Natural gas prices to be revised after Azerbaijani adjustment

BOTAŞ revealed that needs to re-determine natural gas prices due to an increase in payments made to both Iran and Azerbaijan. The previous estimate of pricing for 2010 revealed a price hike of nearly 50 percent for the new year in line with the increase in crude oil prices and the exchange rate. The revision notes, however, that due to the price adjustment for natural gas from Azerbaijan, pricing needs to be reconsidered.

Energy and Natural Resources Minister Taner Yıldız, at the 11th International Energy Arena organized by the Strategic Technical Economic Research Center (STEAM), explained that the price difference paid for Azerbaijani natural gas was part of an April 2008 revision requested by Azerbaijan to the original agreement signed by both parties. He noted that this revision required Turkey to pay a price difference for natural gas bought after August 2007 and also noted that this difference will be paid from BOTAŞ’s own budget.

Alongside this, $704 million was paid to Iran for unbought gas in 2008 due to decreased demand stemming from price hikes which reached 75 percent. In the case that natural gas consumption does not increase this year, BOTAŞ expects to pay an additional $2 billion for unbought natural gas.

Yıldız noted that these new payments will be reflected in higher per-unit natural gas prices. Moreover, he stated that these increased payments will also be a significant cost pressure regarding the Treasury’s goal of achieving a surplus in the new year.

In his speech at the Energy Arena meeting, the minister also said talks with Russia’s Atomstroiexport on building its first nuclear power plant will be completed by next month and plans to construct more will be accelerated.

Turkey has repeatedly pushed back a deadline to finish the tender, held in September 2008, in which Atomstroiexport and its partners Inter RAO and Turkey’s Park Teknik were the only bidders. It wants the group to lower the price at which it will sell the government electricity.

Turkey is reviewing Atomstroiexport’s revised bid. The new price is $0.134-$0.154 per kilowatt hour (kWh), 27 percent lower than its original bid but still about double the current rates. The minister also said his ministry is still working on a bill to develop more renewable energy sources and that Parliament may vote on it in four months.