Will Turkey’s LNG Offers Derail Turkmenistan’s Gas Export Dreams?

Turkmenistan’s hopes of arranging a swap deal to transport the first small volumes of gas to Turkey and possibly Europe took a hit as Ankara struck its third long-term LNG purchase deal in five months.

On September 18, Turkey’s state gas importer Botas agreed with France’s TotalEnergies to import 1.6 billion cubic meters (bcm) per year of LNG from the United States starting in 2027. The new agreement follows a similar agreement Botas with Shell signed in early September, covering 4 bcm per year also starting in 2027. A third deal was signed last May with ExxonMobil; the details of this agreement have not yet been made public.

Neither Ankara nor Ashgabat have commented on whether Turkey’s new LNG supply contracts will impact Turkey’s long-standing plans to import gas from Turkmenistan. However, the ground realities of the market indicate that the more gas Ankara imports from other sources, the less Turkmen gas it will need to meet domestic demand and export commitments.

At the same time, Ankara may still be ready to take Turkmen gas. Such imports would be sold at a gas trading center that Turkish officials are trying to establish in northwest Turkey. However, in a televised interview on September 20, Turkish Energy Minister Alparslan Bayraktar said that Turkey has the capacity to receive up to 80 million billion cubic meters of gas per year, but only needs about 50 billion cubic meters/year to meet its own demand.

“If there is an export opportunity and we can reach an agreement with customers in Europe, we can import LNG from many different sources,” he said. He specifically cited the United States, Qatar, Oman and Trinidad and Tobago as possible suppliers, but did not mention Turkmenistan.

Just a few months ago, the picture looked very different. In March, Turkmen President Serdar Berdymukhamedov and Turkish President Tayyip Erdogan signed a preliminary trial agreement covering an “exchange deal” involving Turkmenistan, Turkey and Iran. Early hopes that a final agreement might be reached were never fulfilledhowever. According to unverified reports, negotiations stalled when Turkmen officials proved difficult to settle on the purchase price.

Turkmenistan’s loss could be Azerbaijan’s gain. Regardless of the reason for the failure of Turkey and Turkmenistan to conclude a gas exchange agreement, Ankara’s new long-term LNG supply agreements could work in Azerbaijan’s favor. Baku’s gas production has increased to a level where it does not need gas from Turkmenistan to meet its short-term domestic needs and export commitments.

However, there is still a question mark over whether Azerbaijan will be able to fulfill its July 2022 promises the European Union to double exports to Europe to 20 billion cubic meters a year by 2027. Now, with Ankara turning to LNG to meet an increasing share of its own gas demand, there is a possibility that Botas to no longer need to import so much gas from Azerbaijan, thus giving Baku more gas to deliver to EU states. Last year, Turkey imported 10.3 billion cubic meters of gas from Azerbaijan, 20% of Turkey’s total imports, up from 8.7 billion cubic meters in 2022.

By David O’Byrne via Eurasianet.org

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