Shell, Turkey's BOTAS sign 10-year LNG deal amid diversification plans
Ankara signed a long-term LNG deal with ExxonMobil in May, as it looks to buy alternative gas supplies to Russia amid rising domestic demand.
State-owned Turkish energy company the Turkish Petroleum Pipeline Corporation (BOTAS) and Shell signed a 10-year supply agreement for 4 billion cubic meters of liquefied natural gas per annum, to be procured from the London-based energy major's US portfolio starting in 2027, as Ankara looks to diversify its gas supplies.
The deal will enable Turkey to become a major regional gas hub by diversifying its resources through expanding LNG access and via extensive terminal and pipeline infrastructure, a statement from BOTAS said.
"Our goal in natural gas, 99% of which we imported until the discovery of Black Sea Gas, is to diversify the supply side and offer natural gas to our citizens and industry in a more competitive and affordable rate," Turkey's Energy and Natural Resources Minister Alparslan Bayraktar said in the statement.
The agreement is expected to offer greater "flexibility" to Turkey, allowing for LNG transport by receiving the fuel at the loading port, he added.
Turkey, whose 2024 population is estimated at around 87 million, has a growing demand for energy. Oil products accounted for 36.1% of Turkey's consumption in 2021, according to the International Energy Agency. The country looks to expand the share of natural gas in its energy mix. According to the IEA, natural gas accounted for 25.9% of the overall consumption in 2021. Ankara has looked to sign deals with energy majors and neighboring gas producers such as Azerbaijan, even as it looks to develop its domestic resources of gas.
Gas projects
Turkey is pressing on with the development of its Black Sea gas reserves, estimated at 710 bcm, according to the government. Peak production of 40 million cubic meters is expected by 2026. The country plans to meet a third of overall domestic demand by 2030.
The country plans to transport Turkmen gas to Europe by acting as an intermediary to support Western moves to diversify away from Russian gas.
Turkish President Recep Tayyip Erdogan said in June that it's “just a matter of time” before natural gas produced in Turkmenistan is transported to Turkey and then to Europe with the cooperation of Azerbaijan. The two countries signed a deal for hydrocarbon cooperation and the supply of Turkmen gas to Turkey in March.
The deal with Shell follows a long-term energy deal valued at $1.1 billion, signed between BOTAS and US energy major ExxonMobil in May to buy LNG as part of ongoing efforts to diversify away from Russian supplies. Turkey would secure up to 2.5 million tons of LNG annually under the 10-year deal.
