Türkiye is scooping up LNG supply. Why?

Last month, Türkiye signed two back-to-back LNG contracts with energy giants Shell and TotalEnergies, locking natural gas supplies for ten years even though the country wasn’t facing any immediate shortage.

Experts say that Türkiye, which depends on imports to meet its energy requirements, is moving proactively to diversify sources of supply as regional wars and shifting alliances increase uncertainty about global energy security.

Türkiye imports gas via transnational pipelines under long-term contracts, some of which will expire over the next two years.

“The long-term LNG agreements concluded this year serve precisely these objectives,” says Dr Cihad Terzioglu, an energy specialist based in Istanbul.

“In addition to taking advantage of the long-term, flexible price advantage, Türkiye will also utilise international ports and facilities, which will enable it to become one of the game-changing energy players.”

LNG, or liquified natural gas, is supercooled methane that can be transported in large quantities in special sea vessels.

It goes to the credit of the Turkish Ministry of Energy and Natural Resources that it secured LNG supplies at a crucial time. The LNG market remains tight as European states are looking to buy LNG volumes ahead of the expiry of the Ukraine-Russia pipeline deal.

Europe still receives substantial gas volumes from Russia. However, that gas comes through the territory of Ukraine, which has indicated it won’t renew the agreement with Moscow.

Securing the future

Türkiye's state pipeline company BOTAS signed a 10-year deal with energy giant Shell on September 2 to receive up to 4 billion cubic meters of LNG annually. Starting in 2027, Shell will supply the LNG from its US and global sources to Türkiye.

Only two weeks later, BOTAS signed another 10-year deal with TotalEnergies. Starting in 2027, the agreement will deliver 16 LNG shipments annually, totalling up to 1.6 billion cubic meters annually.

This recent flurry of deals represents only part of Türkiye’s broader strategy to diversify its energy imports. In May, BOTAS signed a decade-long agreement with Texas-based ExxonMobil to supply 2.7 billion cubic meters of LNG annually.

Türkiye has limited domestic energy resources and heavily relies on imports to meet its growing energy demands. With minimal oil and natural gas reserves, the country imports a significant portion of its energy, primarily from Russia, Iran, and Azerbaijan.

At the same time, the country’s industrial capacity has been expanding rapidly, with sectors like manufacturing and construction driving economic growth.

This industrial growth has led to a sharp increase in energy consumption, further amplifying the country's reliance on imported energy, particularly natural gas and LNG.

Last year, Türkiye imported 50.48 billion cubic meters (bcm) of natural gas, with 71.73 percent (36.21 bcm) via pipelines and 28.27 percent (14.27 bcm) as LNG from 21 countries.

Russia topped the list of suppliers with a 42.27 percent share, followed by Azerbaijan (20.32 percent), Algeria (11.86 percent), Iran (10.71 percent), and the U.S. (7.95 percent).

Gas imports have gone by 7.6 percent following the start of production from the Sakarya Gas Field in the Black Sea.

Aiming to be a hub

Buoyed by Sakarya find and Türkiye’s strategic location, officials have repeated the government’s desire to place the country as a regional hub for gas trade.

Türkiye already boasts a vast pipeline infrastructure that connects countries as far away as Azerbaijan to Bulgaria.

The focus on building LNG facilities and securing the supply comes at a time when there’s a global rush toward electric vehicles and calls for clean energy to run them.

“In today's world of increasing electrification, Türkiye is accelerating its investments in renewable energy resources, storage, hydrogen and electric vehicle technologies, and setting its long-term targets, ” says Terzioglu.

“In the light of all these, we can say that Türkiye's journey to become a regional energy hub is going more successfully than ever before, with breakthroughs and investments.”

The new LNG agreements will also give Türkiye leverage in negotiating terms for BlueStream and TurkStream pipelines from Russia. Their contracts are up for renewal in 2025.

Türkiye is considering potential re-export markets with an eye on European consumers.

The LNG supplies coupled with pipeline gas give Türkiye 25 bcm of surplus gas above the annual consumption of 50 bcm.

"We can supply to European markets, particularly to the ones in south-east Europe that are in need of gas," said Turkish Energy Minister Alparslan Bayraktar last month.