Shell, Turkey sign 10-year LNG supply deal in regional gas hub push

(Bloomberg) – Turkey and Shell signed a 10-year liquefied natural gas (LNG) supply deal with an option to redirect shipments to Europe, the latest step in Ankara’s push to become a regional hub for the fuel.

Shell will sell Turkey’s state-owned Botas the equivalent of around 4 Bcmg per year starting in 2027, Energy Minister Alparslan Bayraktar said at a signing ceremony in Ankara. That’s about 8% of the country’s total gas demand in 2023, data from the national energy regulator show.

The contract includes an option for the gas to be delivered to European terminals outside Turkey, Bayraktar said, adding that it will give Botas “critical capabilities” in LNG shipping.

The announcement hints at plans for a more active international trading role for the national energy company, which has traditionally imported cargoes for domestic consumption.

Turkey aims to become a gas hub and supplier to the European Union and has invested heavily in excess LNG import capacity as well as domestic production in the Black Sea. It already exports small volumes to the bloc, but flows are constrained by pipeline capacity at the western border with Bulgaria.

Botas buys pipeline gas from Russia, Azerbaijan and Iran, while Algeria and the US dominate its LNG imports. In May, the company signed a 10-year LNG supply deal for up to 2.5 million tons per year with US major Exxon Mobil Corp.