Top Official: Azerbaijan Stops Gas Intake from Gazprom
The deputy head of the State Oil Company of Azerbaijan Republic’s (SOCAR) Gas Export Department has informed Natural Gas Europe that Russian gas export to Azerbaijan is being stopped.
Kamal Abbasov said that Azerbaijan will halt Russian gas intake at 00:00 (or 19:00 GMT) on October 20th.
SOCAR's Magistral Gas Pipelines Department told Natural Gas Europe earlier this month that Russia started delivery of 6 million cubic meters per day(mcm/d) of gas to Azerbaijan on September 29th to be supplied to Azerbaijan Methanol Company (AzMeCo).
Abbasov said over the past 22 days less than 5 mcm/d of Russian gas was delivered to Azerbaijan. Total volume reached 100 mcm.
He did not provide further information on the reason behind the halt, saying that SOCAR is only responsible for providing technical service to transit gas. However, an Azerbaijani source anonymously told Natural Gas Europe that the dispute is over price stands behind suspending gas intake from Russia.
Before Gazprom, SOCAR was delivering gas to AzMeCo at $128 per 1000 cubic meters.
Without mentioning any figures, the source said that the price of methanol has decreased significantly on international markets and the current Russian gas price is unprofitable for AzMeCo.
AzMeCo was inaugurated in July 2013. Since August 2014, AzMeCo has produced and exported 191 thousand tons of methanol. British Petroleum bought 80 percent of this volume at $328 per ton. The plant is still working at half capacity, while the full production capacity of this plant is 720,000 tons per annum.
It seems the Russian gas price of $160 per 1000 cm is also unprofitable for AzMeCo. However, the average export price of Russian gas dropped to a minimum during 2015.
From January to August 2015 average export price of Russian gas totaled $240 per 1000 cubic meters, the statistical report of the Russian Customs Service reported last week. Income from gas export for 8 months decreased by 31% and totaled $28.2 billion. Russia exported 117.5 billion cubic meters of gas (-5.4%) during this period.
Gazprom said previously that it would supply up to 2 billion cubic metres of gas per year to Azerbaijan with the possibility of extension.
The report added that “the imports of Russian gas will meet the additional domestic natural gas needs of Azerbaijan due to economic growth.”
Russo-Azeri gas trade commenced in October 2000 when Azerbaijan started gas imports from Russian company Itera. Gazprom provided deliveries to Azerbaijan from 2004 to 2007.
Azerbaijan stopped gas imports from Russia in the beginning of 2007, following the commencement of Shah Deniz Stage 1 project.
SOCAR started gas export to Russia from 2010 to early 2015.
Azerbaijani gas exports to Russia reached 1.37 bcm/a in 2013, but plunged to 0.206 bcm/a in 2014.
Ilham Shaban