Turkey's LNG Supply Agreement: Shell's 10-Year Deal Sets the Stage for a New Energy Era

How Turkey's latest LNG agreements are positioning it as Europe's next major energy hub—boosting security and reshaping the regional market

Table of Contents

• Overview of the Botaş-Shell LNG Agreement
• Key Players in the LNG Partnership
• Strengthening Turkey's Role in Global Gas Trade
• Turkey's Broader LNG Strategy
• Expanding LNG Infrastructure & Capacity

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Botaş and Shell have signed a 10-year liquefied natural gas (LNG) agreement, marking another stride in Turkey's ambition to become a regional gas hub. The deal, which was finalized in Ankara, will see Shell supplying ~ 4 billion cubic meters of LNG annually to Turkey starting in 2027. This amount represents around 8% of Turkey’s total gas demand in 2023, according to the country’s national energy regulator.

Key Players in the LNG Partnership

1. Botaş (Boru Hatları ile Petrol Taşıma Anonim Şirketi)

• Overview: Botaş is Turkey's state-owned oil and gas pipeline company, established in 1974. It is responsible for transporting oil and natural gas within Turkey and plays a significant role in the country's energy sector.
• Role in LNG Partnership: Botaş is the Turkish company that signed the LNG agreements with Shell and ExxonMobil. As Turkey’s primary pipeline operator, Botaş is integral to the country’s strategy of becoming a regional energy hub.

2. Shell (Royal Dutch Shell)

• Overview: Shell is one of the world’s largest multinational oil and gas companies. With operations in over 70 countries, Shell is a major player in the global energy market.
• Role in LNG Partnership: Under the new 10-year deal, Shell will supply Turkey with about 4 billion cubic meters of LNG annually, starting in 2027. Shell's involvement provides Turkey with access to LNG, further enhancing its energy security.

3. ExxonMobil

• Overview: ExxonMobil is an American multinational oil and gas corporation headquartered in Irving, Texas. It is one of the world’s largest publicly traded energy providers and chemical manufacturers, known for its extensive involvement in the exploration, production, and distribution of petroleum products.
• Role in LNG Partnership: Earlier this year, ExxonMobil signed a 10-year agreement to supply Turkey with up to 2.5 million tons of LNG per year. This deal complements Turkey’s energy strategy by diversifying its gas imports and reducing reliance on pipeline gas.

Strengthening Turkey's Role in Global Gas Trade

This agreement is a move that enhances Botaş’s capabilities in LNG shipping and trade. The deal includes an option for Shell to redirect shipments to European terminals, which would provide Turkey with critical flexibility in its LNG trade. Energy Minister Alparslan Bayraktar emphasized that this deal reinforces Turkey's prospects of becoming a natural gas center, further integrating the country into the European energy market.

Turkey's Broader LNG Strategy

The Shell agreement follows a similar 10-year LNG deal between Botaş and ExxonMobil, signed earlier this year. Under that deal, Turkey will receive up to 2.5 million tons of LNG per year from the US. With Turkey relying heavily on imported gas—14.3 billion cubic meters of LNG, accounting for 28.3% of its total consumption last year—these deals are critical in ensuring energy security and supporting the country’s growing demand.

Expanding LNG Infrastructure & Capacity

Turkey has been aggressively expanding its LNG infrastructure to support its ambitions. The country already has a gasification capacity of approximately 0.16 billion cubic meters per day, providing flexibility in meeting national consumption needs with LNG instead of pipeline gas. The new Shell deal and others like it are central to this strategy, positioning Turkey as a key player in the regional and global gas markets.

These LNG deals could position Turkey as a future energy hub, potentially transforming its regional influence and economic landscape. By reducing reliance on pipeline imports, Turkey might achieve greater energy independence, while also playing a pivotal role in Europe's energy security. Additionally, these partnerships could spark innovations in energy technology, positioning Turkey at the forefront of cleaner energy transitions and global energy markets.

Turkey is not just looking to secure its own energy needs; it’s aiming to play a crucial role in Europe’s energy supply chain. The country’s investment in LNG infrastructure and its strategic agreements with major energy companies like Shell and ExxonMobil are part of a broader plan to diversify energy sources and reduce dependency on Russian gas. With additional LNG deals and the development of domestic gas resources, Turkey is on a path to becoming a major energy hub in the region.