Gazprom sets a record in Turkey

Gazprom has set a record for natural gas sales to Turkey, Vedomosti writes, citing the company’s third-quarter financials and data from the Federal Customs Service (FCS). The volume of exports to this country in September became the largest since January and amounted to 1.9 billion cubic meters of fuel.

Also, the indicator significantly exceeds the result of the same period last year, when only 1.017 billion cubic meters of gas were sold to Turkey. At the same time, in just the first nine months of 2020, supplies amounted to 8.854 billion cubic meters, which is 25 percent less than the same data last year.

Analysts interviewed by the publication link the current situation with the nature of Gazprom’s relations with Turkish buyers. They are based mainly on long-term contracts concluded according to the old, less flexible pricing scheme. According to it, the gas price is determined on the basis of oil quotations with a delay of 6-9 months.

Because of this, for most of the year, the price under the long-term contract with Gazprom was higher than the current (spot) quotes on European sites (hubs), as well as the prices of American suppliers of liquefied natural gas (LNG). Under such conditions, Turkish companies, especially private ones, preferred to pay Gazprom a contractual penalty for choosing an insufficient amount of fuel (failure to comply with the “take or pay” condition), but still buy it from third-party suppliers.

However, in the fall, the price under long-term contracts with Gazprom began to decline in response to the spring drop in oil prices. This made Gazprom’s supplies more profitable compared to spot purchases, as prices at hubs, on the contrary, began to rise due to the increased seasonal demand for fuel.

Analysts note that the Turkish market is extremely important for Gazprom, since it is traditionally the second largest market in terms of sales and revenue after the German one. In the first nine months of 2020, deliveries to Europe also significantly decreased and amounted to 125.7 billion cubic meters, which is 13.6 percent lower than last year’s figures.

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