While Europe looks to American liquefied natural gas as a short-term alternative to Russian gas, Turkey may have to turn back to its neighbors to ensure it has sufficient supplies.
With energy prices seldom far from the headlines in Turkey, few Turks will have any problem identifying Russia as the country's main supplier of natural gas since gas imports began back in the late 1980s. Russia still met 44% of Turkey's gas demands last year.
Now, even with energy prices soaring, few in Turkey are aware that the country's second biggest gas supplier over the past winter was the United States, which shipped it in to meet Turkey's high winter gas demand.
The latest data released at the end of March by Turkey's energy market regulator EPDK confirms that for the four months from October through January, the United States supplied 17.4% of Turkey's gas imports, well ahead of near neighbors and longtime suppliers Iran (11.9%) and Azerbaijan (12.9%) and second only to Russia (38%).
The bulk of Turkey's gas imports are brought in by state gas importer Botas, and given Turkey's often fractious relations with Washington, it would be easy to assume both that there is a political motive behind Ankara's recent thirst for US gas and that US gas producers have been earning huge profits from Turkey amid the recent spike in gas prices. This is far from the case.
Since the discovery a decade or so ago that the United States holds the world's third largest reserves of shale gas, production has soared, with the bulk being exported as LNG to buyers in Europe, including Turkey.
"There has been a major redivision of the global LNG market. Europe as a whole is getting much more gas from the US, and Turkey is part of that," explained David Tonge, head of Istanbul-based consultancy IBS.
That redivision has seen Qatar, formerly a major LNG supplier to Turkey, now shipping most of its gas to south Asia and the far east.
Tonge explained that it is also far from true that US LNG producers are enjoying astronomical profits as gas prices soared through last winter and in the wake of Russia's invasion of Ukraine.
He pointed out that Botas buys LNG mainly through tenders for multiple cargoes from LNG wholesale companies like BP, Shell, Vitol and Total, who in turn have long-term contracts with LNG producers in the United States and other LNG-exporting countries.
"It's these wholesale companies that are making the huge profits more than the US producers," he said, pointing out that gas prices on the Netherlands-based TTF market, used by many companies including BOTAS as a basis for pricing, are five to six times what they were only a year ago.
Historically high prices aside, Turkey's thirst for US LNG is likely to be short lived.
Russia's invasion of Ukraine has forced the European Union to look for alternatives to the 155 billion cubic meters (bcm) of Russian gas it imported last year.
On March 25, US President Joe Biden announced an agreement for the United States to supply Europe with an additional 15 bcm of LNG a year. Whether he can actually deliver is unclear, as LNG is exported by wholesalers buying from producers and not by the US government. And even if it happens, the supply would replace less than 10% of Russian imports, meaning Europe will look to other LNG exporters to supply increased volumes.
However, it is clear that increased European LNG demand means that Turkey will face increased competition for what is effectively a limited resource.
"Global LNG production is pretty much at full capacity and no major new production trains will come on stream before 2025," explained Tonge, pointing out that if demand increases, prices can only rise further.
With LNG imports from the United States and Turkey's other suppliers including Algeria, Egypt and Nigeria meeting close to 40% of Turkish gas demands last winter, Ankara, which is already heavily subsidizing gas sales to consumers, must quickly find alternatives to LNG.
Turkey's own Sakarya gas field in the Black Sea, slated to start producing next year, will help, but initial production will be only around 3.5 bcm a year and isn't scheduled to reach the planned 15 bcm per year until 2030.
Other short-term options exist but may require delicate negotiation with Turkey's eastern neighbors.
"There are a number of options for bringing more gas to Turkey through existing pipelines in place of LNG," explained John Roberts, energy analyst and senior fellow at the Atlantic Council, pointing to significant spare capacity in the existing pipelines carrying gas to Turkey from both Azerbaijan and Iran and the vast gas reserves in Turkmenistan on the far side of the Caspian Sea.
Key to unlocking this potential, he explained, is a landmark three-way swap agreement signed last December between Azerbaijan, Iran and Turkmenistan, designed to help Azerbaijan meet growing domestic gas demand without reducing its existing exports to Turkey and Europe.
Under the swap deal, Turkmenistan exports up to 2 bcm a year of gas to northeast Iran, and the same amount is exported from northwest Iran to Azerbaijan.
"That deal could be ramped up to between 5-6 bcm/year to provide extra gas for Turkey, " said Roberts, explaining that the Turkmen gas could reach Turkey either via Azerbaijan and the existing South Caucasus gas pipeline to Turkey, which has 4-5 bcm/year of spare capacity, or via the existing Iran-Turkey pipeline, which also has significant spare capacity.
Alternatively, he suggested, Turkmenistan could export gas to Turkey directly via Iran in an arrangement that would require Tehran and Ashgabat to conclude a separate transit agreement.
Such an arrangement would not be new. "When Iran started exporting gas to Turkey 21 years ago, Botas tested the gas and found it had originated in Turkmenistan," he said, explaining that Iran had signed a deal to export its own gas to Turkey and was supplying cheap Turkmen gas instead.
"As a transit route it worked before, so it can work again," he said.
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