During the gas crisis in Europe, a new gas agreement was silently signed between Azerbaijan and Turkey. It should be noted that the spot (daily market) prices for natural gas in Europe exceeded $ 1,000, which is a historical record. Today, oil prices have exceeded $ 80 for the first time in recent years.

“Eurasianet.org” reports that the governments of Azerbaijan and Turkey are not interested in disclosing detailed information about the new gas agreement. The 20-year agreement regulating gas trade between Azerbaijan and Turkey expired in April. This agreement was signed in 2001 by Heydar Aliyev and Suleyman Demirel.

But the new agreement is far from luxurious, but also temporary. Alparslan Bayraktar, Turkish Deputy Minister of Energy confirmed the new agreement at an energy conference in Dubai on September 20, but declined to give details. It was noted that it was signed by the end of 2024, and Azerbaijani gas will be sold to Turkey at the current rate.

The “Eurasianet.org” portal noted that this humility seemed unusual after extensive ties between Baku and Ankara, especially after Turkey’s strong support for Azerbaijan in the 44-day Karabakh war last year. The article emphasizes that this situation reveals the difference between the economic priorities of the two countries. And it is said that the talks between SOCAR and the Turkish state company “Botash” have been going on all summer and this has led to various rumors. It is alleged that there is a misunderstanding over gas prices, as well as that Azerbaijan does not have sufficient gas reserves to cover both domestic consumption and exports.

The agreement, signed in 2001, provided for the export of 6.6 billion cubic meters of gas a year from Azerbaijan’s “Shah Deniz” field in the Caspian Sea to Turkey. Turkey currently imports gas from Azerbaijan via TANAP under the second agreement. However, the expiration of the first contract put Turkey in a difficult position in the heat of summer. Decreased water levels in the country’s main dams have boosted the operation of gas-fired thermal power plants, which have had to meet growing demand for air conditioning.

According to the Azerbaijani Energy Ministry, the country produced 20.3 billion cubic meters of gas in the first six months of this year: 6.4 billion – from “Azeri-Chirag-Guneshli”, 10 billion –  from “Shah Deniz” and 3.9 billion – from SOCAR. Compared to the same period last year, production increased by 5.1 percent, or 990 million cubic meters.

During the reporting period, gas sales abroad amounted to about 9.1 billion cubic meters, which is 36% more than the same period last year. In January-June this year, 4.7 billion cubic meters of gas were exported to Turkey, 3.2 billion – to Europe and 1.2 billion – to Georgia. During this period, 50.5 million cubic meters of gas was supplied to the BTC pipeline system. More than 2.7 billion cubic meters of gas was transported to Turkey via TANAP.

According to the State Customs Committee for the first two months of this year, 99.6% of Azerbaijan’s natural gas exports were sold to only two countries – Turkey (62%) and Georgia (37 %). A total of $ 180 million was paid for 2 billion 62 million cubic meters of natural gas sold to Turkey. This means $ 87 per 1,000 cubic meters. 1 billion 244 million cubic meters of natural gas was sold to Georgia and $ 175.5 million was paid to Azerbaijan. This means that each thousand cubic meters of natural gas sold to Georgia cost $ 141.

It is noteworthy that, although natural gas was exported at the same time, the cost of gas sold to Georgia was 62% higher than in Turkey. Both Turkey and Georgia import Azerbaijani gas through the same pipelines (South Caucasus Pipeline and TANAP).

Ilham Shaban, the head of the Oil Research Center, told the “Press Klub” that no information about the new contract had been found on the website of any organization directly or indirectly involved in the talks:

“That is, Azerbaijan has not yet officially confirmed such a news. After approval, the name, type, signatories of the contract, date of entry into force and its term, legal obligations of the buyer and seller, transportation and delivery of goods must be disclosed in an international manner.”

The expert noted that he contacted SOCAR in this regard and confirmed that such an agreement had indeed been signed between Turkey and Azerbaijan:

“It was noted that ‘Shah Deniz-1’ gas is already sold in the Turkish market under a new contract. However, the details of the agreement will be made public after some time, as certain procedural issues have been implemented in accordance with the agreement reached between the two parties.”

As for the price of gas sold in Turkey, Ilham Shaban said that it was not disclosed on the grounds that it was a trade secret.

Author: Turqut

Translator: Gulnara Rahimova