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Turkey plans tie-up with Qatar to build LNG terminal

Turkey will discuss building a liquefied natural gas terminal with Qatar on its Aegean coast to help meet rising domestic needs and as Turkey's role as an energy supplier to Europe grows.

Turkey will discuss building a liquefied natural gas (LNG) terminal with Qatar on its Aegean coast to help meet rising domestic needs and as Turkey's role as an energy supplier to Europe grows, the Turkish energy minister Taner Yildiz said on Saturday.

Mr Yildiz said the planned terminal on the Gulf of Saros, an inlet in European Turkey, would have an annual capacity of 5 to 6 billion cubic metres and could help supply Bulgaria and Greece as well as help Turkey meet its own rising LNG demand.

"We think it would be appropriate to build an LNG terminal on the Gulf of Saros to meet the needs of Turkey and the region. Qatar would carry out the feasibility work and evaluate the project," Mr Yildiz told reporters in Algiers on the first day of a visit to Algeria, Libya and Qatar.

"This would help relieve the (Bosporus) Straits traffic and Bulgaria and Greece could benefit from the facility as well."

Turkey is becoming an increasingly important player in global energy markets, both as buyer and as transit hub linking producers to its south and east with European economies keen to diversify supplies.

The country of 75 million people is set to overtake Britain as Europe's third-biggest electricity consumer within a decade.

Turkey's daily gas demand was about 125 million cubic metres in late 2012 and is likely to rise to nearly 220 million during the harsh winter months, energy ministry officials say.

It buys natural gas from Russia, Iran and Azerbaijan and LNG from Nigeria and Algeria under long-term contracts.

Qatar is the world's largest LNG exporter but mainly sells to Asian markets. Turkey currently has no long-term contracts with Qatar but is starting to negotiate them, Mr Yildiz said.

Mr Yildiz said Turkey had agreed to extend its contract to buy an annual 4 billion cubic metres of LNG from Algeria for 10 years from October 2014, when an existing contract will expire.

"We will also discuss the pricing mechanism. Turkey has a growing demand for LNG. We need long-term contracts for this," Mr Yildiz said.

Mr Yildiz said Turkey's demand for natural gas peaked in January and February and that it would ask for at least two or three spot cargoes from Qatar in that period, and would also request two spot cargoes from Algeria.

"We will not have issues meeting the demand even if these cargoes are not received," he said.

Turkey is also seeking to diversify its crude oil suppliers, particularly as US sanctions on Iran have forced it to reduce imports from that source.

Washington says Tehran is enriching uranium to levels used in nuclear weapons and has imposed sanctions on global trade with Iran's energy and shipping sectors. Iran says its nuclear programme is for peaceful purposes.

Turkey cut its Iranian oil purchases by at least 20 per cent last year in order to win an exemption from the sanctions.

"We can meet the oil demand (via) Libya now that supply from Iran is decreasing. The amount of oil we buy from there may increase above 1 million tonnes," Mr Yildiz said, adding that Turkey was also negotiating for higher oil imports from Russia.

Mr Yildiz said he would also discuss oil purchases from Algeria during his trip, and that Turkey's state-owned energy company TPAO planned to take part in upcoming Algerian oil exploration tenders together with its Algerian counterpart Sonatrach.

 

* Reuters

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