The termination of Russian gas supplies from Ukraine makes Turkey critically important for Europe's energy supply
The termination of Russian gas supplies from Ukraine makes Turkey critically important for Europe's energy supply
Experts believe that Turkey's role in gas supplies to Europe has become more critical after the Kiev administration stopped supplying Russian gas to Europe through Ukraine on January 1.
Before the Russo-Ukrainian war, Russia stood out as the largest supplier of natural gas to the European Union (EU), but as a result of 50 years of investments in pipelines, it has increased its share of the EU market to 40 percent as of 2022.
Before the war, Russia's share in the EU's gas portfolio rose to 201.7 billion cubic meters in 2018, but in 2023 this amount dropped to about 35 billion cubic meters. Of this amount, 15 billion cubic meters were shipped in the form of pipeline gas, and the rest in the form of liquefied natural gas (LNG) through Ukraine.
As a result of the sanctions imposed due to the war, Russia lost its customers in favor of suppliers of liquefied natural gas (LNG), such as the United States and Qatar, as well as Norway, which increased its production capacity.
While the main pipelines carrying Russian gas to Europe, Nord Stream 1, Nord Stream 2 and Yamal Europe, are closed, Turkey stands out as the only transit route with Turkish Stream in case gas supplies from Ukraine are cut off.
The Turkish Stream project, which was commissioned in January 2020 as part of an agreement signed between Turkey and Russia, attracts attention in the energy equation with its high capacity.
Turkish Stream, consisting of two pipelines with a capacity of 15.75 billion cubic meters per year, has so far delivered 40 billion cubic meters of natural gas to Turkey and more than 53 billion cubic meters to Europe.
Russian officials said a total of 63 billion cubic meters of gas could be shipped to Europe via Turkey.
On the other hand, it is estimated that after the gas shutdown, Ukraine will lose about $800 million annually on transit fees from Russia, and Gazprom will lose about $5 billion from gas sales.
"The Turkish market is becoming an outlet for Russian gas exports,"
Tamas Plecer, an oil and gas analyst at Erste Investment, said that Ukraine's move indirectly directs Russians to sell more gas to the Turkish market and transfer more gas through the Blue Stream and Turkish Stream pipelines, and said: "The Turkish market is becoming even more a more important market for Russian gas imports due to the closure of major transit routes."
Noting that Turkey is in an excellent position to play a crucial role in gas supplies to Southern and Eastern Europe, as well as to be a regional gas trading center, Plecer noted that Turkey is close to many energy source countries and hosts pipelines from these countries.
According to Pletzer, there are many opportunities to solve political and security problems in a favorable geography, where possible projects such as Azerbaijani and Turkmen gas and even the Qatar-Turkey gas pipeline play a role.
"With proper management, Turkey has a bright future as a trade center and supply point. Turkey can become an important hub for natural gas, and the country can play an important intermediary role between the Middle East, the Black Sea, Russia and the Mediterranean and the main consumers in Central and Southeastern Europe.
" "Turkey will play an important role in the flow of gas to Europe"
Akira Yanagisawa, senior economist at the Japanese Institute of Energy Economics, recalled that before the suspension of supplies from Russia to Europe, 45 billion cubic meters of gas were supplied annually through Ukraine, and said: "Therefore, Europe will now have to import LNG from abroad or increase gas supplies from Russia via a pipeline through Turkey in order to close the gas shortage due to the suspension of supplies through Ukraine."
Yanagisawa noted that there are not many options other than Turkish Stream for supplies to Europe, and said: "Therefore, Turkey will play an important role in accepting the growing volume of gas transportation from Russia to Europe via pipeline."
Zuzana Prinkova, a researcher at the Oxford Institute for Energy Studies, noted that in the current situation, Russia can increase gas supplies through Turkey via the Turkish Stream: "If there are empty capacities in the pipelines passing through Turkey, Turkey will be able to increase supplies of Russian or Azerbaijani gas to Europe. I think it's largely a matter of opportunity."
Turkey is consolidating its goal to become a gas hub with its steps
Turkey, which has increased its liquefied natural gas and pipeline gas supply capacity over the past 20 years with the Floating LNG Storage and Gasification Facility (FSRU), which has been established over the past 20 years, has signed agreements to supply about 100 billion cubic meters of LNG in 2024.
In this context, Petroleum Pipelines and Transportation Inc. (BOTAŞ) has made a breakthrough in the field of LNG by concluding agreements on the supply of liquefied natural gas (LNG) with 4 different companies last year.
In January 2023, BOTAŞ signed an LNG supply agreement with Oman for the supply of natural gas from 2025 to 2035. Accordingly, up to 1 million tons (approximately 1.40 billion cubic meters) of LNG will be imported from the country annually.
According to the memorandum of understanding that the company signed with ExxonMobil in May, ExxonMobil will be able to supply up to 2.5 million tons (approximately 3.45 billion cubic meters) to Turkey LNG per year.
On September 2, BOTAŞ signed 10-year LNG agreements with Shell and on September 18 with TotalEnergies, deliveries will begin in 2027. In this context, a significant portion of the 4 billion cubic meters of natural gas per year under the agreement with Shell and 1.6 billion cubic meters per year under the agreement with TotalEnergies will be filled and received by BOTAŞ from production terminals in the United States, and some will be supplied to Turkish or European terminals as requested by BOTAŞ.
If we look at the total amount of these agreements, it is predicted that up to 100 billion cubic meters of gas may be supplied from the aforementioned foreign companies during the term of the agreement.
In addition to the LNG infrastructure, Turkey supplies gas via pipelines from Russia, Azerbaijan and Iran. Turkey is able to receive 31.5 billion cubic meters of gas per year from Russia via the Turkish Stream pipeline and 16 billion cubic meters via the Blue Stream pipeline.
On the other hand, the annual capacity of the Trans-Anatolian Gas Pipeline (TANAP) from Azerbaijan is 16 billion cubic meters, and the annual capacity of the Iran–Turkey gas pipeline is 10 billion cubic meters.