Turkey Plans to Unbundle its Gas Monopoly

The Turkish government is planning to unbundle the monopoly gas importer and shipper Botas, energy minister Alparslan Bayraktar said March 11 in response to a question from NGW. The occasion was the launch of the International Energy Agency's country report, part of a regular series that is updated every five years or so.

Bayraktar said the president Recep Erdogan would present his plans for economic reform March 12, and include unbundling. However there are no plans to privatise the company, he said.

Althought the electricity market has been deregulated, he said gas market reforms had been stymied so far by the dominance of long-term import contracts, which have inflexible terms. But about a third of these by annual volume are expiring very soon, which will mean more gas can come from more counries and on different terms, he said.

Botas did auction off some of its long-term contracts some years ago but the buyers have been left struggling to find buyers for the gas as the country's power plants have switched to coal while the local currency has lost value against the dollar.

The country has however also imported a lot of LNG on a spot basis, while Russia complains that Turkey is not honouring its take-or-pay commitments. LNG has been cheaper than oil indexed gas, allowing some spot purchases from  an oversupplied global market.

Possibly adding to the competitive nature of the market is the arrival in a few years' time of gas from the giant offshore Sakarya field, which will start up in 2023 according to the "ambitious" plan, and reach plateau in 2026. Discovered last summer under the Black Sea, it was the largest find to be announced, Bayraktar said.

The field is unlikely to meet much of Turkey's gas demand but it is likely to remain in the control of the state producer TPAO. What it will mean is better balance of payments for Turkey as imports reduce; more price certainty for industrial consumers; and lower prices for industry too, meaning more competitively priced products, he said. 

Bayraktar said TPAO was still acquiring seismic data to help it understand the resource potential of satellites, but the country is talking about above 400bn m³. However despite the size and possible complexity of the field, no partners have yet been announced to help TPAO develop it.