Turkey has said it is prepared to significantly increase natural gas exports to the European Union, desperate to further wean itself off Russian gas, but it won’t be easy or cheap: In order to do that, the most likely route is to re-export Azeri natural gas from Turkey. That, in turn, would require Turkey to take in more Russian gas to make up for the shortfall.
In terms of reducing the amount of natural gas revenue for Moscow’s war coffers, then, it’s a wash. Money spent by the EU on Russian natural gas would simply be shifted to Turkey, but the revenue for Russia remains the same, more or less.
Ankara is keen to play the role of savior and boost its leverage with respect to Brussels, but it wants some demand guarantees before it starts spending on the necessary infrastructure.
Over the past couple of years, Europe has been trying to secure alternative gas supplies to replace Russian gas transiting through Ukraine. Back in 2019, Russia and Ukraine inked a five-year pipeline transit agreement to supply natural gas to EU countries. Both countries have continued to honor the deal despite the war and sanctions.
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That is about to change, with Ukraine signaling recently that it has no intention of renewing the pact when it expires at the end of this year. Nor does the EU have any interest in reviving the deal.
Azerbaijan is the key here to any plan for Turkey to boost gas exports to the EU. Azerbaijan’s natural gas sold to Turkey could be re-exported to Europe, possibly through Bulgaria, but not without effort and expense.
In an interview with Bloomberg, Turkish Energy Minister Alparslan Bayraktar pushed hard for a Bulgaria route, noting a potential for increasing volumes to the EU up to 10 billion cubic meters per year, while sending a clear message to Brussels: It won’t happen without some demand guarantees.
According to Bayraktar, the capacity to export via Bulgaria right now is only around 3.5 billion cubic meters a year. But “from a technical point of view”, Turkey is capable of boosting this interconnection.
“What we need is an increase in the capacity of the interconnection between Turkey and Bulgaria”, which currently can only receive about half of the amount of seven billion cubic meters per year that, from a technical point of view, Turkey can provide it,” Bayraktar told Bloomberg.
Turkey and Bulgaria signed a deal in 2023 to permit Bulgaria’s state-owned Bulgargaz to import 1.85 billion cubic meters of gas per year-- good for ~60% of Bulgaria's annual demand--through the Strandzha-Malkoclar interconnection border point with Turkey. Bulgargaz has to pay a €2 billion service fee to Turkish gas firm Bota? over a 13-year period, regardless of whether it makes use of this capacity.
The ball is now in Brussels’ court, and the clock is ticking on ways to replace gas transiting through Ukraine. According to Rystad Energy, Europe will need another 7.2 Bcm annually of more expensive liquefied natural gas (LNG) to make up for this shortfall, and Ankara appears to hold all of the cards.
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By Alex Kimani for Oilprice.com
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Alternatively Turkey could endeavour to persuade the EU to accept more Russian piped gas via the Turk Stream pipeline under the Black Sea and from there to the EU via existing pipelines.
Either way, Turkey will be demanding a big quid pro quo from the EU.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert