Turkey meets most of its energy requirements from overseas supplies, with natural gas contributing to more than 90% of its total energy imports. Iran, along with Azerbaijan and Russia, has been Turkey’s main natural gas suppliers through pipelines. Turkey’s natural gas consumption is expected to increase by approximately 15 Bcm in the next ten years.
However, Turkey has been diversifying its energy basket by developing renewable and nuclear power plants and importing LNG from Algeria, Qatar, and the US. Moreover, Turkey recently discovered a gas field in the Black Sea, which can provide the country with an additional 10 Bcm of natural gas output in no more than five years. Mohammad Sadegh Jokar, an energy market expert with the Institute for International Energy Studies (IIES), said those are challenges that Iran would face in grabbing share in Turkey’s future gas market.
Through the TurkStream pipelines, Russia needs Turkey to replace Ukraine as the main transit for its gas to Europe. Jokan said that Moscow has been providing Ankara with military services and armaments as well as big discounts over its gas exports. With close cultural and historical background, Azerbaijan is also boosting gas shipments to Turkey. The country’s Shah Deniz gas pipeline project is expected to enter service by the end of the year and boost Azerbaijan gas exports to Turkey by 6 Bcm. After being blockaded by fellow Arab nations, Qatar has also been strengthening ties with Turkey, including by supplying gas at good pricing.
Meanwhile, Iran has a long-term contract, whereby Turkey is going to purchase 10 Bcm of Iranian gas annually until 2026. This means that Iran has about six years to take necessary measures to renew the deal. By that time, Turkey will have the upper position in renegotiating the deal, and Iran must prepare more incentives to lure the customer, Jokan said. Jokan also said that Iran could use economic diplomacy to keep its trade with Turkey balanced. Both countries have been working together to boost bilateral trade.
Jokan also said that the government had been on the right track by developing domestic industry because it can provide more outlets for Iranian natural gas. He also recommended the country’s oil ministry to develop the LNG industry because it can help Iranian gas to reach more export destinations.
