Turkey extended Russia gas contracts by a year, eying U.S. gas investment

By Can Sezer

ISTANBUL, Dec 4 (Reuters) - Turkey finalised a one-year extension of its expiring gas import contracts with Russia that total 22 bcm, and is considering investing in U.S. gas production, Turkey's energy minister said.

The two import contracts with Gazprom GAZP.MM are due to expire at year end. Turkey has been steadily cutting the share of Russian gas in its gas mix, and it is currently down to below 40%.

Turkey, Russia's last major natural gas market in Europe, has meanwhile signed a series of deals to purchase long-duration liquefied natural gas (LNG), a big part of it from the U.S., taking advantage of expected global LNG abundance over the next few years.

"BOTAS finalised the contract" with Russia, Energy Minister Bayraktar said, referring to Turkish state gas importer in a press conference embargoed for Thursday.

"They will continue to be supplied by Gazprom next year. But we are focusing on more like short term... like one year," he told journalists in embargoed comments on Wednesday.

IRAN, U.S. ENERGY TALKS

Turkey is also negotiating an 10 bcm gas import contract with Iran expiring in July next year, Bayraktar said, adding that part of the talks relate to increasing the volume of Turkmen gas Turkey is importing through Iran.

"We'd like to increase the capacity of Turkmen gas coming through the swap deal," he said, adding Turkey signed a one year 1.3 bcm gas deal with Turkmenistan this year, sourcing it over Iran. Imports so far this year stand at around 0.5 bcm.

NATO member Turkey has ambitions to become a gas trading hub has been diversifying its traditional pipeline supply sources.

It plans to invest in U.S. gas production facilities to hedge its commitment to purchase up to 1,500 LNG cargoes from the U.S. over the next 15 years, Bayraktar said.

"To hedge our position and create the whole value chain, we are considering to invest in the upstream in the U.S. market" Bayraktar said. State company TPAO was in talks with U.S. energy majors including Chevron CVX.N and Exxon XOM.N and a deal may come next month, he said.

The U.S. became Turkey's fourth largest gas supplier this year at 5.5 bcm, with a 14% share.