Strategic move from Turkey: Ankara eyes Russia's "Yamal LNG" liquid gas
On the eve of the European Union's complete ban on imports of liquefied natural gas (LNG) from Russia starting January 1, a major redistribution is beginning in the international energy market. During the Russian Energy Week, Turkey's Minister of Energy and Natural Resources, Alparslan Bayraktar, held important negotiations with Leonid Michelson, the head of Novatek, which is the main owner of the "Yamal LNG" project.
Record levels of gas flows being rejected by Europe can now be redirected to the logistically convenient Turkish market.
Details of the negotiations: What is Ankara aiming for?
The Turkish Minister of Energy revealed the main objectives of the meeting with the Novatek management on his official page:
LNG cooperation: The parties discussed in detail partnership opportunities in the field of liquefied gas, new delivery routes, and changes in the global market;
Energy security: "We will continue to take strategic steps that increase our country's energy diversity and strengthen supply security," Alparslan Bayraktar emphasized.
Europe's 13.5 billion cubic meter gap and "Yamal LNG"
Until now, "Yamal LNG" has been Russia's largest gas project with unhindered access to Europe:
Record exports to Europe: In the first 7 months of the current year, delivery volumes to EU countries reached a record level, amounting to 9.8 million tons (13.5 billion cubic meters of gas);
A convenient route for Turkey: Once the restrictions take effect on January 1, this huge volume can be diverted to Turkey, where the transport route is much shorter and costs are lower compared to Asia;
Re-export opportunity: European companies have been permitted to re-export Yamal gas to other countries under long-term contracts until July 2027.
An unfavorable situation for Gazprom and Turkey's arbitrage plan
Turkey's rapprochement with Novatek could pose serious competition for the traditional pipeline gas supplier, Gazprom:
Meeting with the head of Gazprom as well: On the same day, Alparslan Bayraktar also held negotiations with Alexey Miller, Chairman of the Gazprom Management Committee, to discuss partnership in the natural gas sector;
Expiration of the 22 billion cubic meter contract: The delicacy of the relationship is that the terms of two major contracts totaling 22 billion cubic meters between Turkey and Gazprom expire at the very end of this year, and no new agreements have been announced yet;
Plan to profit from winter arbitrage: Experts from the Russian National Energy Security Fund note that Turkey can take advantage of unusually high prices this winter: specifically, by accepting cheaper Russian LNG for itself and reselling gas volumes freed up from other sources to Europe at a higher price (arbitrage), there is a high probability of making huge profits.
The European Union's new bans may not completely stop Russian gas, but rather route it back into the world market through detours via major hubs like Turkey.
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