Turkey has negotiated a one-year extension for two long-term pipeline gas import contracts with Russia's Gazprom, which are set to expire at the end of 2025. These contracts cover the delivery of approximately 22 billion cubic metres (Bcm) of gas per year, representing about 40% of Turkey's total gas consumption in 2024. The extension is characterized as a short-term measure while the country pursues other supply options.

Diversification Strategy and LNG Focus

Concurrently, Turkey is actively working to diversify its gas supplies, with a significant focus on securing liquefied natural gas (LNG) contracts from the United States and other sources. This strategy aims to place Turkey in a stronger negotiating position in future talks with Gazprom and other suppliers. A key part of this plan involves Ankara's intention to invest in US gas production facilities to support the import of up to 1,500 LNG cargoes from the US over 15 years.

Recent and Planned LNG Contracts

State-owned entities are in advanced discussions for new LNG deals. Turkish Petroleum (TPAO) is negotiating with US companies Chevron and ExxonMobil, with agreements expected early next year. Botas, the state gas company, has already secured several significant LNG contracts:

• A long-term deal for US LNG signed in May 2023.
• A contract with trader Mercuria in September 2024 for up to 4 Bcm per year of US gas, primarily for winter delivery, starting in 2026 and lasting until 2045.
• Recent agreements for 6 Bcm from Germany's Sefe and 5 Bcm from Italy's Eni.

LNG's share in Turkey's gas imports has risen substantially, from 31% in Q1 2024 to 44% in Q1 of this year, as it offers a quicker contracting solution, especially for peak winter demand.

Infrastructure and Regional Hub Ambitions

To support increased LNG imports, Turkey plans to expand its regasification capacity by adding two floating storage and regasification units (FSRUs). These units could be chartered to other countries, like Morocco, during periods of low domestic consumption. These efforts align with Turkey's long-stated goal of becoming a regional gas hub with multiple import and export options, including pipelines transiting to Europe.

Other Pipeline Gas Negotiations

Beyond Russia, Turkey is also working to extend a separate pipeline gas import contract with Iran, which delivers 10 Bcm per year and expires in July 2026. As part of this arrangement, Turkey intends to increase volumes of gas from Turkmenistan imported via Iran under a swap deal signed earlier this year, which currently allows for 1.3 Bcm annually.