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Private Sector Enters Natural Gas Import in Turkey |
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Saturday, 2 December 2006After state owned Turkish Pipeline Company BOTAS transferred its import contacts to four companies in the private sector, a period of competition has loomed in Turkey's natural gas import market.
Customer portfolios of companies ready to sign purchasing agreements with exporting countries are coming out in the open.
Shell Energy, Avrasya Gaz, Bosphorus Gaz Corporation and Enelko will reportedly contact natural gas distribution companies such as IGDAS (Istanbul Gas Distribution Industry and Trade Inc. Co) and IZGAZ (Izmit Gas Distribution Company) and auto-producer companies.
Natural gas companies will offer cheap gas to these enterprises.
A discount as little as $1 would mean a profit of $4 million for IGDAS, which purchases four billion cubic meters of gas a year, a BOTAS official said.
It is stated the companies authorized to purchase four billion cubic meters gas will suggest increasing the 75 percent "take or pay obligation" to over 90 percent in an effort to buy Russia's gas at a lower or equal price to BOTAS's gas.
Authorities stress Russia will be able to sell an additional one billion cubic meters of gas to Turkey if it increases the "take or pay" amount and their weight in the market will rise further with the private sector.
The companies authorized to import will pay a transfer price to BOTAS for their import from Russia.
Turkish Natural Gas Importers and Exporters Union Chairman and Bosphorus Gas General Coordinator Tugrul Erkin said import authorization meant liberalization of the markets and free competition will decrease prices after a while.
Erkin gave the example of the proposal of thrift flights formerly critical of security and said the prices have now dropped to $50.
Pointing out that there is no magic wand to reduce natural gas prices immediately, Erkin said the main reason for this is that companies have been waiting for authorization since 2001.
Erkin believes liberalization will bring serious benefits in the middle-term: "We will take all measures to reduce prices in the context of free competition. We should decrease sale prices to attract companies. This is what the private sector's dynamic structure requires. For competition, we cannot increase sale prices but we can reduce our purchasing price and costs."
Erkin expects no short-term change in purchasing prices and states as Bosphorus Gaz they are planning to work with six or seven large-scale companies.
Erkin said they would be able to get funds at lower costs because they were a private company and assured there should be no problem in collecting the money.
The bid held Nov. 30, 2005 to transfer import contracts to the private sector was approved on Wednesday.
Shell, which gave the highest bid, and the other companies will have to meet with exporting countries.
The companies will then apply to the Competition Board and the Energy Market Regulatory Agency (EPDK) to obtain import licenses.
BOTAS will no longer be a party in the deal and the conditions for the agreements will be set by the importing company and exporting country.
Whether the prices will rise or fall will be clear following dual agreements.
Turkey purchases 31.5 billion cubic meters natural gas per year and 19 billion cubic meters of this is provided by Russia.
Turkey paid $7.1 billion for natural gas last year.
$4.7 billion of the payment was made to the biggest supplier, Russia.
Turkey gets natural gas from Russia via two lines.
A yearly natural gas amount of 13 billion cubic meters and a daily amount of 43 million cubic meters is received from the Western line, which came to the agenda during the crisis last year.
Six billion cubic meters of natural gas is received in a year from Russia via the Blue Stream pipeline at the bottom of the Black Sea.
Iran is the second supplier in natural gas and a yearly amount of $6.7 billion cubic meters is expected to be received by Turkey according to the agreement.
The amount of gas received from Nigeria and Algeria via LNG tankers is 5.8 billion cubic meters.
Russia's gas price is the most expensive*
Country ---- Price (U.S. dollars)
Russia: 243
Iran: 236
Egypt: 150
Azerbaijan: 120
*The price for 1,000 cubic meters as of the end of 2005
By Ercan Baysal (Zaman)
Saturday, December 02, 2006
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Saturday, 2 December 2006
Turkish Economy
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