UPDATE 1-Azerbaijan’s SOCAR suspends oil transit via Russia to supply BTC | Agricultural Commodities

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* Exports via BTC pipeline have been falling since February

* SOCAR cancels two March-loading positions in Novorossiisk

* SOCAR asked Transneft to divert its transit to Makhachkala (Adds details, quotes)

BAKU/MOSCOW, March 14 (Reuters) – Azerbaijan’s SOCAR has suspended its oil transit through Russia, SOCAR said on Thursday, to divert flows to its own pipeline from the Caspian Sea, which has been grappling with falling exports.

SOCAR’s pipeline, Baku-Tbilisi-Ceyhan (BTC), has seen exports decline as a big contributor to it Turkmenistan diverted its flows to a Russian port earlier this year.

“It was decided that exports via the northern route through Russia would be diverted to BTC pipeline for one month,” the head of SOCAR’s trading arm Adnan Ahmadzadeh told Reuters.

SOCAR had been exporting an average of 160,000 tonnes of crude oil a month via Russia’s Black Sea port of Novorossiisk.

According to the March loading schedule from Novorossiisk obtained by Reuters, SOCAR had two 80,000-tonne cargoes of Siberian Light crude for loading on March 19-20 and 30-31, but both were cancelled. As a result, loadings from Novorosiisk in March are down to 2.4 million tonnes.

SOCAR’s decision to suspend transit comes after exports via the BTC pipeline dropped as Turkmen producers, Eni Turkmenistan and Dragon Oil, decided to sell their volumes to trader Vitol and divert supplies from the BTC to Novorossiisk.

Turkmen producers used to supply about 200,000 tonnes per month to BTC. Their volumes were loaded in SOCAR alliance cargoes and offered in the market by SOCAR trading.

Since February, when Turkmen crude oil was fully diverted to Russia, exports via the BTC pipeline have been steadily falling.

“SOCAR is using every way to get Turkmen volumes back to BTC. As Russia has received Turkmen transit, they may want to ask for their own transit volumes back,” a source in the Caspian crude oil market said.

A source with a direct knowledge of the matter said SOCAR management visited Moscow earlier this week to “negotiate an optimisation of Azerbaijan’s crude oil transit via Russia”.

NEW ROUTE

In February, SOCAR asked Russia’s Transneft to divert oil flows from the Baku-Novorossiisk pipeline to a new route, the port of Makhachkala, for transit via Transneft’s pipelines to Novorossiisk, a document seen by Reuters showed.

SOCAR said in a letter it wanted to discharge some 1.145 million tonnes of crude at the Makhachkala terminal from March to end-2019. Industry sources said there was no spare capacity at the port, as it offloads Kazakh and Turkmenistan crude.

If SOCAR’s proposal was agreed, it would push Turkmenistan’s volumes back to Baku and the BTC pipeline, trade and industry sources added.

Russia’s pipeline monopoly Transneft declined to comment. (Reporting by Nailia Bagirova, Olga Yagova and Gleb Gorodyankin, additional reporting by Vladimir Soldatkin; Editing by David Evans)

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