Turkish Gas Imports Slump in 2019
Turkish gas imports fell by 10.2% overall to 45.21bn m3 in 2019, amid historically-low gas demand in the country's power sector, according to data published by state energy regulator EPDK. The power generation sector accounted for only 24.9% of gas demand during the year, representing the lowest share since Turkey became a major gas importer in the late 1990s.
The decline in imports demonstrates that Ankara's push to diversify away from foreign gas in favour of domestic coal is starting to bear fruit. Turkey has also been experiencing record excess power generating capacity, coupled with 18 months of high precipitation across its eastern mountains that supply the country's main hydroelectric dams, its cheapest source of power.
The decline in imports was not distributed evenly across Turkey's various suppliers. Piped gas supplies from Azerbaijan, Iran and Russia were down 16.7% yr/yr, at 32.5bn m3, while LNG imports rose by 12% to 12.69bn m3, as state-owned Botas sought the cheapest gas available to help keep a lid on prices for Turkish household and commercial consumers.
Russian supplies saw the biggest decline, by 35.7% to 15.19bn m3, or just above half of the volume Turkey is contracted to take. Botas' purchases fell 14.6% to 13.87bn m3, or 69% the contractual volume, while the seven private companies that hold contracts for a combined 10bn m3/yr of Russian gas took a mere 1.32bn m3, down 82%. Only two of the seven made significant purchases, and two did not import any gas at all. The companies are believed to be functionally bankrupt, owing significant sums to Gazprom for failing to meet take-or-pay commitments.
Earlier this month Turkey's deputy energy minister announced that Turkey was leveraging the availability of cheap spot LNG to pressure its long-term suppliers to reduce their prices. Contracts for 8bn m3 of Russian gas, including 4bn m3 held by Botas and 4bn m3 by private importers, are due to expire by the end of 2021. Ankara wants to secure significant price reductions from Moscow that would make Russian gas competitive against spot LNG cargoes.
Long-term contracts held by Botas with Azerbaijan for 6.6bn m3 of piped gas and Nigeria for 1.3bn m3 in the form of LNG are also due to run out in the next two years. But imports from both countries rose significantly in 2019, suggesting Ankara is being selective in which suppliers it puts pressure on.
Azeri volumes rose by 27.3% to 9.59bn m3, thanks to the launch of the Southern Gas Corridor in mid-2018, while imports of Nigerian LNG grew by 45.1% to 2.42bn m3, exceeding the contractual volume as Botas also bought spot cargoes.
Imports from Turkey's third pipeline supplier Iran were also down, albeit by only 1.6% at 7.76bn m3, although this was still below the 9.6bn m3/yr contracted.
Of Turkey's 12.69bn m3 of LNG imports, spot cargoes accounted for 6.99bn m3, marking an increase of 36.1%. In addition to Nigeria, Turkey also boosted shipments from Algeria by 25.6% to 5.68bn m3, versus the 4.4bn m3 contracted. Both Algeria and Nigeria are long-term suppliers whose original supply contracts with Botas date back to the 1990s. Ankara's willingness to add spot cargoes to the contractual volumes suggests an intention to maintain the relationship.
The biggest winner among LNG suppliers was the US, which ramped up sales to Turkey by 174.6% 2.46bn m3. The US only began selling to Turkey in 2016.
Qatar has been a regular supplier of spot LNG to Turkey for several years, under annual contracts whose details have never been published. However, the failure to conclude a new agreement last year saw no cargoes imported in September and October, but shipments were restarted in November after a deal was struck. Overall Qatar volumes fell by 17.5% last year to 2.46bn m3 but were up 57.5% on the 2017 level.
LNG cargoes were also brought ashore from countries including Trinidad and Tobago, Egypt and Equatorial Guinea.