Turkey has been in negotiations with US energy giant ExxonMobil about a multi-billion dollar deal to purchase liquefied gas, as Ankara tries to reduce its dependency on Russian energy.
In an interview, Alparslan Bayraktar, the Turkish energy minister, said that Turkey, which imports almost all its natural gas needs to create a new supply portfolio, which will allow it to be less dependent on a single partner.
These talks take place amid improved relations between Turkey, the US and Sweden after Ankara renounced its veto against Sweden joining Nato and Washington agreed that it would sell Turkey F-16 fighter planes worth billions of US dollars. The talks come at a time when Turkey is trying to reposition herself as a regional hub for energy.
Turkey would secure up to 2,5mn tonnes LNG per year through the long term deal being discussed with Exxon. Bayraktar added that the pact might last for more than a decade.
Bayraktar said that the terms of the Exxon agreement are still being discussed, but according to data agency Argus, 2.5mn tonnes LNG shipped to Turkey will cost approximately $1.1bn.
According to FT calculations based off data from the Energy Market Regulatory Authority, the 2.5mn tonnes LNG in question would have been enough to cover approximately 7 per cent (or 2.7 billion cubic feet) of Turkey’s gas consumption for last year. Bayraktar stated that Turkey imported 5mn tons of LNG last year from the US, on the spot market, where energy is purchased and sold in anticipation of delivery.
Exxon is ambitiously planning to double its LNG production to 40mn tonnes per year by 2030.
It owns 30 percent of Golden Pass LNG, the new export terminal that it’s building on the US Gulf Coast with partner QatarEnergy. The company has a production capacity of 18mn tonnes per year, and will begin to produce LNG in the first quarter of 2025. Exxon also pursues LNG projects in Papua New Guinea, and Mozambique.
Exxon stated that it had held initial discussions with Turkish officials regarding possible LNG opportunities, but refused to comment on its specific commercial strategy.
Ankara is also seeking LNG deals with other US producers of natural gas. Bayraktar stated that Ankara wants to “diversify its natural gas supply” before its long-term contracts expire with Russia in 2025, and with Iran the following year.
Turkey heavily relies on natural gas to generate electricity and for industry. Gas subsidies are also provided to households by the state-owned gas company Botas.
The largest natural gas supplier to Turkey is Russia, with more than 40% of its consumption in the last year coming from pipelines. Ankara has LNG supply agreements with Algeria and Oman.
Turkey maintains strong economic, trade and tourism ties with Russia despite the fact that Turkey’s Nato partners shunned Moscow in 2022 after Moscow launched a full scale invasion of Ukraine.
Moscow, Turkey’s largest oil supplier, will also own and operate Turkey’s first nuclear plant, which is currently being built on the Mediterranean Coast. Bayraktar stated that Russia and South Korea both have “serious interests” in a nuclear project similar to the one on the Black Sea.
Bayraktar defended Turkey’s relations with Russia by saying that “competitive energy deals” with Russia helped Turkey avoid the energy crises that gripped many European countries following the start of the war.
We need gas to ensure supply security. Bayraktar added that it could come from Russia, Azerbaijan or Iran. “We need to consider the competitive edge, which gas is cheaper?”
Bayraktar said that Turkey has made a concerted attempt to expand its infrastructure in order to receive and store LNG. Around 30 percent of Turkish natural-gas imports were LNG last year, up from 15 percent in 2014.
Turkey is also launching its exploration and production activities, including a huge gas site in Black Sea and drilling for oil in the south-east of the country. Bayraktar stated that the country could begin oil exploration in the Black Sea later this year.
Bayraktar stated that while local projects only covered a small fraction of Turkey’s current energy needs, they could be “quite game-changing for us”.