Turkey Unable to Fulfill Azeri Gas Trade Deal

Turkey Unable to Fulfill Azeri Gas Trade Deal
Turkey Unable to Fulfill Azeri Gas Trade Deal

Turkey failed to receive the minimum amount of natural gas it had pledged to buy as per the gas trade agreement with Azerbaijan, signed in 2013, as the state-owned Turkish Pipeline Corporation (BOTAS) had to use its transportation capacity to take the Iranian gas that it had previously bought in a take-or-pay scheme, Today's Zaman reported.

Since both Iranian and Azerbaijani gas are being transported through the same pipeline, which can only receive one of them at once, Turkey had to give up some of the Azerbaijani gas.

The deal with Azerbaijan requires the sale of 6.6 billion cubic meters of gas to Turkey, while the minimum amount Turkey must receive is 5.2 billion cubic meters. The remaining gas must be paid for, but the amount above the minimum receivable requirement may be received in the next four years. BOTAS was only able to take 3.8 billion cubic meters of gas from the country in 2013.

According to sources close to the energy authorities, unless Turkey invests to develop the capacity of its current transportation grid by installing a new pipeline or building compressor stations, the same problem will occur every year.

Iran is one of Turkey's three major natural gas suppliers, along with Russia and Azerbaijan. Turkey has begun litigation against Iran through the International Court of Arbitration for the high price of its gas. The lawsuit is still ongoing.  

According to separate agreements with these suppliers, Turkey has five years to receive the gas it has bought from Iran and Russia. For the Azerbaijani gas, the time limit is four years. Turkey's energy ministry had previously announced that the purchased gas would be received by the end of 2014.