The complicated pricing of natural gas in global markets, with a myriad of long-term and short-term arrangements, sometimes linking gas deals with oil pricing, together with the dynamic demand picture for natural gas and the robust build-out globally of liquefied natural gas (LNG) infrastructure all combine to make Turkey the prime target for U.S. LNG exports.

That was one of the conclusions reached in a recently-released white paper from Energy Mining Advisory Partnership (EMAP) of London.

Technological advancements, allowing developers to extract natural gas from shale, have resulted in a 50-percent increase in reserves and a 34-percent increase in natural gas production in the U.S. over the last decade. This increased production reduced the price of natural gas in the U.S. to one-third of European levels and one-quarter of Japanese levels, creating “a compelling commercial logic for exporting natural gas from U.S.”

Five new LNG facilities, in Texas, Louisiana, and Maryland, are currently under construction in the U.S. and are scheduled to come on line in the next three years. Dozens more are on the drawing boards.

EMAP found that U.S. exports could be “marginally competitive for terminals in Spain and the UK” but “not commercially viable for other European terminals at current prices.” With higher transportation costs and longer transit times, exporting to Asia would not be viable unless and until the price of oil rebounded to $75 per barrel, according to the report.

But Turkey is a different story. Turkey has experienced the fastest growth in energy demand of

the OECD countries over the last three years. Domestic production fills less than 10 percent of Turkey’s energy demand. The country’s energy mix has moved strongly towards natural gas, overtaking oil consumption in 2012.

Turkey currently receives gas from Russia and Iran by pipeline under long-term contracts at relatively high prices. Additionally, Turkey’s commercial relations with those two countries are strained due to the penalties it has had to pay under its onerous contracts. Turkey could buy U.S. natural has at prices 40 percent lower than what it currently pays to Russia and Iran.

With Turkey’s deals with Russia and Iran up for renewal in 2021, U.S. LNG exports could help Turkey negotiate better deals with Iran and Russia, the EMAP report noted. To make it all happen, however, Turkey would have to increase the capacity of its LNG terminals.