Turkey is ready to sell more natural gas to the European Union, but wants long-term commitments to justify the necessary infrastructure investment. He also wants to avoid any complicated deals the bloc is pushing to avoid Russian gas.
"I need this guarantee from you - 10 years, 15 years, whatever, you have to give something". This was said by Energy Minister Alparslan Bayraktar in an interview with Bloomberg Ankara, describing the European gas exchange proposal as "convoluted".
Europe is looking for alternative gas supplies to replace Russian gas. Some options could include Azerbaijan's gas sales to Turkey being diverted to Europe and replaced with additional Russian gas sales to the Turkish market. Turkey is more willing to expand exports through Bulgaria.
In the words of the Turkish Energy Minister, discussions are being held without knowing the capacity and the market, and "what we need is an increase in the capacity of the Turkey-Bulgaria interconnection", which currently can only get half of the 7 billion cubic meters per year that Turkey can technically supply.
Bayraktar said Ankara could work with Azerbaijan's national energy company Socar to increase that to 10 billion cubic meters, but wanted guarantees on European demand.
The Energy Minister pointed out Bulgaria's deal with the Turkish "Botash" from last year to import 1.5 billion cubic meters of liquefied natural gas and re-export it to the west as a more "flexible" answer. But the EU's antitrust watchdog is currently investigating the deal for suspected breaches of European competition rules, and Bulgaria has now renegotiated the deal to allow a third party to exercise the rights.
The minister's comment highlights the diplomatic wrangling that needs to be done to replace Russian flows to Europe, with the agendas of buyers and sellers not always matching.
According to analysts at Energy Aspects Ltd, the political and physical barriers are too high to replace Russian gas passing through Ukraine with Azerbaijani gas, but Azerbaijan will still try to increase its domestic production in the coming years to delivered additional supplies to Europe.
Turkey aims to become a regional gas hub and has already invested heavily in new storage and LNG facilities, as well as exploration and production in the Black Sea. Although it is still almost entirely dependent on imports to meet domestic demand, last year it signed numerous export contracts with Romania, Moldova and Hungary for small quantities of gas.
Alparslan Bayraktar also explained that Turkey is currently exploring importing gas from Turkmenistan through gas exchange through neighboring Iran. He hopes to reach an agreement during his visit to Iran later this month.
Inbound supplies will also get a boost from a long-term LNG import contract with US Exxon Mobil Corp, for which a preliminary agreement was signed in May. Bayraktar said it hopes to announce the final contract, as well as others with undisclosed additional companies, in the coming days.
As Europe tries to wean itself off Russian fuel after the invasion of Ukraine, Moscow remains the biggest supplier of gas to Turkey, which is trying to maintain ties with both Russia and the EU. We remind you that Turkey, which is a member of NATO, has been a candidate country for EU membership since 1999, with negotiations stalled since 2018.
Bayraktar has indicated that last year Ankara and Moscow agreed on "special prices" for fuel regardless of the usual price formula specified in the contract between Russia's Gazprom PJSC and Turkey's "Botas", but did not disclose the terms.
"Depending on the market conditions, the amount of consumption, the amount of imports, sometimes the seller, sometimes the buyer can make different offers,", he specified.