Overview

Oil and Gas Sector

(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 and services)

Turkey is a net importer of oil and gas to the tune of $45 billion annually. Domestic oil production in southeast Turkey and some natural gas production in Thrace currently accounts for just 7% of demand, however Turkey’s recent offshore natural gas discovery in the Black Sea, reportedly amounting to 540 bcm (billion cubic meters), is expected to meet at least 20% of Turkey’s natural gas demand at full production capacity. The Turkish Petroleum Corporation has been procuring offshore drilling and production equipment for use in the Black Sea. U.S. drilling and gas production equipment manufacturers/suppliers are competitive in this area. MENR plans to deliver natural gas from these resources to the national NG pipeline network in 2023.

Turkey plans to continue oil and gas exploration in the Black Sea and Eastern Mediterranean Sea, requiring investment in offshore oil and gas exploration vessels, drilling, and production platforms. Turkey may make investments on floating storage and regasification unit (FSRU) vessels as well. Demand for subsea production wells and pipelines provide U.S. firms another unique export opportunity.

Turkey imports roughly 60 bcm of natural gas per year. In the first quarter of 2022, the U.S. became the largest supplier of LNG to Turkey and the second largest supplier of natural gas after Russia. Turkey has long term take-or-pay agreements for natural gas arriving in Turkey via pipelines from Russia, Iran, and Azerbaijan. 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. MENR is also planning to liberalize the market by unbundling and privatizing the state-owned company BOTAS and decreasing its share of the energy market.

There are two LNG terminals and two FSRU facilities in Turkey that store, gasify, and transfer LNG from the spot market. One LNG facility and one FSRU facility are operated by state-owned oil and natural gas company BOTAS, with plans to build a third FSRU facility in Saros Bay. The other two facilities are operated by the private sector.

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 (TP) conducts most of the oil and 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 recent years, LNG imports have increased. In February 2022, the share of LNG increased 42%. The U.S. is currently the largest LNG exporter to Turkey and the second largest supplier of LNG after Russia.

Wary of supply security, Turkey has been diversifying its NG suppliers. This trend is expected to continue in the coming years, with LNG playing an important role in Turkey’s energy diversification. The main importer of LNG remains BOTAS, though several private firms also possess import licenses.

Turkey is likely to be the largest global purchaser of U.S. LNG in 2022. During the first quarter of 2022, Turkey imported 3.6 bcm of LNG from the U.S. In 2021, Turkey imported 4.7 bcm of LNG in total. 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

Turkey’s natural gas commodity market remains limited. As BOTAS’s long-term take-or-pay agreements expire and supply security problems resolve, we anticipate more private sector participation in the supply of NG.

There are currently nine companies with NG wholesale and production licenses responsible for producing over 30 million cubic meters of NG, mostly in the European part of Turkey. As of December 2021, eight companies imported NG, with BOTAS possessing the largest share. In 2020, only two companies (BOTAS and EGEGAZ) imported spot NG, 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.

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

Natural Gas Storage

MENR is targeting 20% natural gas storage capacity. BOTAS is increasing the existing 1.0 bcm storage capacity at the Salt Lake (Tuz Golu) to 5.4 bcm. BOTAS is also increasing capacity at the Silivri storage facility to 4.6 bcm.

Natural Gas Distribution and Transmission

Turkey’s main NG transmission lines are owned and operated by BOTAS. 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 demand 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 Konya’s NG distribution pipelines. Between 5% and 20% hydrogen was mixed with NG which resulted in higher pipeline distribution efficiency. 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; the Izmir refinery has a capacity of 11.9 million tons; the Kirikkale refinery has a capacity of 5.4 million tons; and the 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 issues repair, maintenance, and modernization tenders which U.S. firms are primed to procure. Turkey’s most recent refinery, in Aliaga, began operating in 2019 and has an annual production capacity of 10 million tons.

Leading Best Prospects

• LNG supply to Turkey
• Compressors and metering stations equipment
• FSRU (Floating Storage and Regasification Unit) vessels
• Subsea production wells and pipelines
• Hydrogen production and supply to NG distribution pipelines and underground storage facilities
• Small LNG facilities for supply of gas to rural areas
• NG storage 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

Resources

• Export-Import Bank of the United States (EXIM Bank): www.exim.gov
• U.S. International Development Finance Corporation (DFC): https://www.dfc.gov/
• U.S. Trade & Development Agency (USTDA): https://www.ustda.gov/
• World Bank Country Page: https://www.worldbank.org/en/country/turkey
• International Finance Corporation: www.ifc.org  

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