Caspian Report - Issue: 07 - Spring 2014

emın akhundzada
114
First, it should speed up reforms
in the energy market and invest in
natural gas infrastructure. The market
was controlled entirely by the
state-owned company BOTAS until
2001. With the enactment of Law
No. 4646 in 2001, four more companies
entered the market, leading
to a degree of market liberalisation.
However, the contract transfers have
not reached the target anticipated
by the Law no. 4646. In fact, 80% of
the market is still being controlled
by BOTAS and the rest is not fully
independent. The fact that BOTAS
determines the prices prevents the
creation of a competitive environment
and creates a monopolistic
structure. At this point, it is crucial to
reduce BOTAS’s share in the market
through various methods, to liberalise
imports and to evaluate the developments
related to LNG activities
in the transition to a more competitive
structure. Reforms to be made
in liberalisation period will not only
create competition in the domestic
market, but also strengthen Turkey’s
position in terms of international
natural gas markets.
Second, one of the necessary conditions
of becoming an energy hub is
constructing large natural gas pipeline
networks. Currently Turkey has
a high pressure natural gas transmission
network of around 15,000
km, and the household penetration
rate is approximately 50-55%. Furthermore,
pipelines in Turkey are
only laid down in one direction, and
it is not possible to reverse the flow
of natural gas when the need arises.
For comparison, the state of Texas
has a 50,000 km pipeline network.
The US as a whole has 850.000 km.
In this regard, Turkey should build
interconnected pipelines in different
directions and spread this pipeline
network across all of its territory.
At the same time, there should
be a single pipeline regulatory system
that should be administrated
transparently.
Third, Turkey’s underground natural
gas storage facilities are still insufficient.
Although Turkey’s growth rate
of natural gas consumption is the second
highest in the world after China,
in terms of natural gas storage capacity
against consumption volume
it lags far behind other countries in
Europe. Natural gas storage facilities
are critically important. Buying and
storing surplus natural gas enables
countries to continue uninterrupted
natural gas transmission when the
demand is high and supply is problematic.
Although Turkey ensures
44% of its electricity generation by
natural gas and imports 98% of its
natural gas consumption, natural gas
storage capacity only meets 5% of
annual consumption, risking the interruption
of electricity supply during
the cold winter months where
demand is higher. At the moment,
Turkey has 2.6 bcm usable storage
capacity and 1 bcm is in the process
of construction. This capacity should
be increased to 10 billion cubic meters
in the short term and 20 billion
cubic meters in the midterm. In addition,
storage facilities should not be
constructed only in certain regions;
they should be built across multiple
locations parallel to the pipelines,
both large and small. This will enable
natural gas flow from the places
where demand is low to the places
where the demand is high.