In recent years, several natural gas pipeline projects and natural gas import opportunities have come to the force in Turkey. After completion of the pipeline project TANAP, which is regarded as the biggest natural gas pipeline project investment in Turkey, approximately 6 bcm of natural gas of 16 bcm will be purchased by Turkey and 10 bcm of this quantity will be exported to Europe.
Current gas field discoveries Leviathan, Tamar and Cyprus have also brought new pipeline project opportunities along, such that Turkey has the opportunity to become an energy hub. Nevertheless, it is a debatable point if and how these projects will affect the natural gas prices in Turkey. Despite all international natural gas import and trading developments and even if the Turkish Natural Gas Market Law has enabled the exercise of market activities to the private sector companies, there are legal restraints for especially natural gas importers which limits the natural gas import in various ways.
Natural gas importers shall supply the natural gas from BOTAŞ (Petroleum Pipeline Corporation)
A limitation in natural gas import in Turkey is the provision of the Natural Gas Market Law which sets forth that natural gas import from countries in which no contracts of BOTAŞ exist, is subject to the evaluation and permission of the Energy Market Regulatory Board. According to the Natural Gas Market Law, the Energy Market Regulatory Board may permit to natural gas import from such countries by evaluation of market competition, the obligations arising from the existing contracts and also the import connections.
On the other hand, natural gas import from countries in that contracts of BOTAŞ exist is not permitted to the natural gas importers until these contracts expire. After the expiration of these contracts, natural gas importers may sign contracts for the same quantities as BOTAŞ imports.
Briefly, natural gas supply directly from the third countries or from the pipelines is not allowed to the natural gas import companies. In contrary, the domination of BOTAŞ is still existing in the natural gas import.
Requirement of separate licenses for import and export activities
As is known, principally a separate license is required for each market activity in natural gas market. This principle is also applicable for natural gas import companies. According to the Natural Gas Market License Regulation, a natural gas importer shall obtain an export license in order to export the imported natural gas abroad. Moreover, a separate import license is also required for each import connection.
Market limit for natural gas import and sale
The legislation provides limits not only for the natural gas import from abroad, but also for the imported and sold natural gas quantity. Pursuant to the legislation, the natural gas which may be imported and sold by natural gas import companies shall not exceed 20 % of the estimated natural gas consumption of the relevant year which is determined by the Energy Market Regulatory Authority.
What has been regulated by the Draft of the New Natural Gas Market Law in this regard?
The Draft of the New Natural Gas Market Law also regulates the same market restrictions in import and sale of natural gas. However, if the New Natural Gas Market Law enters into force as drafted, 50 % of the natural gas amount which will be imported shall be reduced from the obligations of BOTAŞ in the event that the import company imports the natural gas from countries in which contracts of BOTAŞ exist.
Privatisations in natural gas market: Private sector monopoly instead of states monopoly?
Within the frame of the Natural Gas Market Law, the restructuring and privatisation of BOTAŞ has been intended. Pursuant to the Law, only transmission will be under monopoly of BOTAŞ. This will have the consequence that certain natural gas companies become dominant players in the market which may cause the evolution of a monopoly of these private sector companies which dominate the natural gas market currently and the obstraction of the targeted market competition.
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