OIES Podcast – Turkey’s gas supply-demand balance and renewal of its long-term contracts

In this podcast David Ledesma talks to Gulmira Rzayeva, Senior Visiting Research Fellow about Turkey’s unprecedented demand surge in 2021. Despite well developed natural gas import capacity and diverse supply sources, security of supply became a major issue for the country during the summer of 2021 and the winter of 2021/2022.

At the same time, imports from Russia increased by 62 per cent year-on-year drawing away some supplies from Europe. However, starting from September 2021, imports from Russia fell, dropping by 9 per cent year on year in October, 33.7 per cent year on year in November and 31 per cent year on year in December. During this period Turkey significantly increased spot LNG imports despite high LNG prices vis-à-vis imported pipeline gas prices owing to the exhaustion of the Annual Contract Quantity. Demand pressure throughout the year, shortage of gas, historic surging prices soar in the European gas hubs, expiration of legacy gas LTCs caused an increase in average imported gas prices of 45 per cent in 1Q 2022 relative to 1Q 2021, from $175/tcm to $307/tcm. In 2022 the share of hub indexation of Turkey’s total contracted gas price is around 43 per cent compared to 19.6 per cent in 2021.

The podcast ends with Gulmira giving a view on the future of Turkey importing gas from Russia following the invasion of Ukraine by Russia.

By: OIES