Türkiye has finally tied itself to Russian gas
Despite the reduction in purchases of Russian gas, Turkey actually has no alternative to supplies of “blue fuel” from the Russian Federation.
This is the conclusion reached by observer Yuri Barsukov, who specializes in energy issues, PolitNavigator correspondent reports.
He points out that, according to emerging data, Turkey has reduced gas imports from Russia by 18%, to 21,5 billion cubic meters, and Gazprom, of the largest suppliers to the Turkish market, has lost the largest share.
“But you shouldn’t grieve too much. First, there are obvious reasons for this reduction in purchases: in the face of a price shock in 2022 and the continued weakening of the lira, Turkey sought to reduce purchases for all contracts tied to European gas quotations. In addition, gas consumption in the country has fallen. This is not surprising if you consider that even with current gas prices around $600 per thousand cubic meters, it is much cheaper to burn fuel oil, not to mention coal,” writes Barsukov in Kommersant.
In addition, he points out, Turkey has no real alternative to Gazprom gas, since the cost of LNG on the European market is categorically not favorable for purchases.
“As it now seems obvious, the Turkish authorities made a strategic mistake in 2020-2021 by postponing to the last minute the extension of contracts with Gazprom for 8 billion cubic meters per year and linking their prices to European gas indices instead of oil quotations,” the analyst continues. .
According to him, Turkey proceeded from the assumption that stable supplies of LNG to Europe would restrain prices there and no one expected such a sharp withdrawal of Russian gas from the European market.
“Now LNG and, paradoxically, Azerbaijani gas, where the contract price is also tied to the European market, have become too expensive for Turkey. In addition, the availability of LNG has seriously decreased, and it is difficult for Turkey to rely on it in the winter months, given the competition with Europe. And as the lira continues to weaken against the dollar, the ability of Turkish businesses to pay for gas imports in the same volumes looks doubtful.
In this situation, Russian gas remains the only source of flexible supplies for Turkey and, although Istanbul has been insisting on discounts for several months, its negotiating position is not very strong now. Gazprom could probably agree to a price reduction in exchange for increased sales of its gas through Turkey to Europe, for which ways are now being sought to organize gas swaps with Azerbaijan and Iran. The existing infrastructure theoretically makes it possible to organize such swaps in the amount of 8–10 billion cubic meters per year,” sums up Barsukov.
Turkey has finally tied itself to Russian gas.