ExxonMobil (XOM) Negotiates Massive LNG Deal With Turkey
Exxon Mobil Corporation XOM is negotiating a significant liquefied natural gas (LNG) deal with Turkey, signaling a strategic move by Turkey to diversify its energy sources and reduce its dependency on Russian energy.
The deal, potentially lasting a decade, would involve Turkey purchasing up to 2.5 million tons of LNG annually from ExxonMobil, marking a significant shift in its energy procurement strategy.
This negotiation is part of Turkey’s broader initiative to build a new supply portfolio to decrease its reliance on any single energy partner. The move comes at a critical time when Russian energy exports to Europe are declining due to the ongoing conflict in Ukraine, prompting European nations to look for alternative energy sources.
Turkey, which has limited domestic oil and gas reserves, heavily depends on imports, primarily from Russia, Azerbaijan and Iran, supplemented by LNG imports from Algeria, Qatar, the United States and Nigeria. The potential agreement with ExxonMobil is poised to enhance Turkey’s energy security and supply stability.
Financially, the 2.5 million tons of LNG under discussion would represent approximately 7% of Turkey’s total natural gas consumption based on 2023’s figures, with an estimated current market value of $1.1 billion. Previously, Turkey has engaged in spot market transactions, notably importing 5 million tons of LNG from the United States last year.
While the specifics of the commercial terms with Turkey are still under discussion, ExxonMobil confirmed initial talks with the Turkish government regarding potential LNG opportunities, although details of their commercial strategy remain confidential.
The deal could play a pivotal role in reshaping Turkey’s energy landscape, providing a more diversified and secure energy mix, while also bolstering ExxonMobil’s position as a leading global LNG supplier.
ExxonMobil has ambitious expansion plans for its LNG operations, aiming to boost its portfolio to 40 million tons annually by 2030, a significant increase from its 2020 levels. Part of this expansion includes the development of the Golden Pass LNG export terminal on the U.S. Gulf coast, which boasts a capacity of more than 18 million tons per year and is expected to commence operations in early 2025.
Additionally, XOM is developing LNG projects in Papua New Guinea and Mozambique, further illustrating its commitment to growing its LNG business globally.
Zacks Ranks & Stocks to Consider
ExxonMobil currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company SM is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition, and production of oil and gas in North America.
The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.33 and $6.96, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Hess Corporation HES is a leading oil and natural gas exploration and production company. The exploration and production company’s oil and gas proved reserves increased last year by more than 8% year over year.
The Zacks Consensus Estimate for HES’s 2024 and 2025 EPS is pegged at $8.33 and $10.49, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
YPF Sociedad Anonima YPF is a vertically integrated energy company primarily engaged in the oil and gas sector. The company is associated with both upstream and downstream activities, including the exploration, production and refining of crude oil and natural gas.
The Zacks Consensus Estimate for YPF’s 2024 and 2025 EPS is pegged at $6.38 and $7.83, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
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