Turkey has signed a significant deal with the British energy giant Shell to supply it with billions of cubic metres of liquefied natural gas (LNG).
For 10 years from 2027, Shell will provide the country with four billion cubic metres of LNG a year, which will be used for domestic consumption, as well as re-export.
With gas discoveries in the Black Sea and a rapidly evolving gas and oil redistribution capability, Turkey is an emerging player in the energy market but remains a net importer.
During the official signing ceremony with Shell on Monday, Energy Minister Alparslan Bayraktar said his country’s annual gas consumption was around 50 billion cubic metres.
He said the supplied gas would increase Ankara’s “regional and global trade opportunities” and ability to supply European gas terminals.
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Turkey’s gas needs are expected to grow in tandem with its population growth but the deal with Shell would account for a not-insignificant eight percent of its current gas requirement.
“We are also pleased that Botas will acquire different and critical capabilities in the field of LNG transportation,“ Bayraktar said, referring to Turkey’s state-owned pipeline company.
Given its location at the junction of Asia and Europe, the Turkish government is hoping to become an energy hub that connects gas supplies from Russia, Azerbaijan and Turkmenistan to markets in the west.
Domestically, Ankara has a well connected gas network, which ensures its 81 provinces and 212 organised industrial zones are well provided.
“The most important point in the agreement signed with Shell is that Botas will be able to bring this LNG to Turkey and sell some of it to buyers in Europe depending on the price and supply-demand conditions in the market”, Emin Emrah Danis, the general manager of Istanbul-based Moben Consulting, Invesment, Research, told Middle East Eye.
Danis recalled that Turkey also signed a similar deal with Exxon for 10 years to import 2.5 million tonnes of LNG earlier this year.
In 2020, Turkey made the largest natural gas discovery in the history of the republic in the Sakarya gas field in the Black Sea.
“Today, as Turkiye (Turkey), we have daily production of over seven and a half million cubic metres of natural gas. In other words, we produce gas for 3.2 million households,” Bayraktar added.
The minister said that with an additional floating platform that is anchored in the Black Sea, Turkey will reach a production rate of 10 million cubic metres in the next 20 years, satisfying the needs of 4.5 million households.
Bayraktar said that Turkey had recently extended a gas supply agreement with Azerbaijan until 2030 and another one with Algeria until the end of 2027.
“Botas’s Blue Stream contracts with Russia in 2025 and its long-term pipeline gas purchase contracts with Iran in 2026 will expire,” Danis said. “The agreements signed with Shell and Exxon will strengthen Turkey’s hand in contract renewal negotiations with these countries and provide flexibility. “
Despite Turkey’s own energy needs, securing supply from multiple multinational companies and countries, could mean there is a regular surplus that could be exported.
”In this context, we are now exporting natural gas to Europe, to Bulgaria, our neighbour, to Hungary, Romania and Serbia, with which we have no border,” Bayraktar said.
