Turkey’s state energy importer has been provided with a 925 million-euro ($929 million) loan from Deutsche Bank to finance its future liquefied natural gas (LNG) purchases in a bid to diversify its import sources, the German lender said.
The three-year loan will allow Petroleum Pipeline Corporation (BOTAŞ) to diversify its spot LNG purchases from suppliers mainly in Europe and the Middle East, Deutsche Bank said in a statement.
Responsible for 95% of gas supplies in Turkey, BOTAŞ will use the facility to partially meet its LNG purchase requirements from a list of preagreed international natural gas suppliers in 10 countries.
These include the United States, Singapore, France, Germany, Italy, Spain, Switzerland, the United Kingdom, Algeria and Qatar.
The loan is guaranteed by Turkey’s Treasury and Finance Ministry and can be extended in size in the future, the statement said.
The possibility of the financing was first reported by Bloomberg in April.
The agreement marks BOTAŞ’s first loan deal for LNG purchases and is said it could pave the way for similar agreements that will allow it to diversify supplies currently dominated by Russia and Iran.
Turkey imports almost all its energy needs, leaving it vulnerable to price swings. Surging energy prices after Russia’s invasion of Ukraine pushed costs higher, threatening the government’s economic plan aimed at achieving a current account surplus.
The government has been subsidizing a significant amount of utility bills in an effort to soften the burden of soaring consumer prices on households. It opted to keep prices for households steady and hike prices for gas sold to industrial facilities and power plants for the most part of the first half of the year.
Yet, BOTAŞ in June said it had raised prices for households, as well as industry and electricity production, with the price for households raised by 30%.
BOTAŞ has bought billions of dollars from the central bank to cover its purchases this year. It was the largest recipient of nearly $18 billion in currency sales to state economic enterprises by the central bank in the first half of this year.
“The deal constitutes an important step in the ongoing development and focus of Deutsche Bank’s franchise in Turkey and confirms the bank’s continuous support and commitment to the country,” said Orhan Özalp, CEO of Deutsche Bank A.Ş. Turkey.
“Already a leader in financing a number of Turkey’s most significant infrastructure projects, Deutsche Bank has had a long-standing presence in the country and will continue to support selective projects in transport, infrastructure and energy in the future,” he noted.