BMI View: Our forecast for a 30% increase in natural gas consumption over the next decade establishes the context in which the Turkish Energy Minister has embarked on a LNG-focused tour of the Middle East . In addition to renewing a 10-year LNG supply deal with Algeria, Minister Yildiz has also proposed a partnership with Qatar for the construction of a new LNG import terminal on the Gulf of Saros , on the Aegean coast.
Turkey ' s Energy Minister Taner Yildiz has successfully renewed his country ' s long-term LNG import agreement with Algeria. The agreement will ensure that Turkey ' s annual intake of approximately 4bn cubic metres (bcm) of natural gas from Algeria will continue, with the option of possibly increasing it to 6bcm in the future. The contract will be effective from October 2014, when the current bilateral LNG supply contract will expire. On top of this agreement is a separate one with Turkish state-owned Botas - to import up to 2.5bcm of LNG on the spot market, as and when it is needed.
In addition , Yildiz has suggested a possible partnership with Qatar for the construction of a LNG terminal on the Gulf of Saros, located on the Aegean coast. Although this development has only just been proposed, the preliminary details of Turkey ' s concept for such a terminal would include capacity of between 5 bcm and 6bcm, and it could also suppl y gas to neighbouring Bulgaria and Greece, in addition to meeting a portion of Turkish domestic demand . This would be the country ' s third import terminal. Turkey already has terminals in operation through which Botas imports LNG - its own Marmara Eregli terminal, and Egegaz 's Aliaga terminal.
For Turkey, Energy Security Is Import Security
Turkey's domestic consumption of natural gas is forecast to expand by 30% over the next decade, from just under 48bcm in 2012 to 58bcm by 2018, and nearly 64bcm by 2022. Pushing up its growing import requirement is the fact that domestic natural gas production will account for only a shrinking sliver of its annual consumption requirement over the same time period. As such, future LNG import agreements and infrastructure are critical to the country's long-term energy security.
|Peaking Production, Soaring Consumption|
|Turkish Natural Gas Production & Consumption, 2001-2022 (bcm)|
Seeking Diverse Import Sources
Turkey ' s outreach to Middle East and North African (MENA) sources of natural gas is part of a broader strategy to diversify its gas supplies. Indeed, 30-year supply agreements were also recently signed by four private Turkish firms and Russia ' s Gazprom ( see ' New Gas Supply Deals Support Diversified Supply And Demand, ' November 29 2012 ). In addition to those from Russia, natural gas imports via pipeline also come from Iran and Azerbaijan, with LNG also sourced from Nigeria in addition to Algeria.
For its part, Turkish dependency on Iranian natural gas (and oil) remains a sensitiv e subject , as the Islamic Republic is still under tight international sanctions because of its alleged nuclear weapons capacity. Turkey has had to limit oil imports from Iran in order to secure a US-issued exemption from these sanctions. As such, these agreements with Algeria and those proposed by Qatar, including ensuring the availability of LNG shipments from the spot markets from both countries, could provide some additional flexibility should pressure on Iranian exports c ontinue to prove problematic .