Could re-election of Turkey’s president brighten Nigeria’s gas outlook​?​

The re-election on Sunday of Turkish president Recep Tayyip Erdogan means that more cargoes of Liquefied Natural Gas (LNG) from Nigeria could yet find its way to Turkey, as Nigeria LNG struggles to find new buyers for its gas contracts.

 

While Turkey sources only 3 percent of its natural gas from Nigeria, Africa’s biggest gas reserves holder accounts for more than 20 percent of Turkeys LNG imports. Through a contract between NLNG and Turkey’s state-owned BOTAS Petroleum Pipeline Corporation, Nigeria has delivered over 4,000 LNG cargoes to the company’s Mamara LNG Terminal since 1999.

 

LNG differs from natural gas in that it is created by cooling natural gas to form a clear, colourless and non-toxic liquid, 600 times smaller than natural gas. This is to enable the gas to be transported from where it is produced to where it is going to be consumed

 

The re-election of Erdogan, analysts say could mean that the Sales Purchase Agreement (SPA) between NLNG and BOTAS set to end in October 2021, may see more positive talks towards extension as Turkey seeks alternative gas markets now that trade relations with Russia sputters.

 

With only 25 percent of Turkey’s energy demand met by domestic energy sources, the country is heavily dependent on external sources. Ninety-eight percent of the country’s natural gas comes from external sources, imported through pipelines from Russia (60 percent), Iran (20 percent) and Azerbaijan (10 percent), and increasingly from LNG sources in Nigeria and Algeria.

 

“This dependence on foreign imports has become a point of concern for the government in Ankara, particularly following deterioration in relations with Russia, Turkey’s biggest natural gas importer. Ensuring its current and future energy security is a top priority,” say analysts at West Sands Advisory Limited, a UK-based business intelligence firm.

 

The country aims to reduce its dependency on pipeline gas through FSRUs Floating Storage Regasification Unit (FRSU) a vessel equipped with facilities to reheat liquid gas and convert into its original state before it can be pumped into its storage systems. Turkey launched its first FSRU, in 2016 with a capacity of 20million cubic meters. The second with the same capacity was launched in February this year.

 

Strong economic growth in the past ten years has seen energy demand grow by 4 percent between 2005 and 2015 according to a Financial Times study. It is projected to rise further helping to make the global LNG market forecasted to increase by about 50 percent between 2015 and 2020 according to a Wood Mackenzie study.

 

Both the Nigerian and Turkish presidents seem to maintain a congenial relationship, exchanging visits in 2016 and 2017. During the D8 meeting (developing nations) in Ankara last year, Buhari paid a visit to Erdogan where both leaders signed an MoU on trade, economic and industrial cooperation.

 

Trade relations between Nigeria and Turkey was at $779 million in the first eight months in 2017 largely consisting clothing, food (biscuits and pasta), engine and automobile parts, and pharmaceuticals from Turkey and sesame seeds, raw and semi-processed leather, and rubber from Nigeria.