Türkiye Poised to Maintain Flexibility, Leverage in Critical Gas Negotiations

The Blue Stream Natural Gas Pipeline. Source: Wikipedia.

As Russia’s Gazprom and Turkey’s BOTAŞ work to renew two major long-term pipeline gas supply contracts set to expire on December 31, the talks are unfolding against a backdrop of U.S. pressure on countries to reduce Russian energy imports as a means of limiting Moscow’s military funding.

I addressed these negotiations in the Turkey Recap Economy Newsletter #74, published on November 7.

“This likely commitment [Turkey-Russia gas deal] won’t imperil future Western investments. It largely represents a status quo ante commitment – the same as before existing contracts were set to expire – and ultimately reinforces regional energy security.

If anything, Turkey’s increasing gas imports – along with its own Black Sea production – should, in theory, attract greater Western capital, as enhanced energy security strengthens its economic position and lowers overall investment risk.

It is in Turkey’s clear interest to diversify and maximize gas supplies entering the country, whether for domestic use or re-export. Even after securing 16–19 billion cubic meters in new deals with US and European companies in September and October, Ankara will likely renew its Russian and Iran contracts.

However, these new LNG agreements – together with growing Black Sea production – provide Turkey valuable leverage in its negotiations with Russia and Iran.”

This overall assessment should be intuitive to most energy observers. The Blue Stream natural gas pipeline alone makes it essential for both Russia and Türkiye to reach a new agreement. However, in today’s market environment, Türkiye, as the buyer, holds comparatively greater leverage. China provides a useful model in this regard: although Türkiye lacks China’s market size and negotiating power, the underlying strategy is similar. Ankara should acknowledge Russia’s current constraints and use them to secure a stronger agreement that increases the total volume and diversity of gas entering the country.