* Spot LNG drops to about half of Gazprom price
* Gazprom market share falls to 35% in Turkey, 50% in Greece
* Azeri gas exports to Turkey rise, other markets targeted
By Ekaterina Kravtsova
LONDON, Sept 6 (Reuters) - Russian gas exports to Turkey andeight other southeast European nations fell by more than aquarter in the first half of 2019 as cheaper liquefied naturalgas (LNG) and new Azeri supplies helped the region reducereliance on Russia.
Russian exports to Turkey, the biggest regional market, fell36% compared to the first half of 2018, while exports to Greeceand Bulgaria dropped 12.7% and 17.4% respectively, datapublished by Russia's Gazprom showed.
Low LNG prices, driven down by sluggish spot demand in Asiaand rising output particularly in the United States, as well asthe expansion of gas output and pipeline capacity fromAzerbaijan, helped some regional nations diversify suppliers.
Gazprom's exports to the nine regional states fell 27% to14.2 billion cubic metres (bcm) from 19.5 bcm a year earlier,the figures published by the Russian energy giant showed.
"Low LNG prices are accelerating the trend of reducingRussian gas dependency," said Alex Lagakos, head of Greek EnergyForum, a think-tank focussing on Greece and regional markets.
Dutch front-month contract, a benchmark for spot LNGdelivered to Europe, averaged at $3.6 per million Britishthermal units (mmBtu) this summer, about half Gazprom's pricefor gas supplied to Turkey, a Turkish gas market source said.Gazprom does not publish its gas contract prices.
Turkey imported 8.1 bcm from Gazprom in the first half ofthis year, down from 12.7 bcm a year earlier. Its reliance onRussian supplies fell to 35% of its needs from 49%.
A Turkish gas market source said the drop in Russian flowsmight have been intended "to show Gazprom that Turkey cansurvive without Russian gas."
But analysts said regional countries were not seeking tosqueeze out Gazprom completely in favour of LNG, rather theywanted to reduce their heavy dependence on a single supplier.
Gulmira Rzayeva, a research associate at the OxfordInstitute for Energy Studies, said the region's aim was "tobecome more energy secure."
Turkey's gas imports from Iran held almost steady, whileimports from Azerbaijan surged 43% in the period, after thelaunch of the second stage of BP's Shah Deniz gas fieldin the Caspian Sea and the Trans-Anatolian Natural Gas Pipeline(TANAP) run by Azerbaijan's SOCAR last year, data from Turkey'senergy market authority EDPK showed.
CONTRACT TERMS
Turkish private companies that have deals with Gazprom toimport 10 bcm a year have imported only 600 million cubic metresin the first six months, the source said, blaming high prices.
Another industry source said buyers were typically requiredto take 80% to 85% of the contracted amount or pay a fee.
Their failure to secure a price reduction in the Gazpromcontracts might mean they could be reluctant to extend the dealswhen they expire in the early 2020s, industry experts said.
Rzayeva said one factor pushing Botas to reduce its relianceon Gazprom was the strict terms in the Russian firm's contractsthat prevented gas being sold on to other buyers, a requirementlimiting the Turkish state energy firm's bid to turn Turkey intoa regional gas hub.
"The Russian contract has a destination clause, the Azerideals from Shah Deniz stages 1 and 2 don't," she said.
Turkey's LNG imports rose 12% in the first six months to4.92 million tonnes, equivalent to about 6.7 bcm, RefinitivEikon data showed. Spot LNG imports outpaced the rise in Turkishpurchases via long-term contracts with Algeria and Nigeria.
LNG SHARE
Greece, which imported 1.5 bcm from Gazprom in the first sixmonths of 2019 compared to 1.7 bcm a year earlier, reported aneven bigger 156% jump in LNG imports to 0.82 million tonnes,equivalent to about 1.1 bcm, according to Refinitiv Eikon data.
Gazprom's share of the Greek market also slipped to 50% from60%, a Greek market industry source said, while the share of LNGrose to 40% from about 30%, Greek Energy Forum's Lagakos said.
"This is one of the highest shares in Europe (for LNG), onlycomparable to the ones of the Iberian market," he said.
Greece's Public Gas Company (DEPA) has been discussing along-term LNG supply deal with U.S. supplier Cheniere and hasreserved 1 bcm a year via the Trans Adriatic Pipeline (TAP), alink that extends to Italy and which is due to start in 2020.
Bulgaria, which until this year had been almost entirelydependent on Russian gas, has purchased two shipments of LNGfrom the United States. The LNG imports come via Greece asBulgaria does not have a regassification terminal.
Bulgaria also signed a contract in April with DEPA foranother gas shipment.
Construction of a pipeline to Bulgaria via Greece to importAzeri gas also began this year. Sofia plans to meet up to 30% ofits gas needs beyond 2020 under a contract to import 1 bcm ayear from Azerbaijan's Shah Deniz 2 field.
Ankara is also in talks with Sofia to supply any extra gasit receives from Azerbaijan to Bulgaria, Rzayeva said.
Bulgaria's state energy firm Bulgargaz and Botas did notrespond to Reuters requests for comment.
Gazprom aims to beef up its network to supply the region andbeyond. It is aiming to launch the TurkStream pipeline acrossthe Black Sea to Turkey in coming months with capacity of 15.75bcm a year in its first stage. The pipeline will be used totransport some gas to Europe that now transits Ukraine.
Gazprom said the recent drop in exports to Turkey and otherregional countries would not affect the long-term Turkstreamplans. "It is not correct to make a conclusion about demand forit from a one-time market situation," it said when asked.
Gazprom also told Reuters it was confident it would remain amajor supplier to Europe, saying it "does not see any threat toits positions in Europe as gas demand in the region will remainconsistently high."
(Reporting by Ekaterina Kravtsova;Editing by Nina Chestney and Edmund Blair)
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