Turan Research Center

After Turkey signed several long-term contracts for U.S. liquid natural gas (LNG) imports, Reuters reported that Russia and Iran’s share of Turkey’s gas market is increasingly at risk – especially as Ankara’s gas purchase contracts from the Blue Stream pipeline in Russia are set to expire within months, while its 20-year gas import deal with Iran will end by mid-next year.

Turkey’s energy sector now stands at a pivotal crossroads as the country seeks to diversify its gas supply and reduce its historical dependence on Russian and Iranian imports, which have long dominated the market. Over the next three years, Turkey aims to meet half of its natural gas demand through a mix of domestic production and U.S. LNG imports.

If realized, this strategy would mark a major shift — at least on paper — away from reliance on Russian and Iranian gas. Just a decade ago, the two countries accounted for as much as 73 percent of Turkey’s gas imports a decade ago. Today, that figure has fallen to around 55 percent.

Turkey’s gas import sources:

Source: The Energy Market Regulatory Authority (EMRA)

Over the past decade, Turkey’s domestic gas consumption has increased by 15 billion cubic meters, yet forecasts indicate that growth over the next ten years will not exceed this level. Much of this additional demand is expected to be offset by the country’s expanding domestic production, driven by new developments such as Sakarya gas field in the Black Sea.

Currently, Turkey’s electricity generation mix remains heavily dependent on gas-fired power plants, which account for 22 percent of installed capacity, while solar and wind account for 18 percent. As part of its long-term energy transition strategy, Turkey plans to expand renewable capacity from 32 gigawatts today to 120 gigawatts by 2035. Meanwhile, the first reactor of the Akkuyu nuclear power plant is scheduled to come online this year. Turkey’s total nuclear capacity is projected to reach 7.4 gigawatts by 2035. This equals to the annual consumption of approximately 15 billion cubic meters of gas in the thermal power generation.

Domestic gas output is also set to double next year with the continued development of the Sakarya field, reaching over 14 billion cubic meters by 2028 — four times the current production capacity. The project underscores Turkey’s strategic shift toward greater energy self-sufficiency.

Together with the new U.S. LNG import contracts and long-term gas purchase agreements with Azerbaijan (effective at least through 2033), Turkey’s reliance on Russian and Iranian gas is expected to decline, at least officially. LNG imports offer flexibility, enabling Ankara to volumes based on seasonal demand and reduce reliance on fixed pipeline gas supplies. However, LNG typically comes at a higher cost than pipeline gas, and long-term contracts often include fixed pricing clauses, which could weigh on the overall economics of the Turkish gas market.

Beyond price and supply considerations, Turkey’s diversification strategy is also shaped by broader geopolitical and regulatory constraints. Both Russia and Iran are simultaneously under U.S. and EU sanctions, and continued trade with them carries technical, economic, and geopolitical risks — from insurance complications to restructions on financial transactions. Turkey’s Halkbank, for example, has been entangled in U.S. courts for nearly two decades over its financial dealings with Iran.

Turkey’s existing LNG import capacity already matches its total domestic gas consumption, reflecting significant investment in gas terminals across multiple routes and regions over the past decade.

At the same time, energy exports remain a strategic priority for the United States, and Ankara’s growing purchase of U.S. LNG are as much a political statement as an economic decision – intended to signal its commitment to reducing dependence on Russian gas.

Still, while Russian pipeline gas remains cheaper than LNG, Moscow currently sells the same gas to China with an additional 27 percent discount. In other words, Russia offers Turkey no meaningful price advantage that would justify maintaining its current 40 percent reliance on Russian imports. Moreover, Moscow has repeatedly demonstrated its willingness to use gas supplies as a political weapon in times of crisis. — including against Turkey.

Russia’s track record in Europe illustrates this pattern clearly. In November 2021 — months before its full-scale invasion of Ukraine — Moscow began sharply reducing gas deliveries through Nord Stream 1 and Ukrainian transit lines from 155 bbc in 2021 to just 39 bcm in 2022 - — a drop of 75 percent. After the invasion, exports were halted entirely. The resulting supply shock sent Title Transfer Facility (TTF) — Europe’s largest gas market and the benchmark for prices across the continent — market prices soaring from €40–50 per Megawatt-hour (MWh) in the summer of 2021 to a record €342 per MWh in August 2022 —a 60 percent surge that triggered an energy crisis in EU.

Turkey has faced comparable pressure: Russia has repeatedly reduced or halted gas supplies under various pretexts — completely halting deliveries to Ukraine for six days in a gas dispute in January 2009 — affecting transit to Turkey and others, slashing exports by 10 percent in 2016 after Turkey shot down a Russian jet, and cutting volumes sevenfold in 2020 during the pandemic. These recurring disruptions underscore the political leverage Moscow continues to wield through its energy exports.

Why “At Least on Paper”? The Limits of Diversification

Although renewable energy capacity is expanding rapidly, Turkey continues to invest in conventional power generation. This year, Ankara is commissioning a new 1,000 MW gas-fired power plant, underscoring the role of natural gas in its energy mix. Coal remains another major component, accounting for 22 percent of electricity generation and roughly one-quarter of total final energy consumption. Achieving greenhouse gas reduction targets will therefore depend on gradually replacing coal with cleaner alternatives, including natural gas. In other words, despite rapid renewable expansion, gas will remain a cornerstone of Turkey’s energy transition.

Natural gas also vital for industrial and household energy consumption, representing about 24 percent of industrial final energy use and 53 percent of household energy consumption. Both sectors are expected to experience steady demand growth driven by industrialization, urban expansion, and population increases. This sustained reliance highlights the importance of maintaining a diversified and resilient supply portfolio to ensure energy security while managing cost and environmental impacts.

Turkey’s strategic role as an energy transit hub adds another layer of complexity. The country currently imports around 16 billion cubic meters (bcm) of Russian gas annually via the Blue Stream pipeline, which is set to expire in a few months, with no public indication of renewal. Additional volumes arrive through TurkStream, which has an annual capacity of 31.5 bcm. While part of this gas meets domestic demand, the remainder is  re-exported to Europe – more than1 bcm per month in the first half of this year alone.

As EU member states aim to phase out Russian gas imports by the end of 2026, Turkey could exploit its position by increasing Russian imports for domestic use while exporting an equivalent volume of domestically produced gas to Europe. However, using TurkStream for Turkey’s own exports would require complex legal and contractual arrangements. Alternative routes, including the Trans Adriatic Pipeline (TAP) or Interconnector Greece-Bulgaria (IGB) may offer additional capacity for exporting Turkish gas to European markets. Such a strategy would enhance Ankara’s ability to optimize its energy portfolio, balancing domestic supply, import costs, and export revenues.

The Future of Iran’s Gas Exports

Despite worsening domestic gas shortages, Iran continues to prioritize exports to Turkey because of the significant revenue generated from these sales. Eastern Turkey remains heavily dependent on Iranian gas, complicating any near-term effort to phase out imports. However, Azerbaijan could partially offset a reduction in Iranian gas supply, while alternative sources, like increasing the volume of Turkmen gas imported through swap deals via Iran, are also available.

Iran’s 20-year gas export contract to Turkey is scheduled to expire in mid-2026 and even in the best-case scenario, the renewal would likely be limited to about 5 bcm per year, half of the current contractual level. Should no renewal occur, Iran risks losing direct access to the Turkish gas market, though it could still participate indirectly through swap agreements with Turkmenistan.

Since March, Turkey has started receiving Turkmen gas via a swap mechanism with Iran. The initial volume is set at 2 bcm annually, but could increase to 10 bcm, effectively replacing Iranian gas in Turkey’s supply mix.

A Balancing Act in a Fragmented Energy Landscape

Turkey’s gas market is in the midst of a profound transformation, shaped by rising domestic production, growing LNG imports, rapid renewable energy expansion, and the launch of nuclear generation. Although Russia and Iran have historically dominated Turkey’s gas imports, their share is expected to decline steadily over the next decade, particularly in direct pipeline deliveries.

Yet, for both countries, complete disengagement remains unlikely. Technical, contractual, and geopolitical realities — ranging from energy security needs and EU import policies to regional interdependencies — ensure their continued, albeit diminished role.

Ultimately, Turkey’s evolving gas strategy reflects a balanced and pragmatic approach: diversifying supply, boosting self-sufficiency, expanding renewables, and leveraging its strategic transit position to manage domestic demand while enhancing export capacity. The interplay of these trends will define Turkey’s gas market structure and its regional energy influence through 2035.

Dalga Khatinoglu is an expert on Iran’s energy and macroeconomics, and a researcher on energy in Azerbaijan, Central Asia and Arab countries.