Turkey - Country Commercial Guide
Oil and Gas Equipment – LNG and LNG Terminals, Upstream, Downstream and Midstream

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-10-07

Oil & Gas Equipment – LNG/ LNG Terminals, Upstream, Downstream, Midstream

Overview

 

2017

2018

2019

2020 estimated

Total Local Production

1,269

896

910

850

Total Exports

2,284

1,578

1,560

1,200

Total Imports

3,482

2,407

2,580

2,300

Imports from the US

139

94

135

120

Total Market Size

2,467

1,725

1,930

1,950

Exchange Rates

3.81

5.26

5.94

6.00

(total market size = (total local production + imports) - exports)                                         

Units: $ millions
Source: Ministry of Energy and Natural Resources, State Institute of Statistics.

Note:  Above figures do not include LNG and Natural Gas Imports (just the equipment)

Oil and Gas

Turkey is a net importer of oil & gas with potential prospects in the Thrace basin, offshore Mediterranean and Black Sea. Turkey spends over $40 billion every year on imports of energy resources such as oil, natural gas and coal. Local oil production meets only 7% of demand, so Turkey imports approximately 260 million barrels of oil every year. Shale gas has not been widely explored. Although Turkey, with a population of over 80 million and approximately $800 billion GDP, is a major consumer of oil and gas, it is also an important transit country for natural gas produced in Azerbaijan and Russia with prospects from other countries in the region. Other resources which have been discovered in recent years in the Eastern Mediterranean (if a political solution is found) could be transported through pipelines from Turkey to Europe.

National oil and gas exploration and production company Turkish Petroleum (TP) conducts the majority of oil and gas explorations in Turkey. TP is also active in other countries either on its own or in joint ventures with national and international companies. TP is a major buyer of upstream equipment for both onshore and offshore explorations. Other private sector producers operating in Turkey procure their own equipment usually from U.S., Chinese or European companies. Engagement with state-owned petroleum pipeline corporation BOTAS for LNG and piped gas will be important in the first quarter of 2021 as several long-term piped gas agreements will expire.

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.

Liquefied Natural Gas (LNG)

For decades, Turkey has relied on pipeline gas from its neighbors - Russia, Iran and Azerbaijan - to meet its needs. Just four years ago, pipeline gas accounted for 84% of Turkey’s total imports, 63% of which came from Russia. Turkey now intends to import compatible LNG rather than long-term pipeline gas. Turkey imports approximately 45 bcma of natural gas every year and is expected to remain an important natural gas consumer. In 2019, due to the attractiveness of compatible LNG prices, the percentage of pipeline gas and LNG to total imports was 73% and 27%, respectively. BOTAS is the main importer of LNG, but other private firms also possess import licenses. However, unless the market is fully liberalized, these private sector importers will not be market players. Turkey has two LNG terminals and two FSRU facilities. LNG is supplied from Algeria, Nigeria, the United States and Qatar as spot LNG.

Turkey is currently the 10th largest global purchaser of U.S. LNG and the second largest in Europe. 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. 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 had long-term agreements with Russian Gazprom, Iran’s national gas company IGC, and Azerbaijan’s national oil company 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 Soros 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. One handicap Turkey had with these long-term agreements is that the prices were indexed to oil prices rather than current market prices for NG. Therefore, Turkey is planning to have shorter term spot LNG agreements depending on the demand and supply situation.

Natural Gas Commodity Market: The Turkish Government established, under EXIST, a natural gas commodity market to trade natural gas supplies. However, trade at this commodity market will remain very limited until BOTAS’ long-term agreements terminate, and more liberalized market conditions are established. The Turkish Government also intends to establish an energy hub in Istanbul for gas trading with European countries.

Natural Gas Storage:  MENR is targeting 20% natural gas storage capacity. For this purpose, 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): The TANAP NG Pipeline, starting at the Georgia-Turkey border and extending to the Turkey-Greece border, with a total length of 1,850 km, is part of the Southern Gas Corridor (SGC), which will bring Azeri gas to the European Union. 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 to Europe in 2021. A branch is expected to take Azeri gas from Greece to Bulgaria and further north.

Leading Sub-Sectors

  • LNG Supply to Turkey
  • Small LNG facilities for supply of gas to rural areas
  • FSRUs (Floating Storage Regasification Unit)
  • Natural gas 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 at refineries
  • Carbon capture at refineries
  • Artificial intelligence, data analytics and automation systems for refineries

Opportunities

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. Export-Import Bank and U.S. International Development Finance Corporation (DFC) would consider potential projects for financing in Turkey. U.S. suppliers should contact the relevant representatives of the subject U.S. Government agencies or U.S. Commercial Service Turkey.

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