Turkey's winter LNG imports at new high

26 Mar 19, 18:42 - Natural gas, LNG, Fundamentals

London, 26 March (Argus) — Turkey's LNG deliveries have reached a record high this winter, with quick spot deliveries and strong receipts under long-term contracts with Algeria and Nigeria offsetting weaker Qatari supply than a year earlier.

Turkish terminals received 90 LNG cargoes on 1 October–26 March, already an all-time high for any winter. And a Nigerian cargo is scheduled to be unloaded at the Marmara Ereglisi terminal on 28 March, bringing the number of deliveries to 91.

Turkey received 86 cargoes last winter and 69 deliveries in October 2016-March 2017. Stronger sendout this winter has helped offset weaker pipeline imports, particularly from Russia.

LNG receipts from countries other than Algeria, Nigeria and Qatar — with which Turkey has long-term supply contracts — rose to the highest in recent years, climbing to 23 from 21 a year earlier. And spot deliveries may have been even higher, as state-owned Botas may have purchased some of the cargoes received from Algeria and Nigeria on a spot basis.

Botas tends to secure additional LNG deliveries for winter — in addition to supply already contracted through medium or long-term contracts — through tenders ahead of winter. The firm held two additional tenders in October last year, as it had secured only a few winter deliveries in its July auction. The firm later sought an additional six deliveries, although it was unclear how many of these were unallocated slots from previous tenders. Botas has an obligation to take all of the supply contracted in tenders.

LNG receipts secured through tenders had been expected to fall this winter compared with recent years, mostly because of additional long-term supply becoming available following the start of Azeri flows through the 16bn m3/yr Trans-Adriatic pipeline (Tanap) in June 2018 and Qatari LNG deliveries under a three-year deal for 1.5mn t/yr Botas signed with state-controlled Qatargas, which became effective in October 2017.

But while Tanap deliveries of around 5.7mn m3/d throughout this winter bolstered supplies to Turkey, Botas' Qatari LNG receipts fell considerably in October-March compared with a year earlier.

Botas revised terms with Qatargas for more flexibility to receive cargoes throughout the year, after the firms had initially agreed on contractual supply to be delivered in October-March. Qatari receipts have dropped to 12 so far this winter from 19 in October 2017-March 2018 and no Qatari deliveries are expected at Turkish terminals for the remainder of this month.

Slower Qatari deliveries were more than offset by quicker receipts from Nigeria and Algeria. Combined deliveries from the two countries were the highest for any winter since at least 2013-14. Nigeria and Algeria each delivered five additional cargoes in October-March compared with a year earlier — including the scheduled delivery on 28 March. Some of the deliveries may have been secured in the spot market, as the LNG price for Turkey delivery holding a wide discount to the oil-linked pipeline import costs offered an incentive for Botas to prioritise LNG over pipeline imports.

Botas holds long-term supply agreements for 4.4bn m3/yr of pipeline gas equivalent with Algeria's Sonatrach and for 1.3bn m3/yr with Nigeria LNG.

Shell biggest spot supplier

Most of Turkey's LNG receipts this winter from countries other than Algeria, Nigeria and Qatar may have been provided by Shell.

Of the 23 cargoes, 14 were Shell-controlled vessels mostly delivered from terminals where the firm has long-term offtake agreements. The remainder of the tankers were chartered by Total, Malaysia's Petronas and Norway's Equinor, while one was a vessel operating on a spot basis and the charterer for one of the ships was unknown.

Slow deliveries to Dortyol

The Botas-operated offshore Dortyol terminal, which became operational in early 2018, received only three cargoes in October-March, despite record-high aggregate deliveries in the period.

This is mostly because Botas has capacity booked on a long-term basis at the other three terminals with use-or-pay obligations. Dortyol did not receive any cargoes in summer 2018.

Newly added regasification capacity has boosted Turkey's deliveries in recent years. Sendout capacity more than doubled to 108mn m3/d in 2018 from 51mn m3/d in 2016, following the start-up of Dortyol.