Istanbul July 13 2022: Turkey’s state gas company got a 925 million-euro ($929 million) loan from Deutsche Bank AG to finance liquefied natural gas purchases in a bid to reduce the country’s reliance on imports from Russia.
The three-year loan allows Boru Hatlari ile Petrol Tasima AS, or Botas, to buy LNG from pre-arranged suppliers in 10 countries, including the US, Algeria and Qatar, according to an emailed statement from Deutsche Bank. The financing is guaranteed by Turkey’s government and can be increased in the future.
The deal marks the state-owned pipeline operator’s first international loan for LNG imports. And while it will only fund a fraction of Turkey’s gas consumption, it paves the way for similar transactions that will let Botas diversify supplies currently dominated by Russia and Iran.
The loan facility comes at a crucial time for Botas. The Turkish company has been hit by soaring gas prices that it has struggled to pass on to consumers, with authorities desperate to curb inflation at a 24-year high before a crucial election year. Botas has said it’s selling gas to domestic consumers at 30% of the cost.
The government pumped more cash into Botas during the first quarter than it did in the whole of 2021 to keep it running. The company was also the biggest recipient of the central bank’s $18 billion of currency sales for state companies in the first half of this year, adding to pressure on Turkey’s foreign reserves.
Botas will use the loan to also buy LNG from suppliers in Germany, France, Italy, Spain, Switzerland, Singapore and the UK, it said.
Negotiations for the loan were first reported by Bloomberg in April, which also said the size could be doubled in future.