Turkey is ready to sell more natural gas to the European Union but wants long-term commitments to justify the infrastructure investment needed. It also wants to sidestep any complicated swaps that the bloc is pushing to avoid Russian gas.
Europe is trying to secure alternative gas supplies to replace Russian flows that transit Ukraine. Some options could involve Azerbaijan’s gas sales into Turkey being diverted to Europe and replaced by additional sales of Russian gas into the Turkish market. Turkey is more keen to expand exports via Bulgaria.
“These discussions are made without knowing the capacity and the market,” he said. “What we need is an increase in the Turkey-Bulgaria interconnection capacity,” that can currently only receive half of the 7 billion cubic meters per year that Turkey can technically supply.
Ankara could work with Azerbaijan’s national energy company Socar to increase that to as much as 10bcm, but wants assurances about Europe’s demand, he said.
The comments highlight the diplomatic wrangling required to replace Russian flows to Europe — with the agendas of buyers and sellers not always aligning.
“We think political and physical barriers are too high to replace Russian gas flowing through Ukraine with Azerbaijani gas,” consultants Energy Aspects Ltd. said in a recent note. “Azerbaijan will struggle to ramp up its domestic production to deliver any meaningful additional supply to Europe next year.”
Bayraktar pointed to deals like Turkey’s pact last year with Bulgaria to import as much as 1.5 bcm of LNG and re-export it westward as a more “flexible” solution. That could raise eyebrows in Brussels, where the EU’s antitrust watchdog is probing the agreement over concerns that it’s anti-competitive.
Meanwhile, Bulgaria — which under the agreement has to pay nearly $500,000 a day for access to the Turkish gas grid — is looking to renegotiate the deal to allow a third party to use the rights, because of the high costs.
Turkey aims to become a regional gas hub and has already invested heavily in new storage and liquefied natural gas facilities as well as exploration and production in the Black Sea. While it’s still almost entirely reliant on imports to meet domestic demand, it signed multiple export contracts with Romania, Moldova and Hungary last year for small amounts of gas.
It’s also exploring gas imports from Turkmenistan, currently through a gas swap via neighboring Iran, Bayraktar said, adding that he hopes to reach an agreement during a visit there later this month.
Incoming supply is also set to receive a boost from a long-term LNG import contract with the US’s Exxon Mobil Corp, for which a provisional deal was signed in May. Bayraktar said he hopes to announce the final contract as well as others with undisclosed additional companies in the coming days.
Russian Discount
While Europe has tried to wean itself off Russian fuel since the invasion of Ukraine, Moscow remains NATO-member Turkey’s biggest gas supplier, as Ankara tries to balance ties with both sides in the conflict.
Turkey and Russia negotiated “special prices” for the fuel last summer and winter independent of the usual price formula set out in the contract between Russia’s Gazprom PJSC and Turkey’s Botas, the minister said, without disclosing the terms.
“Depending on market conditions, consumption amounts, import amounts, sometimes the seller, sometimes the buyer can make different suggestions,” he said.
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