Turkey is in talks with US energy supermajor ExxonMobil over a multibillion-dollar deal to buy liquefied natural gas as Ankara seeks to curb its dependence on Russian energy.
The country, which imports nearly all of its natural gas, is
seeking to build a “new supply portfolio” that will make it less reliant on any
single partner, Turkish energy minister Alparslan Bayraktar said in an
interview with the Financial Times.
The talks come amid improving relations between Turkey and
the US after Ankara dropped its veto on Sweden joining the Nato military
alliance and Washington agreed to sell Turkey billions of dollars worth of F-16
fighter jets. They also come as Turkey is seeking to reposition itself as a
regional energy hub.
Turkey would secure up to 2.5mn tonnes of LNG a year through
the long-term deal under discussion with Exxon, Bayraktar said, adding that the
pact could last for a decade.
Bayraktar said the commercial terms of the Exxon deal were
still under discussion, but 2.5mn tonnes of LNG shipped to Turkey would
currently cost about $1.1bn, according to pricing assessments by data agency
Argus.
The 2.5mn tonnes of LNG under discussion would be enough to
cover roughly 7 per cent of Turkey’s natural gas consumption last year,
according to FT calculations based on data from the Energy Market Regulatory
Authority. Last year, Turkey imported 5mn tonnes of LNG from the US on the
“spot” market where energy is bought and sold for imminent delivery, Bayraktar
said.
Exxon has ambitious plans to expand its LNG portfolio to
40mn tonnes a year by 2030, about double what it was in 2020.
The company owns a 30 per cent stake in Golden Pass LNG, a
new export terminal on the US Gulf coast that it is building with partner
QatarEnergy. It has a capacity exceeding 18mn tonnes a year and is due to
begin producing LNG in the first half of 2025. Exxon is also pursuing LNG
projects in Papua New Guinea and Mozambique.
Exxon said it had initial discussions with the Turkish
government regarding potential LNG opportunities but would not comment on the
details of its commercial strategy.
Ankara, which had also enquired with other US natural gas
producers about LNG deals, is seeking to “diversify” its natural gas supplies
before some of its long-term contracts with Russia expire in 2025 and those
with Iran expire the following year, Bayraktar said.
Turkey relies heavily on natural gas for power generation
and industry. Households also benefit from large and costly gas subsidies
through state gas company BotaÅŸ.
Russia is by far Turkey’s biggest natural gas supplier,
accounting for more than 40 per cent of its consumption last year, which mostly
arrived by pipelines. Ankara currently has long-term LNG supply deals with
Algeria and Oman.
Turkey has retained strong trade, economic and tourist ties
with Russia even after Turkey’s Nato allies shunned Moscow after it launched a
full-scale invasion of Ukraine in 2022.
Moscow is also Turkey’s top oil supplier and will own and
operate the country’s first nuclear power plant, currently under construction,
on the Mediterranean coast. Russia, along with South Korea, both have “serious
interest” in a similar nuclear project on the Black Sea, Bayraktar said.
Bayraktar defended his country’s relations with Russia,
saying that “competitive” energy deals with Russia have helped Turkey to avoid
the energy crisis that gripped major European countries after the war
began.
“For security of supply, we need to get gas from somewhere.
It could be from Russia, it could be from Azerbaijan, it could be Iran, or LNG
options,” Bayraktar said, adding that “we need to look at the competitiveness
edge; which gas is cheaper?”
Bayraktar added that Turkey had made a concerted effort to
expand its infrastructure for receiving and storing LNG. About 30 per cent of
Turkish natural gas imports last year were LNG from 15 per cent in 2014.
Turkey has also been launching its own exploration and
production operations, including a large gas site in the Black Sea and oil
drilling in the country’s south-east. The country may later this year begin
exploring for oil in the Black Sea as well, Bayraktar said.
While local projects covered only a tiny fraction of Turkey’s energy needs currently, they had the potential to be “quite a game-changer for us,” Bayraktar said.
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