BAKU, Azerbaijan, May 21. Volumes of gas supplies from Shah Deniz Phase 1 (SD1) field from Azerbaijan to Turkey are expected to naturally decrease in 2022-23, Gulmira Rzayeva, Senior Visiting Research Fellow at Oxford Institute for Energy Studies said, Trend reports via the Institute.
Due to the expiration of the SD1 contract in April 2021, gas imports from Azerbaijan decreased from 3.7 billion cubic meters in April to 2.3 billion cubic meters in May, resulting in a 24 percent year-on-year increase in 2021, the expert explains.
Meanwhile, Turkish BOTAŞ Petroleum Pipeline Corporation renewed its expired 6.6 billion cubic meters per year long-term contract with Azerbaijan Gas Supply Company (AGSC) for gas deliveries from SD1 in August 2021, changing it to a short-term contract with the gas price formula linked to oil prices, Rzayeva said.
According to the expert, Turkey’s preferred source of gas at the moment is the Shah Deniz gas from both phases because the cost of this gas is the lowest owing to the oil price indexation.
“The sides contracted deliveries of 2.5 billion cubic meters to Turkey in 2022 and 3.5 billion cubic meters in 2023. Given that volumes at SD1 are expected to start to decline naturally in 2023-2024, it is most likely that there will not be enough gas to renew this contract with AGSC after 2023. Should Turkey need additional volumes of gas from Azerbaijan, gas may come from other fields currently under development, i.e. Absheron Phase 2 or Umid-Babek,” the expert noted.
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