Turkey has a very high foreign-source dependency in energy
sector by 75% whereas natural gas dependency mounts to 98%. Apart
from being a major natural gas importer, Turkey locates in a very
strategic region between the demand centres in Europe and
manufacturing areas such as Russia and Middle East that results
with being a natural gas trading hub. In this regard, there are
many internal and external key components conduce to determine the
prices in Turkey. In the scope of endogenous determinants,
electricity prices is observed as a fundamental driver of natural
Outrageous Increasing in Natural Gas Demand Caused Electricity
To illustrate, latest power cuts existed as a result of harsh
weather conditions throughout the Turkey. As a consequence of this
fact, demand for natural gas extremely boosted. When Turkish
electricity market is analyzed, it could be seen that 50% of
electricity need is met by natural gas terminals. In consideration
of this interrelation, unit electricity prices climbed from 0.15
TRY to 1 TRY in the recent days. Furthermore, some technical issues
in natural gas terminals also caused not to meet the demand. Iron
and steel industry, which requires highly consumption of natural
gas damaged in reaction to deficiency in natural gas supply.
Trading Fact: Natural Gas Terminals Are Endangered with Recent
Recently, the Commission has taken a resolution regarding the
electricity trade done by energy plants on 21.11.2013. According to
this Resolution, an electricity manufacturing license owner may
purchase 40 % of its annual electricity production amount from the
market. This Resolution is based on the Article 30 ç) of the
of the Electricity Market License Regulation
("Regulation"), according to which a manufacturing
license owner is entitled to purchase the electricity energy or
electricity capacity in order to provide the electricity energy or
capacity which he/she shall supply. However, this energy amount
shall not exceed its annual produced energy amount which is
determined by the Energy Market Regulatory Commission
Typically, bilateral agreements are implemented by natural gas
terminals for sales of their production capacity in the market. On
the other hand, these manufacturers make another proposals with
counter parties for pursuance of their engagement. After this
regulation, these natural gas producers will have difficulties to
set a balance between their production capacity and their 40%
capability of electricity purchasing. Contract management is
projected to require a strong forecasting against to operational
risk. Another substantial point is long term contracts are applied
for their gas procurement by natural gas producers. Uncertainty in
their capacity management with 40% purchasing limitation may
increase marginal costs regarding unexpected instant needs of their
natural gas. In this regard, they may encounter with troubles to
meet their demands and also higher natural gas prices may be faced.
This resolution is expect to rise electricity prices in Turkey as a
result of high correlation between natural gas and electricity
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