Today Turkey is one of the most problematic destinations for Russian gas exports. Until recently, Ankara was the second largest buyer after Berlin, now Gazprom has sharply surrendered its positions, yielding them to other suppliers. In the next six years, the terms of the Turkish Stream and Blue Stream contracts will expire, but will new ones be signed and under what conditions?
Turkey became the second largest export market for Russian gas in 2007, and in 2013 Alexey Miller boasted that it could be number one at all. At that time, Ankara was critically dependent on gas imports, and Gazprom accounted for a very impressive 60%. The Blue Stream gas pipeline was already in operation, and after the crisis in Ukraine in 2014 and "sabotage" by Bulgaria, two lines of the Turkish Stream, which cost the budget $ 7 billion, began to be pulled bypassing these two countries. But then everything did not go as planned by the management of the state corporation.
At first, the incident with the Russian Su-24 bomber shot down by the Turks played a negative role. Ankara got off with "tomatoes", but made far-reaching conclusions. Additional gas supplies from Azerbaijan were established, in addition, pipeline gas also comes from Iran.
SecondlyTurkey has accelerated the commissioning of two floating LNG terminals (FSRUs) with a capacity of 20 million cubic meters per day in the provinces of Izmir and Hatay. This played a major role when world LNG prices plummeted. For comparison, in the first quarter of 2020, Gazprom's products cost the Turks $ 257 per 1 cubic meters, LNG - $ 98,2 for the same volume. The Turks are already capable of receiving up to 24 billion cubic meters per year in the form of LNG and intend to build new terminals.
Finally, it has become very unprofitable for Ankara to buy Russian gas in the previous volumes for foreign currency due to the devaluation of the Turkish lira by 30%. The next year the contract for deliveries via the Turkish Stream expires, and in 2026 - the Blue Stream. Considering that President Erdogan recently reported on the discovery of his own gas fields, estimated at 320 billion cubic meters, Gazprom's prospects are awful. In the most negative scenario, Russia could become the owner of two empty pipelines running along the bottom of the Black Sea.
However, there are also slightly more optimistic estimates. Economists point out that the abnormally low price of LNG cannot last forever. For example, for Qatar, LNG production is largely a by-product of shale oil development. When its quotes fell due to the six-week "oil war" between Russia and Saudi Arabia, Riyadh was forced to dump its surplus on the world market, which plummeted the price of LNG. Those who invested in the construction of receiving terminals on time have made good progress. But now the situation is gradually changing: the market is steadily digesting surplus gas, the winter heating season is approaching, so the price of LNG is going up noticeably.
Most likely, Ankara will not completely refuse to import Russian gas. It will continue to diversify supplies through the construction of LNG terminals and the development of its own fields. This will be a serious trump card in negotiations with Gazprom, which will have to make very serious price concessions. Ultimately, the domestic monopolist will lose most of the market, but will be allowed to remain as a backup supplier with two pipelines for Turkey.