Turkey nearing 'critical' phase in gas supply arrangements: minister

Turkey is approaching a ‘"critical" stage in 2025/26 with regard to its gas supply arrangements, with a number of its key gas import contracts set to expire, Turkish energy minister Alparslan Bayraktar said Oct. 10.

Speaking at the St Petersburg Interational Gas Forum, Bayraktar said Ankara's gas import strategy had two main aims -- supply security and affordability.

State-owned Botas has a legacy contract with Russia's Gazprom for 16 Bcm/year delivered via the Blue Stream pipeline that expires at the end of 2025 and has also been importing 5.75 Bcm/year of Russian gas via the TurkStream pipeline under yearly, quarterly and monthly spot deals that also expire at the end of 2025.

Botas also holds a contract to import up to 9.6 Bcm/year of Iranian gas that expires in July 2026.

Separately, six private companies hold contracts to import Russian gas. Of these, Enerco has a contract for 2.5 Bcm/year that expires at the end of 2025 and Avrasya Gaz holds a contract for 0.5 Bcm/year that expires in February 2026.

Neither company has imported any gas since 2021, however, and only tiny quantities between 2019-2021.

Supply diversification

Faced with the prospect of the expiry of many of its import contracts, Bayraktar said Turkey was pursuing a policy of supply diversification.

"We are a growing market, our needs are increasing but at the same time we are focusing on security of supply," he said.

"We are trying to diversify our gas supply portfolio," he added, pointing to three recent long-term LNG contracts that Botas has signed with ExxonMobil, Shell and TotalEnergies.

"We are looking for more reliable supply for the Turkish market and for competitive and affordable gas supplies," he added, without making any direct reference to Botas' soon-to-expire contracts with Gazprom.

"Definitely gas needs to be competitive and if we leave it to the market only, sometimes we might have some difficulties on this front," he said, pointing to recent periods of high gas prices.

Bayraktar did stress the benefits for both Turkey and Russia afforded by the two direct pipeline connections that allow the supply of Russian gas directly to Turkey without the need to transit through third countries.

"We can receive gas from Russia through Blue Stream and through TurkStream -- around 31.5 Bcm/year in total," he said.

Before TurkStream began operations in 2020, Turkey received Russian gas via Ukraine and the Trans-Balkan gas link through Romania and Bulgaria.

Trading hub

Gazprom, in a statement Oct. 10, said its CEO Alexei Miller had met with Bayraktar on the sidelines of the St Petersburg event.

It said the parties discussed "current issues and prospects for cooperation in the gas sector," including the project to create an international gas hub.

Commenting on the plans for the hub, Bayraktar said: "We are working very closely with Gazprom on this project. Hopefully in the next few months we will see some solid developments on this front."

In October 2022, Turkey and Russia agreed to work together to realize a proposal to create a gas hub in northwest Turkey.

Russian President Vladimir Putin said in September 2023 that Gazprom had delivered a draft roadmap to Botas on the implementation of the hub and said Russia was ready to transit gas through Turkey to consumers in third countries.

To date, Ankara has not released any details of how the proposed hub would operate.

Statements by Turkish officials have stated only that the aim is to allow gas arriving in Turkey from multiple pipeline and LNG sources to be traded in Turkey and transited on to customers in Europe.

Bayraktar also noted that Turkey has pipeline links with Azerbaijan with a current capacity of 12.5 Bcm/year, as well as a pipeline from its own Sakarya gas field.

"Only by pipeline we can bring in around 63 Bcm of gas -- more than our consumption," he said, adding that Turkey had the capacity to import a further 20-25 Bcm/year in the form of LNG.

"Our consumption is around 50 Bcm/year. It is increasing but we have 80-85 Bcm/year of import capacity," he said.

This meant Turkey had "significant" excess capacity that can be used for gas to trade on Turkey's planned trading hub, he said.