Gazprom ‘unilaterally’ hikes price to Turkey – importer

Aura Sabadus

01-Mar-2016

Russia’s Gazprom has unilaterally decided to increase the price of gas sold to Turkey’s private importers and reduced the volumes exported to the country by an average 12 million cubic metres (mcm)/day without an official explanation, one of Turkey’s private importers said on Tuesday.

Enerco Enerji, one of the importers involved in the price negotiations, said:

“At the end of last year, Gazprom Export requested a revision of the contract price. The gas contract allows for such a request and requires discussions between the parties and mutual agreement or finally arbitration. Those discussions began constructively.

“Recently Gazprom Export demanded an immediate increase of the price and threatened to reduce the gas. Reduction of the gas volumes began as of 24 February without official explanation.

“There is no possibility for one party to unilaterally change the price in the contract.… All parties should follow their contract.”

A source close to the discussions told ICIS the price dispute started in December when Gazprom sent a letter to importers informing them the import price for 2016 would be increased, despite the fact European oil-indexed gas prices had been falling in line with the value of crude.

The letter was sent two weeks after Turkey downed a Russian fighter jet, the source said.

Later in January, Gazprom sent its regular monthly invoice and the price was in line with the importers’ expectations.

However, a few days later Gazprom sent a new bill that requested private importers to pay an extra amount on top of the previously invoiced sum, a source said.

When the importers refused to pay, Russia reduced the gas exported via the Western Line, the source said.

Flows at the western Malkoclar entry point into Turkey from Bulgaria have been hovering around 30mcm/day since the 24 February. Average contractual levels at the border are 42mcm/day.

Another source close to discussions said Gazprom was likely to push for a price increase in Turkey, being caught between falling oil prices and a slumping domestic economy.

On the other hand, the Russian producer was also wary of offering discounts at a time when it was in arbitration with the Turkish gas incumbent BOTAS over the price for the gas imported by the state company, the second source said.

Gazprom declined to comment. aura.sabadus@icis.com

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