Turkish firms in natural gas price discount talks with Gazprom

Turkey’s private natural gas importers are in discussion with Russian incumbent Gazprom for a price discount, although the producer has already sent out its first invoices for 2015 and they include a higher price than last year’s, sources have told ICIS.

A shipper said the invoice price had been agreed in 2014, when Gazprom then conditioned a 10% decrease for that year, on a similar increase this year.

Nevertheless, private importers are fighting to negotiate the price down to allow them to make a margin in a difficult climate.

The Turkish business environment is particularly strenuous at the moment as the Turkish lira has been breaking new record lows for the last week. The currency traded at 2.49 against the US dollar at 13:00 London time, on Wednesday.

Negotiations over private importers’ discounts are linked to negotiations over the import price for Turkish incumbent BOTAS, which typically pays a higher price.

The incumbent is expecting a price discount from Gazprom for 2015. Several sources active in the gas market said the company had pushed for a 12% discount, but Gazprom had not accepted this as it expects its oil-indexed prices to fall later this summer, in line with current bearish crude values. But this information could not be confirmed with the Russian company.

The Gazprom increase may prompt Turkey’s private gas importers and wholesalers to focus on the LNG market where prices have been trending below the Turkish regulated tariff for the first time in five years. The bearish LNG prices may offer a window of opportunity for Turkey’s private gas sector. Aura Sabadus