This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 6/18/2019

Overview

Oil and Gas Sector

 

2016

2017

2018

2019 estimated

Total Local Production

1,238

1,269

896

910

Total Exports

1,676

2,284

1,578

1,600

Total Imports

3,291

3,482

2,407

2,300

Imports from the US

119

139

94

100

Total Market Size

2,853

2,467

1,725

1,610

Exchange Rates

2.90

3.50

3.50

4.70

(total market size = (total local production + imports) - exports)                                                                                                                                                                   Units: $ millions
Source: Ministry of Energy and Natural Reources, State Institute of Statistics.
Note:  Above figures do not include LNG and Natural Gas Imports (just the equipment)

Turkey is a major consumer of oil and gas and local production only meets a fraction of the total demand.  Turkey imports 93% of the oil and 99% of the natural gas that it consumes but has a goal for domestic resources to meet 20% of total demand by the end of 2023.  In 2018, the cost of imports of energy resources increased 15.6% to nearly $43 billion and is expected to reach $45 billion in 2019.  This increase is primarily attributed to increasing global oil and gas prices as actual consumption fell due to an economic slowdown, meaning the manufacturing industry is using less fuel.  A wet spring in 2019 and warmer weather in the winter of 2018 also led to increased hydroelectric power production (and less natural gas) as well as lower consumption to heat buildings and residences.  In 2018, natural gas consumption fell 6% to 50 billion cubic meter/year (bcma) from 53 bcma in 2017.

Domestic gas production is concentrated in the European part of Turkey (Thrace), while oil prospects are in southeast Turkey and the Eastern Mediterranean.  Exploration in the Black Sea has so far yielded little success; however, when compared to explorations in the United States and elsewhere, Turkey’s resources have not been sufficiently explored.  From 1934 to 2017, only 4,815 oil wells were drilled, consisting of 1,863 exploration and 1,929 production wells.  The discovery rate for oil and gas has been, on average, 32% and while little fracturing (non-conventional exploration) has been conducted so far, there are strong indications that shale formations near Thrace may contain exploitable reserves.  As of the end of 2017, 20 foreign and 22 domestic companies held 223 licenses.

Liquefied Natural Gas (LNG)

Turkey is the 10th largest global purchaser of U.S. LNG worldwide and the largest in Europe.  With natural gas consumption of approximately 50 bcma, Turkey will remain an important natural gas consumer.  U.S. LNG offers Turkey advantages in terms of quality, reliability, supply security, and the possibility of upstream investment.  Increasing purchases of U.S. LNG will strengthen Turkey’s purchasing position vis-à-vis alternative suppliers.

For decades, Turkey has relied on pipeline gas from its neighbors - Azerbaijan, Iran and Russia - to meet its needs.  In 2016, pipeline gas accounted for 84% of Turkey’s total imports, 63% of which came from Russia. Turkey’s imports of LNG have steadily grown since 2016, but previously only to meet demand growth, and not at the expense of pipeline gas.  Since late 2018, however, Turkey’s LNG imports have surged, hitting a monthly record of 2.34 bcm in January 2019.  Most interestingly, LNG is replacing pipeline gas imports, which started to decline last year.

Turkey is a net-importer of LNG and natural gas.  Turkey imported 460 million cubic meters (mcm) of LNG from the United States alone in January 2019, while Algeria supplied 698 mcm and Nigeria supplied 478 mcm.  LNG met 40% of the natural gas demand in January 2019.  Turkey was the second largest importer of LNG from all sources in Europe after Spain, importing 7.8 million tons in 2018 while all or Europe imported 47 million tons.

Turkey’s state-owned Petroleum Pipeline Corporation (BOTAS) owns and operates the gas transmission system and most of Turkey’s gas storage facilities, and accounts for nearly 80% of gas sales.  Botas, on behalf of the Turkish Government, has been making long-term agreements with Russian Gazprom, Iran’s national gas company IGC, and Azeri SOCAR.  BOTAS has a large LNG facility in Eregli, for which it imports LNG from Nigeria and Algeria. A large-scale terminal owned and operated by Egegaz is a private facility supplying LNG to the Turkish market.  In recent years, the Turkish Government has taken steps to increase private-sector participation in the natural gas market.  Kolin Group’s Egri Liman facility, with its floating storage and regasification unit (FSRU), has been supplying spot LNG to Botas at peak demand times.  The second FSRU is in Dortyol, Hatay, owned and operated by BOTAS.  Another FSRU is planned to be constructed at the Saros Bay.

Turkey has signed long-term take-or-pay agreements with Russia, Iran, Azerbaijan, Algeria and Nigeria.  Some of these agreements will conclude in 2021 and 2022 and Turkey will be seeking new suppliers.  Turkey’s gas import agreement with Russia via the Balkan route is currently under negotiation for transfer to the new TurkStream pipeline in December 2019.  BOTAS’ active natural gas contracts are listed below:

Turkey's Gas Import Agreements

Agreement

Signature Date

Operation Date

Year

Volume
(Plato–billion cubic meters/year)

End Date

Nigeria (LNG)

1995

1999

22

1,2

2021

Iranian

1996

2001

25

10

2026

Algeria (LNG)

1988

1994

27

4

2021

Russia (Blue Stream)

1997

2003

25

16

2028

Russia (Balkan Route)

1998

1998

23

8

2022

Russia (Balkan Route)

1998

1998

23

4

2022

Russia (Balkan Rotası)

2013

2013

23

1

2036

Russia (Balkan Route)

2013

2013

30

5

2043

Turkmenistan

1999

- - - - - -

30

16

- - -

Azerbaijan

2001

2007

15

6,6

2022


Natural Gas Commodity Market:  the Turkish Government soon plans to establish, under EXIST, a new natural gas commodity market to trade natural gas supplies.  It also plans to establish an energy hub where natural gas supplied from countries in the region will be dispatched to Europe.

Natural Gas Storage:  MENR is targeting 20% natural gas storage capacity.  For this purpose, state-owned energy company BOTAS is increasing the existing 1 bcm storage capacity at the Salt Lake (Tuz Golu) to 5.4 bcm.  The capacity at the Silivri storage facility will also be increased to 4.6 bcm.

TANAP/Trans Anatolian Natural Gas Pipeline Project (Southern Gas Corridor):  This $9.2 billion pipeline project, TANAP NG Pipeline, starts at the Georgia-Turkey border and extends to the Turkey-Greece border, with at a total length of 1,850 km (1,810 km onshore + 2 X 19 km offshore).  It is part of the Southern Gas Corridor (SGC), which will bring Azeri gas to the European Union.  TANAP’s initial transportation capacity is 16 bcma (570 billion cubic feet) (expandable to 31 bcma--1.1 trillion cubic feet).  The new pipeline will initially supply 10 bcma of gas to Europe and 6 bcma to Turkey.  The gas will be sourced from Azerbaijan's Shah Deniz II field in the Caspian Sea.  Gas from Azerbaijan through the TANAP pipeline started flowing to Turkey in June 2018 and TANAP is currently linefilling to supply gas to Europe.  TANAP will be ready to deliver the first linefill gas to TAP by the end of June 2019.The SGC consists of three pipelines: South Caucasus Pipeline Extension from Shah Deniz, which will transport the gas via Azerbaijan and Georgia, the TANAP pipeline via Turkey, and the Trans-Adriatic Pipeline (TAP), which starts in Greece and will take the gas across Albania and then via an offshore section in the Adriatic to Italy.  The first gas is expected to flow via SGC in 2019-2020.  A branch is expected to take Azeri gas from Greece to Bulgaria and further north. 
 
Leading Best Prospects

  • LNG Supply to Turkey

  • Small LNG facilities for supply of gas to rural areas

  • FSRUs (Floating Storage Regasification Unit)

  • NG Storage equipment and services

  • Natural gas pipeline compressors, pumps, valves, pumps and other pipeline-related equipment and services

  • Refinery upgrade opportunities

  • Sulfur recovery units

  • Refinery energy efficiency studies and equipment

  • Membrane bio-reactors (MBR) for wastewater treatment

  • Communications and data management, energy storage and renewable energy systems integrated into refineries

  • Waste heat recovery systems for refineries

  • Organic rankine cycle (ORC) implementations

  • Carbon capture

  • Artificial intelligence, data analytics and automation systems for refineries

Opportunities

The U.S. Department of Commerce’s International Trade Administration identifies Turkey as a top destination for U.S. smart grid technology, renewable energy and civil nuclear exports.
Expansion projects for refinery and petrochemical facilities, FSRU and local LNG equipment supply projects will be major opportunities. 
The U.S. Trade & Development Agency, U.S. EXIM Bank and the Overseas Private Investment Corporation would consider financing renewable energy projects in Turkey. U.S. EXIM provides financing for renewable energy projects with a repayment period of 18 years after project commissioning.

Web Resources

For project financing, see:

For further information on the energy sector, contact:

Serdar Cetinkaya
Energy and Mining Leader
U.S. Commercial Service
U.S. Embassy, Ankara, Turkey
Serdar.Cetinkaya@trade.gov
www.export.gov/turkey

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More Information

Turkey Energy Trade Development and Promotion