Socar Eyes Turkey Gas Retailing
Socar Turkey Energy, 87% owned by Azerbaijan state-run Socar and 13% by US bank Goldman Sachs, are eyeing retail sales of at least 4bn m³/yr in Turkey. That was about 7.5% of the country’s demand in 2017, CEO Zaur Gahramanov told NGW October 3.
Socar owns several big downstream projects in Izmir, southwest Turkey, including 51% of the Petkim petrochemical complex and the wholly-owned Star refinery; and a power plant. These facilities use 3-4bn m3/yr, Gahramanov added. Socar wants to buy the gas distribution systems in this region and to supply the gas to these facilities.
This would be Socar's second foreign retail gas market. Azerbaijan sold all the gas that Georgia imported this year and accounts for half the country's retail sales. Azerbaijan sold 13% of Turkey’s total imports including LNG in the first seven months of this year. The company is also negotiating with Bulgaria for a share of its gas distribution market.
Turkish newspaper Sozcu reported August 8 that German gas utility EWE was close to offloading its 80% stakes in the gas distribution businesses in the cities of Bursa and Kayseri, plus its Turkish telecom operator Millenicom, adding Socar and rival Turkish conglomerate Kolin were likeliest to snap up the assets; it cited market sources who said the EWE Turkish assets were worth $200mn-$250mn. EWE told NGW that it was in talks with interested parties and would exit Turkey if the price was right.
Gahramanov told NGW that purchase is all but done, giving Azerbaijan the right to distribute 1bn m³/yr. Turkey's gas regulator must approve the deal but that might take only a few months. Izmir is close to Bursa, but the Izmir Gas company dominates the retail market in this region.
While Socar is increasing its share, Russian Gazprom said October 2 that the company had sold its 71% stake in Bosphorus Gaz to the local Sen Group, citing the weak lira. OMV completed the sale of its Turkish power plant a month ago.
EWE's main gas distribution areas in Turkey
(Credit: EWE)
Southern Gas Corridor ramps up
Azerbaijan started BP-led Shah Deniz stage 2 gas flow to Turkey in July 2018. A BP source told NGW then that for the second half of this year, the Southern Gas Corridor (SGC) would export 0.5bn m³. However, Gahramanov told NGW October 3 that that was a low estimate: likelier is that it will sell 1bn m³ this year; 2bn m3 next year and 4bn m3 in 2020, reaching the contractual 6bn m³/yr in 2021. Azerbaijan’s total gas flow to Turkey from Shah Deniz stage 1 and 2 would reach 12.5bn m3/yr in 2021.
Socar told NGW that during July-September the SGC carried about 4.3mn m3/d and this is gradually rising.