Turkey signs 10-year LNG supply agreement with TotalEnergies

Turkey’s ambitions to become a regional gas hub just got a new boost after the country signed a 10-year deal with French energy giant TotalEnergies (NYSE:TTE), Turkey’s Daily Sabah reported on Wednesday.

Under the terms of the agreement, the oil and gas supermajor will supply Turkish state energy company BOTAS with 1.1 million metric tons per annum (mtpa) of liquefied natural gas (LNG) over 10 years starting in 2027. This marks the fourth long term import. agreement BOTAS signed this year with non-state-owned companies, after signing a similar business with Shell Plc (NYSE: SHEL), Exxon Mobil Corp. (NYSE:XOM) and Oman.

According to Turkish Energy Minister Alparslan Bayraktar, the supply agreements will provide Turkey with 25 billion cubic meters (bcm) of surplus gas over the country’s annual consumption of 50 billion cubic meters.

“We can supply the European markets, especially those in South East Europe that need gas,” said Bayraktar, who was in Houston to sign the agreement, as reported by Reuters.

The gas surplus gives Turkey additional flexibility to negotiate better terms or even reduce gas imports from Russia and Iran, with contracts with Gazprom Export and the Iranian National Gas Company due to expire in 2025 and 2026.

“Turkey has two goals in the gas import process: one, to reduce the volumes of imports from Russia and Iran. Second, Turkey hopes to position itself as a gas supply hub… because European buyers have not signed enough long-term gas contracts.Professor Brenda Shaffer, an energy expert at the US Naval Postgraduate School, told Reuters.

In July, Turkey said it was ready to significantly increase natural gas exports to the European Union. Ankara wants to play the role of savior and increase its influence with Brussels, but wants some guarantees of demand before it starts spending on the necessary infrastructure.

In an interview with Bloomberg, Turkish Energy Minister Alparslan Bayraktar pushed hard for a Bulgarian route, noting a potential increase in volumes to the EU by up to 10 billion cubic meters a year, while sending a message clear in Brussels: it will not happen without. some warranties on request. According to Bayraktar, the capacity to export through Bulgaria at the moment is only about 3.5 billion cubic meters per year. But “technically” Turkey is able to boost this interconnection.

By Alex Kimani for Oilprice.com

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