October 27, 2019 (03:21)

Development of the Turkish gas market

The Turkish government’s energy policy, aimed at diversifying natural gas sources and creating a highly consumable market in the country, is characterized by a decline in Russian gas imports, gradual increase in pipeline gas imports from Azerbaijan, LNG from the United States and other countries. At the same time, while replacing Russian gas, Ankara is trying to get better terms from Russia for gas supplies to Turkey and the EU in the future.


Thus, according to the Turkish state-owned energy regulator “EMRA”, imports of Russian gas through the territory of Turkey decreased by 36% – to 7.99 billion cubic meters in the first half of 2019 (in 2018 this figure was 12.57 billion cubic meters). According to Çağatay Özdemir, World Bank analyst, the share of Russian gas in Turkey’s gas balance has now dropped from 48% (in 2018) to 34%. At the same time, the expert believes that the volume of Russian gas imports from Turkey will resume and increase if the Russian “Gazprom” launches the first stage of the “Turkish Stream” gas pipeline with a total capacity of 31.5 billion cubic meters of gas per year at the end of 2019.


Total volume of gas imports by Turkey in the first half of the year amounted to 23.29 billion cubic meters, with 16.15 billion cubic meters of pipeline gas imports         (as compared to 19.71 billion cubic meters in the first half of 2018).


Along with the decline in Russian gas imports, Mr. Özdemir noted a significant increase in Turkey’s imports of liquefied gas from the United States, which rose almost four times. Thus, the first US LNG supplies to Turkey were made in 2018 and amounted to only 0.191 billion cubic meters of gas. In the first half of this year LNG exports from the US to Turkey increased by 363% – up to 0.884 billion cubic meters. This amounts to 12% of total LNG imports by country and 3.8% of Turkey’s total gas imports. US LNG price for Turkey from January to June 2019 decreased from USD 200 to USD 155 per thousand cubic meters. Currently, in terms of US LNG imports in Europe, Turkey ranks second after Spain. Çağatay Özdemir considers this fact extremely important in the context of Turkey’s current energy policy.


Overall, Turkey’s total gas imports fell by 10% in the first half of 2019 as compared to 2018. At the same time, according to “EMRA”, pipeline gas imports decreased by 18%. The regulator attributes reduction of pipeline gas imports to a fall in gas demand in the domestic market, where part of the gas-fired power plants switched to renewable generation.


Talking about Turkey’s liquefied gas market, Özdemir noted that between January and June 2019, LNG imports from Turkey increased by 18% up to 7.14 billion cubic meters (as compared to 6.24 billion cubic meters in the first half of 2018 and 5.52 billion cubic meters in the first half of 2017). LNG share in Turkey’s gas balance rose to its historic peak of 30% in the first half of the year. Turkey imports the largest volumes of LNG from Algeria (2.94 billion cubic meters of LNG per year) and Qatar (1.26 billion cubic meters of LNG per year).


Exports of Azerbaijani pipeline gas through the “Trans-Anatolian Gas Pipeline” to Turkey in the first half of 2019 increased by 38% up to 4.41 billion cubic meters ( as compared to 3.2 billion cubic meters in 2018). Imports of pipeline gas from Iran decreased by 5% to 3.75 billion cubic meters in the first half of this year (in 2018 this figure was 3.95 billion cubic meters).


According to Madalina Vicari, the economic analyst at the University of Liège, Belgium, Turkey’s energy policy is consistently aimed at establishing one of the largest regional gas hubs between East and West on its own territory, which is due to the intensive development of the gas transportation infrastructure (LNG terminals, gas storages, gas pipelines – Figure 1), has the potential to become one of the largest gas trading venues in the region and beyond.


Along with the development of infrastructure, the Turkish regulator “EMRA” has been developing regulatory rules for gas imports and exports that facilitate gas supplies to Southeast European countries. At the beginning of this year “EMRA” has already set up Energy Exchange Istanbul (“EXIST”) and has granted gas market operators with 14 licenses to export gas from Turkey to the EU. In particular, licenses were granted to international company “Shell” and Turkish company “Aygaz”. “EMRA” provided equal access to the country’s gas market for all companies.


According to Madalina Vicari, currently Turkey has 5 LNG regasification terminals, 4 points of entry to the GTS of Turkey. With the introduction of the “Turkish Stream”, Turkey’s capacity for daily gas imports will increase from 271.5 million cubic meters to up to 334 million cubic meters. Daily gas consumption in Turkey is now about 148 million cubic meters (49.3 billion cubic meters in 2018). Thus, Turkey’s daily potential gas export volumes will be around 100-186 million cubic meters per day (or about 35-55 billion cubic meters per year).


Turkey’s gas policy, focused on diversification of its gas supply sources and liberalization of internal market, could allow Ankara to create a regional gas hub and ensure its own gas needs of 50 billion cubic meters per year at a competitive price within the next 5 years and export about 35-55 billion cubic meters of gas per year to the EU (Southeast Europe: Greece, Bulgaria, Serbia, etc.).


Image 0f: enerji.gov.tr

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