Acasă » Oil&Gas » Turkey’s prospects as a regional gas hub (analysis by Mihai Melintei)

Turkey’s prospects as a regional gas hub (analysis by Mihai Melintei)

17 July 2023

Mihai Melintei, Energy Analytical Studies


In the last decade the use of natural gas has grown considerably, accounting for a third of the increase in total energy demand, more than any other fossil fuel. According to the IEA (International Energy Agency), it is expected that the demand for gas in the coming years will continue to grow, both in natural and liquefied form. The fact that it can be stored, delivered through pipelines or transported in liquefied form by tankers allows gas to respond to seasonal fluctuations in demand while providing consistent support for the transition to renewables. At the same time, the natural gas market is increasingly globalized, determined by the availability of supply chains, geopolitical factors and the increase in demand for liquefied natural gas (LNG). Additionally, in this context,


The context

The events in Ukraine increased the geostrategic importance of the Black Sea region and also strengthened the ambitions of regional actors. Turkey’s value as a partner in triangular energy cooperation with Europe and Russia has grown considerably. The already existing gas export routes from Russia to Turkey (Blue Stream, Turkish Stream) contribute both to meeting Turkey’s growing domestic demand and to strengthening Ankara’s position as a regional gas distribution center/hub.

The geographical position of Turkey favors the development of the regional gas hub. Turkey is located in close proximity to gas-producing countries (Azerbaijan, Iran, Russia) and gas-consuming countries, members of the European Union. Thus, according to Turkey’s energy plan, greater attention is paid to the country’s integration into regional energy markets, noting that Turkey can act as an energy center – a hub. To achieve this, it is necessary to form a market, ensure adequate infrastructure and achieve a regional omnium consensus among the main energy players. Accomplishing these points will allow the use of Turkey’s geographical opportunities to interconnect natural gas producing and consuming countries in a regional hub.

The Turkish gas hub project involves the creation of a gas supply and pricing platform at the EU border, which could become an alternative to other gas pricing centers in Europe. The gas supply will be ensured by the capacities of the existing pipelines between Russia and Turkey, the Blue Stream and Turkish Stream gas pipelines, with their possible expansion; gas supplies from Azerbaijan through the Southern Gas Corridor (SGC); delivery of gas from Iran and Turkmenistan, as well as natural gas from Turkish fields in the Black Sea. In this sense, the Southern Gas Corridor is important for Turkey, in particular, the main gas pipeline that passes through the territory of Turkey, the Trans-Anatolian Gas Pipeline (TANAP). There is a common opinion on the doubling of gas supplies through the TANAP pipeline, for which work has already started. The expansion of TANAP also implies an increase in gas production in the next 3-4 years in Azerbaijan, which will certainly contribute to the energy security of both Turkey and Southeast Europe.


Opportunities (O) and Risks (R)

It should be noted that when talking about the gas hub in Turkey, national leaders have different meanings regarding the development of this regional project. The Russian side is interested, first of all, in maintaining its share of gas on the European market through the routes that transit Turkey, as an alternative to those in Ukraine and the Nord Stream pipelines. Turkey’s own interests are much more ambitious – turning the country into a gas hub of regional importance, where the key parameters of the European natural gas market, including the gas price, will be set. Therefore, considering the current geopolitical situation in the Black Sea, it is appropriate to the situation to consider Romania’s interests in the Turkish gas hub project, assessing its risks (R) and opportunities (O).


(O) Consolidation and expansion of SGC infrastructure

One of the key opportunities for Romania in the context of the development of the gas hub in Turkey, aims to implement the second stage of the Southern Gas Corridor (SGC). Thus, the development of the natural gas transport infrastructure can be included on the work agenda by completing the works on the BRUA gas pipeline (Bulgaria – Romania – Hungary – Austria), as part of the expansion of the Southern Gas Corridor to the Balkans and Central Europe. Also, in the context of the development of gas supply through SGC, as part of the Turkish gas hub, Transgaz from Romania, together with the operators of gas transport systems from Greece, Bulgaria and Hungary can increase the natural gas supply capacities through the vertical corridor, which will allow the transmission of natural gas through bidirectional flows, from Southeastern Europe to Northeastern Europe and vice versa. In this sense, Romania can become an important regional node, interconnecting the SGC with the Vertical Corridor, which will allow the transit of important gas flows through Romania from the Azeri Shah Deniz natural gas field and the LNG terminals in Greece to Central and Eastern Europe, with important storage capacities.

The expansion of the Southern Gas Corridor is of particular importance, as new suppliers of natural gas are needed for the Balkan countries (Bulgaria, Serbia), Central European countries (Hungary, Austria, Slovakia) and Eastern (Republic of Moldova), which still remain mostly dependent on a single gas supplier. Romania, in the context of the realization of the Turkish gas hub project, can use the hub as an energy tool to launch the SGC expansion initiative in the region, considering that gas hubs require an extensive network of gas pipelines and storage sites (UGS) to allow the sale and movement of gas operatively, criteria that Romania meets.


(O) Trans-Balkan gas pipeline and reverse gas supply

Another opportunity for Romania is the connection of the Trans-Balkan gas pipeline to the Turkish gas hub. Since the gas hub will be located at the intersection points of energy infrastructure networks/pipelines, its connection with the Trans-Balkan pipeline cannot be neglected. Thus, Romania will be able to supply volumes of natural gas to the Republic of Moldova. In this sense, the Republic of Moldova carried out reconstruction works of the ȘDKRI main pipeline (Şebelinka – Dnepropetrovsk – Krivoi-Rog – Ismail) to ensure the conditions for the reception of natural gas in reverse mode through the Trans-Balkan pipeline at the SMG Căuşeni gas measuring station. Chisinau and Baku are conducting negotiations regarding the option of supplying natural gas to the Republic of Moldova by using the Trans-Balkan pipeline.


(O) Offshore gas from the Black Sea

The presence of market demand from industrial clusters or consumers, access to infrastructure for all energy market participants, availability of diversified gas sources, including a large number of gas producers is imperatively an essential part for the development of the hub . For Romania, as a producer of natural gas, the gas hub in Turkey can be a favorable element from the perspective of diversified gas sources and can contribute to intensifying efforts to launch offshore natural gas extraction from Romania’s exclusive economic zone on the Black Sea ( the Neptune Deep project). The exploitation of natural gas from the Black Sea will strengthen Romania’s energy security, ensuring the necessary natural gas from its own resources, thus contributing to the transformation of Romania into a much more competitive energy market. As a regional producer of natural gas, Romania will be able to trade gas contracts through derivative financial instruments, such as: futures contracts, put options, swaps, etc. taking advantage of the Turkish gas hub.


(O) Interconnection of gas pipelines

With the development of the Turkish gas hub in the region, Romania will have the opportunity to fully promote the European Union’s energy market policy in Southeast Europe, as Bulgaria lacks sufficient energy resources and infrastructure. Moreover, with its own gas resources, infrastructure and developed interconnectors in the energy sector, Romania is in an ideal position to be the guarantor of energy security in this part of Europe and a transit area for the supply of energy resources from the Caspian Sea to Black Sea. In this sense, the implementation of a connection of gas pipelines from South-Eastern Europe with those from Western Europe can be facilitated, since currently such an infrastructure does not exist, and a simple reconfiguration of gas flows within the EU will not it will work, because there are no natural gas pipelines between North-West and South Europe. And from this perspective, Romania may be interested in exporting its future reserves of natural gas extracted offshore from the Black Sea area.


(R) Economic/Competitive Risk

Turkey’s main objective is for the gas hub to form a platform where key directions of the European natural gas market, including gas prices, will be determined. Thus, several natural gas producers will be registered on the Turkish energy exchange EPİAȘ, which will conclude spot contracts for the supply of gas, Turkey becoming the place for the formation of a price for natural gas. In this sense, Romania will not be able to trade gas contracts at a competitive market price, but only at the price set by the hub. Romania can manage this risk by implementing futures contracts, which can cover the risk, insuring against a possible unfavorable evolution of the market and prices.


(R) Regional political difficulties

Another risk is associated with the alignment of Turkish legislation with European norms regarding such important aspects as the management of oil and gas companies and the certification of natural gas supply operations. With the development of the gas hub, it will be necessary to develop new agreements with the border states, Bulgaria and Greece. Political difficulties in interacting with them can be an obstacle to the implementation of such agreements. These agreements are important, considering that the Greece-Bulgaria inter-connector allows the transit of gas from Azerbaijan to Romania.


(R) Turkey – regional monopoly on the gas market

The geopolitical effects that Turkey will get from the development of the gas hub also create a series of risks. Turkey will have the opportunity to influence the supply of natural gas to Southeast Europe, including the transit of Azeri gas supplied to Romania, as well as the setting of prices on the regional gas market. Ankara will gain additional leverage over the EU and individual European states. Turkey will de jure be the supplier of natural gas (even if a mixture of natural gas of Russian, Azerbaijani, Turkmen, Iranian, etc. origin will be supplied through pipelines). Romania can manage the risk of Turkey becoming a monopoly player on the regional energy market by using its own offshore gas resources. With the gases from the Black Sea, Romania can become an important regional actor on the energy market,


(R) Volatile price development

Another risk related to the Turkish gas hub is associated with the construction of new infrastructure for supply routes, which will cause the price of supplied fuel (gas) to rise volatile. The expansion of the Southern Gas Corridor, the interconnection of the SGC with the Vertical Corridor, the development of the energy infrastructure in the region as a whole, including the increase of natural gas extraction by the main producers, especially Azerbaijan, may be the reason for the increase in natural gas prices, which will be felt by the economies states in the region, including Romania. A management for this type of risk can be the REPowerEU plan, which provides for specific investments in gas infrastructure to ensure security of supply throughout the EU.



With the development of the gas hub project in Turkey, the geography of natural gas exports in the Black Sea region is diversifying, contributing to strengthening Europe’s energy security. Regardless of the specific implementation of the gas hub project (extension of existing gas pipelines or construction of new gas pipelines, as well as any other formats of interaction between the parties involved in the development of gas infrastructure at the regional level) a strategy of win-win type, as most of the risks associated with the gas hub activity can be managed. Given that traditional sales markets do not cope with the energy crisis, and economic opportunities are replaced by geopolitical considerations,

According to the REPowerEU plan, the EU needs additional natural gas infrastructure, which will contribute to the creation of a resilient and interconnected gas infrastructure in the EU, fully offsetting the future loss of gas imports from Russia. Through the development of the gas hub project in Turkey, Romania has the opportunity to complete and interconnect the European energy infrastructure with the resources of the Caspian region, including in the field of renewable energy through the implementation of the Agreement signed between the Governments of Azerbaijan, Georgia, Romania and Hungary on the Strategic Partnership in the field of green energy development and transport.




This interview first appeared in the printed edition of Energynomics Magazine, issued in June 2023.

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