Turkey extends Russia Gas Contracts by an additional year with a view to US Investment

Turkey has finalised an extension of one year to its two gas import contracts that expire with Russia, totalling 22 bcm. It is also considering investing in U.S. production, as part of its efforts to diversify sources of energy.

Turkey, Russia's final major gas market in Europe has steadily reduced the proportion of Russian gas in its gas supply mix. It has now fallen below 40%. Both contracts with Gazprom expire this year.

Ankara signed separate deals to buy long-term liquefied gas (LNG), with a large part coming from the United States. This was done in order to take advantage of the expected abundance of LNG globally over the next couple of years.

Bayraktar, the Energy Minister, said that "BOTAS has finalized the contract" with Gazprom in an embargoed press conference on Thursday.

"They will be supplied by Gazprom in the coming year." "We are more focused on the short-term... say one year," he said to journalists on Wednesday in an embargoed comment.

IRAN AND U.S. GAS CONVERSATIONS

Bayraktar added that Turkey was also in talks with Iran to extend a 10 billion cubic meter gas contract, which expires next July. Part of the talks are about increasing the volume Turkmen gas Turkey imports through Iran.

He said that "we'd like the increase the capacity Turkmen gas through the swap agreement", adding that Turkey signed this year a 1.3 bcm one-year gas deal with Turkmenistan, sourcing the gas from Iran. Imports this year have been around 0.5 billion cubic meters.

NATO member Turkey's ambition is to become a hub for gas trading. It has begun diversifying its pipeline supply sources.

Bayraktar, in a rare joint press conference with foreign media outlets, said that the company plans to invest into U.S. production facilities in order to secure its commitment to buy up to 1,500 cargoes of LNG from the U.S. in the next 15-year period.

Bayraktar stated that "to hedge our position and to create the entire value chain, it is possible we will invest upstream on the U.S. Market". He said that the state company TPAO is in talks with U.S. oil and gas majors such as Exxon, Chevron, and others. A deal could be reached next month.

This year, the U.S. became Turkey’s fourth-largest gas supplier with 5.5 bcm and a 14% market share.

The minister stated that Turkey will add two additional FSRUs (or LNG regasification vessels) over the next couple of years to increase its capacity to receive LNG and may later charter them out to Morocco and other nations.

The country has two LNG onshore gasification terminals and three FSRUs. These are able to supply more than 50 bcm in liquid gas.

NUCLEAR WITH U.S.

Turkey expects its electricity consumption will grow substantially and plans to add two additional nuclear plants to its base-load generation capacity.

The two plants are currently being discussed separately by KEPCO in South Korea and AtkinsRealis in Canada.

Bayraktar reported that Westinghouse, a U.S. company, has expressed an interest in participating in the second nuclear reactor along with South Korea KEPCO.

Bayraktar added that Turkey was considering inviting financial investors, such as the UAE's Emirates Nuclear Energy Company, to participate in the project within the next few weeks.

He also said that Turkey was playing a role in mediating the release of $2 billion worth of Russian funds "stuck" at J.P. Morgan. These funds would be used for the completion and operation of Akkuyu, a nuclear power station built by Rosatom along Turkey's south coast. Can Sezer, Jonathan Spicer and Thomas Derpinghaus (reporting)

(source: Reuters)