Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
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 Botaş.
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.
Additional reporting by Shotaro Tani in London