FT: Türkiye aims to reduce reliance on Russian gas with US LNG deal

As Turkey's long-term natural gas contracts with Russia and Iran approach expiry, the country is turning to the US and ExxonMobil for a significant LNG supply agreement.

Apr 29, 2024 - 06:57

FT: Türkiye aims to reduce reliance on Russian gas with US LNG deal

LNG gas Europe Russia energy war

Türkiye is in discussions with US energy giant ExxonMobil to secure a long-term deal for liquefied natural gas (LNG) supplies worth billions of dollars, according to Turkish energy minister Alparslan Bayraktar.

In an interview with the Financial Times, Bayraktar stated that the country is seeking to build a “new supply portfolio” to reduce its reliance on any single energy partner.

The potential agreement with Exxon would provide Türkiye with up to 2.5 million tonnes of LNG annually for a period of up to 10 years.

“The commercial terms of the Exxon deal were still under discussion, but 2.5mn tonnes of LNG shipped to Türkiye would currently cost about $1.1bn,” Bayraktar said. This volume of LNG would be sufficient to cover approximately 7% of Türkiye’s natural gas consumption in 2022.

Bayraktar emphasized that Türkiye aims to diversify its natural gas supplies before some of its long-term contracts with Russia expire in 2025 and those with Iran in 2026. Currently, Russia is Türkiye’s largest natural gas supplier, accounting for more than 40% of its consumption last year, primarily delivered through pipelines.

The minister defended Türkiye’s ongoing energy relations with Russia, stating that “competitive” deals have helped the country avoid the energy crisis that affected major European countries following Russia’s invasion of Ukraine in 2022.

“For security of supply, we need to get gas from somewhere. It could be from Russia, it could be from Azerbaijan, it could be Iran, or LNG options,” Bayraktar explained.

Türkiye has been investing in expanding its infrastructure for receiving and storing LNG, with the share of LNG in its natural gas imports increasing from 15% in 2014 to 30% in 2022. The country is also exploring domestic oil and gas resources, including a large gas site in the Black Sea and oil drilling in the south-east, which Bayraktar described as having the potential to be “quite a game-changer for us.”

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