The Draft of New Natural Gas Market Law provides incentives not
only regarding the natural gas, but also regarding the LNG
(Liquified Natural Gas) import and LNG terminal establishment. If
this Law enters into force as drafted, the LNG import will be
easier. Accordingly, an LNG importer shall fulfill the financial
sufficiency requirement and most of other requirements for
importers do not have to be fulfilled. Moreover, LNG users are also
regarded as independent consumers and the investors may determine
the LNG plants tariffs freely. According to the related articles of
this law, LNG plants which are put into operation after the
entering of this law into force are exempted from the system access
requirements in the Natural Gas Market Law until 2025.
The market situation in Turkey
Recently, Turkey has two LNG plants one of which pertains to
BOTAŞ and it imports the LNG from diverse countries. The LNG
market is subject to the Energy Market Regulatory Authority. Due to
new regulations in natural gas market, the LNG import has been
liberalised in 2008, thereby the LNG import has been implemented by
private sector since 2009. Moreover, the LNG terminals has been
brought into use of third parties within the new regulations in
2009. The LNG storage tariffs are determined by the parties
according to the recent law. However, number of LNG plants is not
sufficient to establish a competitive market. If the New Natural
Gas Law enters into force, the increase of the number of LNG plants
is expected due to the incentives for LNG terminal investments.
LNG trade in the world
With the increase of energy consumption in the world the search
of alternative energy resources comes into the fore. LNG as one of
them is not a recent alternative energy resource. It has been
dealed for approximately 30 years in the world. Despite the fell of
trade volume of the LNG in 2012, its trade has been increasing
since 2007. Especially the Fukushima desaster has been a factor of
increase of the LNG demand and import in Japan. Japan and other
several countries in Asia and also several countries in Europe use
LNG in order to meet their gas demand. Recently several countries
have begun and are planning to begin importing the LNG. There were
more than 90 existing regasification plants in the world, several
LNG terminals which have been put in operation in Israel,
Singapore, India, China and Malaysia and more than 20 projects
planned to be completed in coming years.
Why investing in LNG?: Advantages and marketing facilities
With its advantages such as its low risk for the environment,
its cost-efficiency, contribution to diversification of energy
sources and transit routes, the LNG has been a preferable
alternative energy. The resource and market of LNG are not
dependent on each other physically, whereas the market of petroleum
and natural gas depend on their production. Accordingly, the
manufacturers have the possibility to sell the LNG to diverse
countries and consumers may buy the LNG from diverse sellers.
Moreover, the transportation of the LNG is more advantageous for
large distances compared to the pipeline transportation. An LNG
manufacturer may have the possibility to supply LNG to several
markets because of its storage facilities.
As conclusion, the LNG may be regarded as a contribution to
energy diversification in Turkey especially due to its advantages
and increase of its use and thereby the establishment of a
competitive LNG market may be expected due to the New Natural Gas
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Turkey has amended the Electricity Market Law numbered 6446 to promote use and security of domestic energy resources. Under the amendments, planned capacity mechanisms must give priority to local energy sources.
Turkey's energy regulator previously ruled (decision numbered 5709, dated 30 July 2015) that a total capacity of 2,000 MW would be reserved in the period up until 2020 for wind power pre-license applicants to connect to the grid.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).