LNG

The Turkish Petroleum Pipeline Corporation (BOTAŞ), the nation's main natural gas wholesaler and assets operator, and US energy major ExxonMobil Corp have signed a cooperation deal on liquefied natural gas trading.

The Turkish Minister of Energy and Natural Resources, Alparslan Bayraktar, who was in the US for talks, confirmed the accord in a statement after several months of negotiations.

“With this agreement, which is planned to be long-term, we will take another step in diversifying our resources,” stated Bayraktar.

“We are among the few countries in the world with ample LNG regasification capacity and we will continue to contribute to the energy supply security of both our country and our region,” the minister declared.

Value of deal

Minister Bayraktar had also mentioned last month in an interview that Turkey was in talks with ExxonMobil on a supply agreement worth more than $1 billion.

Bayraktar had said at the time that negotiations were ongoing with ExxonMobil for 2.5 million tonnes of LNG, valued at around $1.1Bln and lasting up to 10 years.

Turkey has varied LNG supply sources and has half a dozen natural gas pipelines bringing in Turkish supplies and traversing its territory to deliver volumes to other nations.

Russia is a big supplier of pipeline gas to Turkey, accounting for more than 40 percent of its consumption in 2023.

The Gazprom BlueStream gas pipeline to Turkey is 1,213 kilometres (754 miles) in length and with design capacity of 16 billion cubic metre per annum, while the Russian TurkStream gas pipeline is about 930km long and with capacity of 31.5 Bcm.

Turkey is additionally the main transit nation for the Trans-Adriatic Pipeline, the final leg of the 3,500km Southern Gas Corridor pipeline network for Azerbaijan gas, which came on stream in 2020 and supplies primarily Greece, the Balkans and Italy.

Main LNG suppliers

Turkey’s main LNG suppliers over the past years have included the US, Algeria and Egypt.

US LNG data shows that the Turks are currently the eighth-largest recipients of US LNG cargoes since 2016 and receive at least six shipments per month.

BOTAŞ, the signatory of the accord with ExxonMobil, builds and operates natural gas pipelines in Turkey and accounts for most of the nation’s wholesale market.

The company runs the Marmara Eregesli LNG import terminal as its main source of cargoes while several floating facilities also operate.

Turkey has received LNG since 1994, first from Algeria and later from countries like Qatar and Nigeria and then from the US as well.

ExxonMobil’s LNG portfolio is wide and varied from Qatar itself to Papua New Guinea.

It is additionally an upstream partner of QatarEnergy worldwide in addition to having supplies from Ras Laffan.

QatarEnergy is also the lead developer of the Golden Pass LNG export project in Texas that will come on stream in 2025 and in which ExxonMobil has a 30 percent stake.

Azerbaijan, the Central Asian nation and former Soviet republic, has issued its quarterly natural gas pipeline export data that affects LNG requirements in Southern Europe.

Enagás, the Spanish natural gas operator of six large LNG terminals and with gas assets in other European countries and overseas, reported a fall in net profits as Spanish gas and power demand dropped, offset by a one-time gain from the sale of a stake in a gas pipeline in Mexico.

Enagás, the Spanish natural gas operator of six large LNG terminals and with gas assets in other European countries, has successfully sold €600 million of bonds as it also allocated half of its available regasification capacity for the next 15 years.

The Enagás 10-year bonds will mature in 2034 and have an annual coupon of 3.625 percent.

The bonds had five-times more offers to buy than the issuance required.

“Although the company does not have relevant maturities until the end of the year, it has taken advantage of the good market conditions at the beginning of the year to carry out this issue, extend the average life of its debt and thus have part of the upcoming maturities covered,” the Madrid-based company explained.

“The success of the placement, both in term and in financing cost, contributes to improving the good financial situation of the company, which has diversified financing sources,” it added.

Slot allocations

Spain’s Enagas said that its recent LNG allocation represented nearly all of the slots it had offered to date, reinforcing Spain’s status as key hub for LNG imports in Europe.

The prominence of the Spanish in the LNG sector is further highlighted by the fact that its regasification terminals accounted for almost one-third of LNG storage in Europe as of mid-January 2024.

Enagás also started up the El Musel LNG trans-shipment terminal in 2023 in the Port of Gijón in northwest Spain to supply other EU nations and assigned its logistics services to the European utility Endesa.

The grid company owns five large Spanish terminals at Barcelona in the northeast, at Cartagena in the southeast, at Sagunto in the east of Spain, at Huelva in the southwest and the El Musel facility.

Enagás additionally holds a 50 percent stake at another northwest facility serving the northwest port of Bilbao and owns two small regasification terminals in the Canary Islands.

Spain’s storage levels are still at around 85 percent filled and the LNG is supplemented by pipeline gas supplies from Algeria.

Other stakes

Enagás in July 2023 closed an agreement to acquire an additional 4 percent stake in the Trans-Adriatic Pipeline (TAP), taking its stake in the pipeline bringing Azerbaijan gas to Europe up to 20 percent.

In other LNG activities outside of Spain, Enagás became an industrial partner with a 10 percent stake in the Hanseatic Energy Hub consortium planning an onshore LNG import terminal at the German North Sea port of Stade.

Equinor, the leading supplier of pipeline natural gas to Europe, and the State Oil Company of Azerbaijan Republic (SOCAR) in Central Asia have signed an agreement whereby Equinor will divest all its remaining assets in Azerbaijan to SOCAR.

Turkey, an LNG importer and with plans to increase domestic production from Black Sea fields and the main route to Europe for natural gas from Azerbaijan, has raised the prices of natural gas and power by 20 percent for industrial users amid energy secuirty concerns in the South Caucasus region bordering Eastern Europe.

Sept 26 (LNGJ) - Turkish President Tayyip Erdogan and his Azerbaijan counterpart Ilham Aliyev have attended a ground-breaking ceremony for a new natural gas pipeline that will run from Turkey’s eastern province of Igdir to Sederek in western Azerbaijan. “The Igdir-Nakhchevan gas pipeline project we have launched will further strengthen our cooperation with Azerbaijan in the energy sector and will also contribute to the supply of gas to Europe,” Erdogan said.

   Analysts note that after Azerbaijan’s military offensive in the past week regained control of the breakaway Nagorno-Karabakh region from ethnic Armenians, another dispute is looming with Armenia over the territory of Nakhchevan where the new pipeline will run. Like Nagorno-Karabakh, where the Armenian population has been isolated in their enclave from the country of Armenia, the Nakhchevan autonomous region of Azerbaijan borders Armenia on two sides and is 450 kilometres (280 miles) west of the Azerbaijan capital Baku.

Enagás, the Spanish gas grid and terminals operator, increased profits in the first six months of 2023 helped by one-time items as LNG activities increased to help the European Union’s natural gas shortfall and the utility also boosted future capacity on the Trans-Adriatic Pipeline from Azerbaijan.

The company’s net profits jumped to €172.8M including a net gain of €42.2M from the sale of a stake in the Morelos Pipeline in Mexico and an €133.8M adjustment relating to the Tallgrass Energy operations in the US.

“The Spanish Gas System operated 100 percent availability, Spain increased its total gas exports by 55 percent in the first half of the year and ship reloading has increased by 67 percent, contributing to Europe's security of supply,” Enagás stated.

Italy was a main destination for LNG re-exports to Europe while pipeline gas connections increased by 33 percent to 28.6 terawatt hours. The company already trans-ships LNG to the EU from terminals like Barcelona.

“Spain's underground natural gas storage facilities are at 98 percent capacity, an all-time high for the month of July,” it added.

Revenues up

The Madrid-based company reported first-half revenues of €450.5M, a drop of 5.8 percent from €472.2M registered in the first six months of 2022.

Enagás said it was still on track to meet the full-year earnings target of between €310M and €320M.

Enagás added that in July it closed the agreement announced in January to acquire an additional 4 percent stake from European trader AXPO in the Trans-Adriatic Pipeline (TAP) for €168M, taking its stake in the pipeline bringing Azerbaijan gas to Europe up to 20 percent.

During the first half, Enagás contracted additional transport capacity of 1.2 billion cubic metres from TAP, in addition to the current 10 Bcm starting in 2026.

During an eventful first half, Enagás noted the start-up of the El Musel LNG trans-shipment terminal in the Port of Gijón in northwest Spain and the assignment of its logistics services to the European utility Endesa.

“The terminal has already received two LNG shipments and will start commercial operation on July 31 after a capacity allocation process that has aroused great interest,” the company added.

Another highlight was the agreement with regional gas company Reganosa through which Enagás acquired its 130-kilometres of strategic gas pipelines in northern Spain and Reganosa agreed to purchase a 25 percent stake in the El Musel regasification terminal.

“The closing of the deal was expected in the second half of this year,” said the company.

In LNG activities outside of Spain, Enagás became an industrial partner with a 10 percent stake in the Hanseatic Energy Hub consortium planning an onshore LNG import terminal at the German North Sea port of Stade.

Azerbaijan, a supplier of natural gas via the Trans-Adriatic Pipeline to Europe, is expected to confirm a West Asian gas deal involving the supply of one LNG cargo a month to Pakistan after a year of energy cooperation talks between the two nations.

The State Oil Company of the Republic of Azerbaijan, known as SOCAR, is set to confirm the deal to supply LNG on credit to the company called Pakistan LNG Limited and gasoline to Pakistan State Oil Co. during the second half of 2023 under an inter-governmental agreement.

Pakistan has two floating LNG import terminals at Port Qasim, east of Karachi, though has been unable to import sufficient volumes because of the country’s financial woes and political instability.

Pakistan’s Minister of State for Oil, Musadik Masood Malik, first raised the LNG imports issue in a meeting in 2022 involving SOCAR President Rovshan Najaf as well as the Minister of the Investment Council of Pakistan Chaudhry Salik Hussain.

“Discussions were held on the oil and gas sector, especially the trade of oil products, the development of natural gas infrastructure and the supply of LNG to Pakistan,” said a statement,

Affordable LNG

Pakistani Oil Minister Malik said the government was in the process of finalising the LNG supply deal with Azerbaijan.

“The less expensive LNG imports from Azerbaijan would be according to the domestic demand and the available finances,” Malik explained.

The Minister added that the LNG agreement would mandate Azerbaijan to offer one cargo of LNG at the lowest price possible every month.

He added that Pakistan’s deal was “unique” in that it offered the “flexibility of accepting or rejecting the cargo offer” without giving any reason.

Malik added that Pakistan would be offered 12 cargoes by SOCAR over the coming year.

“This accord is an unprecedented opportunity for Pakistan to access affordable LNG from around the world through Azerbaijan’s trading network,” added Malik.

Azerbaijan has no LNG production facilities of its own but has been an LNG market player since 2016 through its SOCAR Trading division, which buys and sells LNG cargoes worldwide as well as other oil and gas products.

The Azeri gas fields also supply large pipeline volumes to European Union nations such as Bulgaria, Greece and Italy as well as to Georgia and Turkey by pipeline.

SOCAR has large-scale domestic oil and gas joint ventures in the prolific Azerbaijani sector of the Caspian Sea with BP of the UK and France’s TotalEnergies, two companies with widespread LNG portfolios and ready access to cargoes.

Long-term ambitions

The Azeri company said it would regard the final LNG deal with Pakistan as a way of “maintaining productive and warm economic relations with a friendly country and partner”.

Analysts noted that Pakistan was also aiming in the longer term for natural gas supply links with another former Soviet Central Asian republic, Turkmenistan.

The Pakistanis have signed an accord on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project that the region has been looking at for more than 10 years as opening the way for regional development if the project ever started.

That 1,800-kilometre (1,120 miles) pipeline if built in the still unstable region would carry volumes from Turkmenistan’s huge Galkynysh gas field via Afghanistan and Pakistan to the Indian city of Fazilka.

The route would also take the TAPI pipeline through the Afghan cities of Herat and Kandahar and the Pakistani cities of Quetta and Multan.

Enagás, the Spanish natural gas grid and LNG terminals operator, said first-quarter net profits excluding one-time items dropped by 21 percent and revenues also fell even as LNG and pipeline gas delivers rose and 43 percent of the LNG stored in Europe during the quarter was in the tanks of the six Spanish regasification terminals.