Türkiye has signed a natural gas purchase agreement with Oman that will be valid for the next 10 years, Energy and Natural Resources Minister Fatih Dönmez announced Monday.
A delegation from the Turkish state energy company BOTAŞ visited Oman for the agreement that will see Türkiye buying an annual 1.4 billion cubic meters (bcm) of gas from Oman, Dönmez told an event in Istanbul.
The agreement with Oman also includes an opportunity to be extended further if needed, Dönmez told the Summit of Century of Türkiye in Energy.
"At a time when the world, especially Europe, is suffering from gas supply problems, Türkiye is taking all steps to become a gas trade center," he said.
Türkiye is almost entirely dependent on imports to cover its energy needs, which leaves it vulnerable to rising costs that skyrocketed following Russia’s invasion of Ukraine. Domestic demand has increased since the pandemic.
It imports gas mainly from Russia, Azerbaijan and Iran, as well as liquified natural gas (LNG) from Qatar, the United States, Nigeria and Algeria.
International gas markets were upended after Russia, a significant gas producer, invaded Ukraine in February last year. Many countries, including those in the European Union, responded with sanctions on Russian exports, while Russia has also cut off supplies to Europe via pipelines.
Black Sea gas
Meanwhile, Türkiye is set to start pumping the natural gas it discovered in the Black Sea into the national grid by the end of March. It has gradually discovered about 710 bcm of natural gas since August 2020, which is estimated to have a market value of $1 trillion (TL 18.81 trillion).
Dönmez said the current reserve is enough to meet a 30-year demand of Türkiye, a figure he suggested could increase as the country expands its hydrocarbon explorations.
About 10 million cubic meters (mcm) of gas per day is expected to be transferred in the initial phase, while the infrastructure has been set up to enable this figure to peak at 40 mcm through 2026.
"The first phase of Black Sea gas will come into operation towards the end of March, and we will be able to meet one-quarter of our gas needs at full capacity production from here," Dönmez noted.
"This means that Türkiye’s gas imports will have decreased by one quarter."
Türkiye’s annual gas consumption rose from 48 bcm in 2020 to a record 60 bcm in 2021. President Recep Tayyip Erdoğan said she was expected to stand at around 53.5 bcm in 2022.
Earlier estimates had put the figure at up to 63 bcm, but the power generated from renewable resources this year drove the gas consumption downward.
Gas hub target
Dönmez also declared that Türkiye’s third floating liquefied natural gas storage and regasification unit (FSRU) is projected to arrive in Türkiye within a week and that the ship has taken its first cargo and started sailing.
The ship will serve at the Saros FSRU terminal, which will also give the country the flexibility to carry out LNG transport, especially during the summer season when the demand to pump gas into the system is low.
"With the Saros FSRU, we will add a new entry point to the Thrace region, where consumption is high. More importantly, we will become a more active player in the regional gas trade, especially in the Balkans, in line with our gas hub target," Dönmez suggested.
The first step, he said, was taken with Bulgaria in this context, as the agreement includes an annual gas supply of approximately 1.5 bcm to Bulgaria until 2035, corresponding to 30% of the country's annual gas consumption.
The agreement between Bulgaria’s state gas company Bulgargaz and BOTAŞ, signed earlier this month, will give Bulgaria access to Türkiye’s gas network and LNG terminals to help bring in supplies.
"In addition to Bulgaria, we are carrying out similar processes with North Macedonia, Romania, and Moldova," Dönmez said.
In October, Russia's President Vladimir Putin proposed setting up a gas hub in Türkiye following explosions that damaged Russia's Nord Stream gas pipelines under the Baltic Sea.
Putin suggested developing transshipment and exchange terminals for Russian gas, potentially making Turkey a significant center for sales of Russian gas to third countries.
Erdoğan backed the idea and the two countries instructed authorities to work on a roadmap, which is expected to be announced soon.
Summit of gas buyers, sellers
Dönmez also said Türkiye would hold a natural gas summit on Feb. 14-15 to bring together gas supplier countries and Europe's consumer countries in Istanbul.
"We will bring together supplier countries from the Middle East, Mediterranean, Caspian and Middle Asia with consumer countries from Europe," the minister noted.
Türkiye has the infrastructure and experience in gas trade and authorities are taking steps for it to be a hub where regional benchmark prices are set, Dönmez said.
"Our target is to bring together supplier and consumer countries and become the gas-trading center where the benchmark price of gas is set," he added.
Along with the energy ministers, the summit is expected to host high-level representatives of public institutions and organizations, the private sector, and international energy organizations.
The event will discuss the effects of global developments on the energy sector, changes in supply and demand and pricing, and global supply security issues, Dönmez concluded.