BAKU

Azerbaijan halted natural gas supplies to Turkey from the Shah Deniz I offshore field due to contract expiry, Azerbaijan’s state energy company SOCAR’s spokesman said.

“Azerbaijan’s gas exports as part of the Shah Deniz I contract were suspended due to the 15-year contract expiry,” Ibrahim Akhmedov said.

“Talks (on a new contract) are underway.”

BP confirmed talks on the prolongation of the contract.

A BP-led consortium, which develops Shah Deniz project, has been pumping gas from the offshore Shah Deniz field’s first phase since 2006, delivering more than 10 billion cubic metres (bcm) a year of gas to Azerbaijan, Georgia and Turkey.

Turkey signed a deal for gas supplies from Shah Deniz I in 2007, with expected annual volumes of 6.6 bcm.

In January-March 2021, Azerbaijan exported 3 bcm of gas to Turkey.

SOCAR said that gas supplies to Georgia from Shah Deniz I, as well as gas deliveries to Turkey from Shah Deniz II would continue as usual.

The second phase started output in 2018, adding 16 bcm of gas production capacity at its peak to bring total capacity to 26 bcm.

Azerbaijan started commercial natural gas supplies to Europe from Shah Deniz II via its $40-billion Southern Gas Corridor in December 2020, when the corridor’s last part, the Trans-Adriatic Pipeline, was launched. The project is aimed at reducing Europe’s dependence on natural gas supplies from Russia, which currently controls 34 percent of the continent’s gas market.

Azerbaijan aims to supply European gas markets with 10 bcm of gas a year, including 8 bcm to Italy and a combined 2 bcm to Greece and Bulgaria.

Apart from BP and SOCAR, participants of the Shah Deniz consortium are Turkey’s TPAO, Malaysia’s Petronas, Russia’s LUKoil and Iran’s NIOC.