Gas Strategies, 31 October 2012

                            New Storage Facilities Vital to Turkey’s Energy Aspirations

Turkey can mitigate its looming supply gap with increased storage and LNG imports, Okan Yardimci, energy expert at Turkey's Energy Market Regulatory Authority, told Gas Matters Today on the sidelines of the 14th Oil and Gas Transportation conference in Istanbul on Tuesday. The country's current 2.7 Bcm/year of underground storage is insufficient to meet its ambitions of becoming  a gas hub, he said, stressing that market liberalisation could only happen there if supply begins to exceed consumption. 

New Storage Facilities Vital to Turkey’s Energy Aspirations

Turkey will be able mitigate its looming gas supply gap by increasing storage capacity and LNG imports, but its current 2.7 Bcm of underground storage is insufficient to meet the country’s ambitions to become a gas hub according to Okan Yardimci, energy expert at Turkey’s Energy Market Regulatory Authority.

Speaking to Gas Matters Today on the sidelines of the 14th Oil and Gas Transportation conference in Istanbul on Tuesday, Yardimci said that high-capacity salt cavity storage was crucial for Turkey, and even more so for European supply, while market liberalisation – key to Turkey’s aspirations as an interregional hub – could only happen if supply begins to exceed consumption.

“Europe wants gas but Turkey needs much more than Europe. All European countries, especially those taking gas from Russia are decreasing their consumption, but Turkey is increasing,” he said.

“The plan is to reduce natural gas consumption [in the long term], because Turkey’s total gas imports for the last 25 years have been more than 450 Bcm, which cost more than $200 billion – a huge amount. It’s the best thing that we had to improve the economy. We can decrease it to some level but we cannot take it to zero, so we need more pipelines and LNG infrastructure,” he added.

“The target is to reduce our natural gas dependency. We plan to invest more on renewable energy and our own energy sources, but Turkey’s electricity consumption is growing by 8%/year, so renewables are not enough,” he continued.
Two gas storage projects are currently operational in Turkey, while three licence applications are pending for new sites. A final investment decision (FID) on one of those at a site in Tuzgolu is expected to be made within a year of the project receiving its licence.
At present Turkey’s domestic production represents only 2% of its natural gas consumption and so it needs more storage, and potentially LNG imports to reduce the impact of disruptions to its gas supply from Iran and Azerbaijan.

Combined storage, LNG regasification and pipeline contracts represent 180 MMcm/d of peak supply to Turkey, but this was exceeded last winter when national gas consumption hit a peak of 205 MMcm/d.

Turkey’s overall consumption is expected to increase from 45.7 Bcm in 2011 (according to BP statistics) to 48.5 Bcm in 2012, but new storage projects can take three to four years to complete, and pipeline supply has been frequently disrupted by terrorist attacks (see Gas Matters Today, October 22, 2012).

“Our underground storage is okay, our LNG facilities are running, and especially in spring and summer time there is no problem – but doubts remain over our winter supply,” said Yardimci.

Some 62 private companies operate in the Turkish gas industry, with both LNG import terminals and infrastructure operated privately, but a more liberalised market is needed to attract investment from IOCs (see Gas Matters Today, October 11, 2012).
However, neither public nor private companies are able to invest in infrastructure due to the lack of consistent market prices, long-term transit tariff structures, and transparency over decision making.

According to market participants, the market is either over- or undersupplied, but never supplied adequately. Moreover, having state gas and pipeline operator BOTAS as the single market player responsible for security of supply and sourcing is considered structurally to be the wrong concept, while price setting at BOTAS is prone to political influence. - MS

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