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: 2021-12-07

Overview

Oil and Gas Sector

 

2018

2019

2020

2021 estimated

Total Local Production

896

910

875

950

Total Exports

1,578

1,560

1,140

1,200

Total Imports

2,407

2,580

2,780

3,200

Imports from the U.S.

94

135

147

180

Total Market Size

1,725

1,930

2,515

2,950

Exchange Rates

5.26

5.94

7.00

8.00

(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)

Turkey is a net importer of oil & gas, albeit with potential offshore prospects in the Black Sea, the eastern Mediterranean, and the Thrace basin. There is some oil production in southeast Turkey and some natural gas production in Thrace. Turkey’s recent offshore Black Sea discovery, reportedly amounting to 540 bcm (billion cubic meters), is expected to meet at least 20% of Turkey’s natural gas demand once a sub-sea pipeline is built and full production capacity is achieved. The Turkish Petroleum Corporation is developing this discovery and will be procuring offshore drilling and production equipment. U.S. drilling and gas production equipment manufacturers are competitive in this area and we anticipate a promising market for them. The GoT plans to deliver natural gas from these resources to the NG pipeline network in 2023.

Turkey imports roughly 45-50 bcm of natural gas per year. 31.33% of total LNG imports came from the U.S., Algeria, Nigeria, Qatar, and several other countries as spot deliveries. Turkey has long term take-or-pay agreements for natural gas arriving in Turkey via pipeline from Russia, Iran, and Azerbaijan. In 2020, Russia had a 33.59% share in natural gas imports, Iran had 11.06%, and Azerbaijan had 24% with the remaining natural gas coming came from LNG imports. Some of these long-term take-or-pay agreements will be expiring in the coming years and Turkey is expected to import more spot LNG. The GoT is also planning to liberalize the market by unbundling and privatizing the state-owned company BOTAS and decreasing its’ share of the energy market, thus creating opportunities for private industry.

There are four LNG terminals in Turkey that store, gasify, and transfer LNG from the spot market, two of which are operated by BOTAS.

Turkey spends over $40 billion annually on imports of energy resources including oil, natural gas, and coal. Local oil production meets only 7% of the demand, so Turkey imports an additional 260 million barrels of oil every year. Shale gas has not been widely explored. Although Turkey 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. Potential resources in the eastern Mediterranean could likely be transported through pipelines from Turkey to Europe.

National oil and gas exploration and production company Turkish Petroleum conducts most of the oil & gas exploration in Turkey. TP is also active in other countries, either on its own or as part of a joint venture with private companies. TP is a major buyer of upstream equipment for both onshore and offshore exploration. Other private sector producers operating in Turkey often procure their own equipment from U.S., Chinese, or European companies.

Liquefied Natural Gas:

For decades, Turkey has relied on pipeline gas from its neighbors – Russia, Iran, and Azerbaijan – to meet its energy needs. In 2016, pipeline gas accounted for 84% of Turkey’s total NG imports (with LNG accounting for the remaining 16%). With several of Turkey’s long-term take-or-pay agreements expiring, LNG shares increased 31% in 2020.

Due to the attractiveness of compatible LNG prices and greater flexibility to supply from the spot LNG markets, Turkey intends to import compatible LNG rather than long term pipeline gas. The main importer of LNG remains BOTAS, though several private firms also possess import licenses.

Turkey is the 10th largest global purchaser of U.S. LNG and the second largest in Europe. With natural gas consumption of approximately 50 bcm, 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.

Natural Gas Commodity Market:

The GoT established a natural gas commodity market, however, remains limited. As BOTAS’ long-term take-or-pay agreements expire, we expect more private sector participation in the supply of NG.

As of the end of 2020, there are 52 companies with wholesale licenses. Of these, nine produce natural gas. In 2020, Simge Automotiv began auto LNG activity for the first time. Simge Otomotiv has a wholesale license.

As of 2020, there are 18 import long-term license holders and 52 companies with import spot licenses. In 2020, only two companies (BOTAS and EGEGAZ) imported spot LNG, and two companies (Bosphorus Gaz and Engie Enerji) imported spot pipe gas. Ten of the remaining 48 companies operated in the domestic wholesale of gas.

BOTAS supplied almost 73% of the NG market in Turkey in 2020.

Natural Gas Storage:

MENR is targeting 20% natural gas storage capacity. 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.

Natural Gas Distribution and Transmission:

Turkey’s main NG transmission lines are owned and operated by BOTAS. NG distribution within cities to households and industrial consumers are provided by NG distribution companies. There are currently 72 NG distribution companies in Turkey which fall under the Association of Turkey (GAZBIR). GAZBIR owns the Natural Gas and Energy Training Certification Inspection and Technological Service Co, Ltd. (GAZMER), accredited by the Vocational Qualifications Authority (VQA) and the Turkish Accreditation Agency, which operates to meet the demands in training, research and development, laboratory requirements, and common technological needs. GAZBIR is a member of EUROGAS and the International Gas Union.

Usage of Hydrogen in NG Pipelines and Storage Facilities:

A pilot project was conducted by GAZBIR-GAZMER using hydrogen in NG distribution pipelines in Konya NG distribution lines. Between 5% and 20% hydrogen was mixed with NG which demonstrated a higher efficiency in pipeline distribution. The MENR is encouraging hydrogen use in pipelines, the production of hydrogen from domestic coal, the use of green hydrogen for energy storage purposes, and the use of boron minerals to hold hydrogen.

Refineries:

TUPRAS is Turkey’s largest oil refiner with four refineries: Izmit refinery, established in 1961, has a refining capacity of 11.3 million tons; Izmir refinery has a capacity of 11.9 million tons; Kirikkale refinery has a capacity of 5.4 million tons; and Batman refinery has a refining capacity of 1.4 million tons. TUPRAS has been modernizing and expanding its facilities, and U.S. firms have become suppliers of equipment and services. TUPRAS routinely conducts repair, maintenance, and modernization tenders which U.S. firms are primed to procure. Turkey’s most recent refinery was built by Socar in Aliaga, began operating in 2019, and has an annual production capacity of 10 million tons.

Leading Best Prospects

  • LNG supply to Turkey
  • Hydrogen production and supply to NG distribution pipelines and underground storage facilities
  • 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
  • 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

Supply of offshore drilling and production equipment and services, expansion and modernization projects for refinery and petrochemical facilities, FSRU and local LNG equipment supply projects will provide major opportunities for U.S. firms.

The U.S. Trade & Development Agency, the EXIM Bank, and the DFC are active in financing potential projects in Turkey.

Resources

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