FACTBOX: Turkish elections see energy in focus

Turkey goes to the polls May 14 with energy prices a key issue in the major transit hub that's dependent on imports of oil and gas.

Leading Turkey for 20 years, President Recep Tayyip Erdogan has been a key partner for Russia since it invaded Ukraine in 2022. A change in government could see the country pursue more pro-Western policies.

The following are main oil and gas issues at stake:

Trade flows

--Turkey is an important transit point for crude flows. The country is currently stalling on allowing the restart of crude flows from northern Iraq weeks after exports from the Ceyhan pipeline terminal were suspended, restricting supplies of mostly Kurdish-origin Iraqi crude.

--Ankara has also grown more dependent on help from Russia as the high cost of oil and gas has added to inflationary issues crippling the economy.

• Russia has increased oil supplies to Turkey after losing traditional markets in Europe following its invasion of Ukraine, which triggered Western sanctions including EU import bans on most Russian oil.
• Russia supplied 35.7% of Turkey's crude imports during 2022, up from a 17.3% share in 2021. It accounted for 53.3% of Turkey's 14.03 million mt oil product imports in 2022, up from 37.6%.
• Flows through the Baku-Tbilisi-Ceyhan (BTC) pipeline from Azerbaijan to Ceyhan rose 7.9% on year in the first quarter of 2023, averaging 609,000 b/d. This includes volumes from Kazakhstan, supplied under an agreement to ship 1.5 million mt/year (30,000 b/d) via the route.
• Turkey imported 12.06 million Bcm of gas in the first two months of 2023. Russia accounted for 35% of these imports, supplying 4.21 Bcm.

--Shortfalls in nearby gas supplies have forced Turkey increasingly to secure LNG deals.

• Algeria is Turkey's largest supplier of LNG, recently overtaking the US. Algeria supplied 1.855 million mt of LNG so far in 2023. Turkish imports of US LNG have slowed to just behind Algeria at 1.852 million mt.
• Turkey has imported 796,000 mt of Russian LNG so far in 2023, almost triple last year's intake of 286,000 mt, according to data from S&P Global Commodity Insights. Deliveries are contracted mainly from Gazprom's Portovaya and Novatek's Yamal LNG.

Related story: Turkish elections unlikely to solve Ankara's energy dilemma

Infrastructure

--Turkey's control of the Turkish Straits, the shipping route connecting the Black Sea with the Mediterranean, gives it a geostrategic position in world trade. It is also host to major pipelines which are important for European market security.

• The Kirkuk-Ceyhan Pipeline transports crude from the semi-autonomous Kurdistan region of Iraq to the Mediterranean port of Ceyhan.
• Typically about 350,000-375,000 b/d of the exports comprise Kurdish Blend Test from KRG-controlled oil fields, with the remaining 75,000-100,000 b/d federally controlled Kirkuk grade.
• The Baku-Tbilisi-Ceyhan pipeline also supplies oil from Azerbaijan and Kazakhstan to the port of Ceyhan.
• Turkey serves as a key transit route for gas from Azerbaijan to Europe via the 16 Bcm/year TANAP pipeline.
• Russian gas is supplied via the 16 Bcm/year Blue Stream pipeline, and the two-string 31.5 Bcm/year TurkStream pipeline. Both make landfall in northern Turkey.

Prices

--Turkey has taken advantage of major discounts on Russian crude since the invasion of Ukraine, despite being a member of the NATO military alliance opposed to Moscow's military action.

• Discounts for Russia's key crude grade Urals have reached more than $40/b in the period since February 2022. Platts assessed Urals FOB Primorsk at $51.33/b on May 10, a $25.6/b discount to Forward Dated Brent. Platts is part of S&P Global Commodity Insights.
• LNG prices have fallen significantly after experiencing major volatility in 2022. Platts assessed LNG DES Mediterranean marker at Eur 30.447/MWh on May 11. Its 2022 peak was Eur253.884/MWh on Aug. 26.