zaman, Rovseen Ibrahimov, a professor from Qafqaz University in Baku,
said the impact of the price hike on Turkish consumers would depend
to a degree on how local gas distributors agree to sell the gas.
"Currently, the gas sector is a very profitable sector for Turkey,
and a cubic meter of Azerbaijani gas costs between $380 and $500 —
depending on location — for consumers, whereas its cost to the state
is just $120 per a thousand cubic meters. Azerbaijani gas provides
only 17-18 percent of Turkish consumers’ needs," Ibrahimov said.
According to the expert, the price increase was inevitable as
Azerbaijan has many alternative export markets including Iran, Russia
and Romania, and recently officials were speculating on exporting
gas to China through Turkmenistan.
President Ilham Aliyev had reiterated several times over the past
year that there was no logical explanation for exporting gas to
Turkey at one-third of the world gas price. Some analysts attempted
to link strained Turkish-Azerbaijani relations due to Turkey’s growing
relations with Armenia with the gas price increase, but Aliyev rejects
the claims, asserting that the current gas price of $120 is preventing
Azerbaijan from exporting its gas to European markets. "If Turkey is
earning from expensive Russian gas, the less-costly Azerbaijani gas
will surely make substantial profits," the expert said.
From: Emil Lazarian | Ararat NewsPress
